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Additional Cost of Biomass Reallocation in NATEM

IEA-ETSAP
IEA-ETSAP

Additional Cost of Biomass Reallocation in NATEM Mr. Etienne Bernier, Natural Resources Canada 24th-25th June 2024, etsap meeting, etsap summer workshop, semi-annual meeting, june 2024, Bonn, Germany, IRENA Innovation and Technology Centre, Thomas-Dehler-Haus, Willy-Brandt-Allee 20

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ADDITIONAL COST OF BIOMASS REALLOCATION IN NATEM Etienne Bernier CanmetENERGY in Varennes ETSAP workshop, Bonn, Germany June 24, 2024
COPYRIGHT AND DISCLAIMER Commercial reproduction and distribution is prohibited except with written permission from NRCan. For more information, contact NRCan at nrcan.copyrightdroitdauteur.rncan@canada.ca. 息 His Majesty the King in Right of Canada, as represented by the Minister of Natural Resources Canada, 2024 DISCLAIMER The content of this presentation is for information purposes and does not represent the policy positions of the Government of Canada, nor does it constitute the endorsement of any particular commercial product. Natural Resources Canada (NRCan) is not responsible for the accuracy or completeness of the information contained in the reproduced material. NRCan shall at all times be indemnified and held harmless against any and all claims whatsoever arising out of negligence or other fault in the use of the information contained in this presentation. 2
OUR RESEARCH CENTRES IN CANADA 3 HAMILTON (ON) Transportation (materials) Clean energy production Pipelines Manufacturing sector VARENNES (QC) Buildings Industrial processes Renewable energy integration RETScreen International OTTAWA (ON) Communities & infrastructure Industrial processes Clean electricity Bioenergy Renewables Transportation DEVON (AB) Fossil fuel decarbonization, extraction, upgrading, refining and biofuels Environmental studies and remediation Oil spill science
IEA ETC OUR INDUSTRIAL DECARBONISATION APPROACH / METHODOLOGY 4
5 Why could additional costs matter to policymakers? Scenario definitions Results Interpretation Questions & Answers OUTLINE
PROBLEM DEFINITION FROM A POLICYMAKING PERSPECTIVE Knowledge of additional costs (minimum cost of accommodating an additional constraint) brings value to policymakers because it helps quantify future trade-offs between narrow and broad sets of end-uses of a scarce natural resource For example: it is significantly more costly to allocate biomass for multiple end-uses (SAF, diesel and gasoline substitutes, buildings heat, electricity generation, industrial, etc.) rather than just a purportedly optimal set? This work examined the additional cost of allocating biomass to various end uses, while still achieving the goal of Net Zero GHG emissions in Canada by 2050 at the least cost: B - Allocating more biomass than optimal to the industrial sector C - Allocating more biomass than optimal to the transportation sector D - Allocating more biomass than optimal to the buildings sector E - Allocating more biomass than optimal to the solid carbon storage sector NATEM was chosen for this work because it is an optimization-based model and it adequately models Canadas energy systems (multi-sector) The project was conducted in a partnership approach with ESMIA Everyone in Canada wants to decarbonise using biomass, but who deserves it most? 6
SCENARIO DEFINITIONS Scenario Additional constraints A. Optimal Net Zero in 2050 is the main constraint Resulting usage of lignocellulosic biomass - 85 million dry tons in 2050 - becomes a fixed input for all other scenarios B. More industry Specific BECCS technologies are required in the steel, iron ore, cement and pulp sectors in 2050 C. More transportation 50% of biomass input (vs 2% optimal) must be transformed into liquid transportation fuels in 2050 (any end-use) D. More buildings 50% of biomass input (vs 0% optimal) must be transformed into pellets for buildings in 2050 (any end-use) E. More solid carbon storage No additional constraint, but negative emissions are recognized only when based on biochar storage, not biogenic CO2 storage 7
RESULTS FOR SCENARIO A: OPTIMAL BIOMASS USE IN 2050 Important role for slow pyrolysis as soon as 2030, followed by gasification later (BECCS for H2) Co-location on heavy industrial sites to enable efficient, direct uses of syngas with CCS Transportation uses biofuels in 2050, but less than electricity, jet fuel, hydrogen and gasoline Industrial steam generation is not entirely electrified; it acts as a swing user for excess bioenergy 8
SCENARIO B: INCREASED BIOMASS USE IN INDUSTRY Requiring specific BECCS technologies ends up reshuffling biomass use - and the balance of positive and negative emissions - within industry, without diverting a significant amount from other sectors Additional cost is quite small ($3.2B CAD) because overall electricity demand barely increases No significant change in direct air capture and in overall transformation losses Low additional cost, as industrial uses were already preferred 9 Additional costs (Billions CAD 2016)
SCENARIO C: INCREASED BIOMASS USE IN TRANSPORTATION More biorefineries with CCS, less gasification and pyrolysis in industry Less gasoline, jet fuel, and first generation biofuels in transportation $41B additional cost includes $16B to build more biorefinery capacity and $24B to increase electrification overall, including even more electric vehicles (!), to offset transformation losses Moderate additional cost, as vehicle electrification remains maximized to avoid re-emission 10 Additional costs (Billions CAD 2016)
SCENARIO D: INCREASED BIOMASS USE IN BUILDINGS More pelletization for residential end-uses, less gasification and pyrolysis in industry Increase in Direct Air Capture (DAC) to recover the leaked (otherwise storable) biogenic carbon $118B additional cost includes $147B to provide more electricity to DAC and other sectors, including in non-residential buildings, offset by $54B savings in residential appliance CAPEX High additional cost, as biogenic CO2 is re-emitted where clearly it should not 11 Additional costs (Billions CAD 2016)
SCENARIO E: INCREASED BIOMASS USE IN CARBON STORAGE More slow pyrolysis, less gasification Scenario definition (CO2 never negative) reallocates pyrolysis by-products towards CCS-incompatible applications and natural gas towards CCS-compatible ones, including blue hydrogen A modest amount of industrial CO2 capture is replaced by DAC in 2050 $35B additional cost includes $51B to increase electrification (more DAC, less combustion), offset by savings related to CO2 capture and storage Moderate additional cost, as pyrolysis was already a preferred route 12 Additional costs (Billions CAD 2016)
INTERPRETATION FOR POLICYMAKERS Bioenergy pathways that lock-in avoidable CO2 re-emissions will likely be regretted Buildings heat emerged as the worst offender in this work, but this may apply to many other re-emitting schemes Possible consequence: priced out of feedstock, as negative emitters will have a higher ability to pay for biomass Favored bioenergy pathways are 1) highly carbon-negative, 2) highly energy efficient compared to respective end-use electrification, and 3) low CAPEX This favors industrial end-uses, especially where H2, syngas and solid carbon are strictly needed For transportation sector applications that require carbon, low-loss pathways (e.g. petroleum refining) are preferred to high-loss pathways (e.g. Fischer-Tropsch synthesis), biogenic or not Liquid biofuels are less problematic when 1) production facilities are CCS-ready, and 2) not a pretext to slow down non-emitting alternatives Storing carbon in solid form is attractive despite leaving energy behind Analogous to adding negative coal in the energy mix Biomass is more valuable as a carbon store than as an energy source. Everything else follows on from this. 13
A PARADIGM SHIFT ABOUT GHG EMISSIONS Modelling brings a new way to think about decarbonization, by showing its emergent properties 14
1615 Lionel-Boulet Blvd. Varennes (QC) J3X 1P7 Phone: +1.450.652.4621 canmetenergy@nrcan.gc.ca Contact infos: Etienne Bernier (etienne.bernier@nrcan-rncan.gc.ca) Industrial Systems Optimization CanmetENERGY in Varennes Energy Efficiency and Technology Sector Natural Resources Canada Government of Canada

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Additional Cost of Biomass Reallocation in NATEM

  • 1. ADDITIONAL COST OF BIOMASS REALLOCATION IN NATEM Etienne Bernier CanmetENERGY in Varennes ETSAP workshop, Bonn, Germany June 24, 2024
  • 2. COPYRIGHT AND DISCLAIMER Commercial reproduction and distribution is prohibited except with written permission from NRCan. For more information, contact NRCan at nrcan.copyrightdroitdauteur.rncan@canada.ca. 息 His Majesty the King in Right of Canada, as represented by the Minister of Natural Resources Canada, 2024 DISCLAIMER The content of this presentation is for information purposes and does not represent the policy positions of the Government of Canada, nor does it constitute the endorsement of any particular commercial product. Natural Resources Canada (NRCan) is not responsible for the accuracy or completeness of the information contained in the reproduced material. NRCan shall at all times be indemnified and held harmless against any and all claims whatsoever arising out of negligence or other fault in the use of the information contained in this presentation. 2
  • 3. OUR RESEARCH CENTRES IN CANADA 3 HAMILTON (ON) Transportation (materials) Clean energy production Pipelines Manufacturing sector VARENNES (QC) Buildings Industrial processes Renewable energy integration RETScreen International OTTAWA (ON) Communities & infrastructure Industrial processes Clean electricity Bioenergy Renewables Transportation DEVON (AB) Fossil fuel decarbonization, extraction, upgrading, refining and biofuels Environmental studies and remediation Oil spill science
  • 4. IEA ETC OUR INDUSTRIAL DECARBONISATION APPROACH / METHODOLOGY 4
  • 5. 5 Why could additional costs matter to policymakers? Scenario definitions Results Interpretation Questions & Answers OUTLINE
  • 6. PROBLEM DEFINITION FROM A POLICYMAKING PERSPECTIVE Knowledge of additional costs (minimum cost of accommodating an additional constraint) brings value to policymakers because it helps quantify future trade-offs between narrow and broad sets of end-uses of a scarce natural resource For example: it is significantly more costly to allocate biomass for multiple end-uses (SAF, diesel and gasoline substitutes, buildings heat, electricity generation, industrial, etc.) rather than just a purportedly optimal set? This work examined the additional cost of allocating biomass to various end uses, while still achieving the goal of Net Zero GHG emissions in Canada by 2050 at the least cost: B - Allocating more biomass than optimal to the industrial sector C - Allocating more biomass than optimal to the transportation sector D - Allocating more biomass than optimal to the buildings sector E - Allocating more biomass than optimal to the solid carbon storage sector NATEM was chosen for this work because it is an optimization-based model and it adequately models Canadas energy systems (multi-sector) The project was conducted in a partnership approach with ESMIA Everyone in Canada wants to decarbonise using biomass, but who deserves it most? 6
  • 7. SCENARIO DEFINITIONS Scenario Additional constraints A. Optimal Net Zero in 2050 is the main constraint Resulting usage of lignocellulosic biomass - 85 million dry tons in 2050 - becomes a fixed input for all other scenarios B. More industry Specific BECCS technologies are required in the steel, iron ore, cement and pulp sectors in 2050 C. More transportation 50% of biomass input (vs 2% optimal) must be transformed into liquid transportation fuels in 2050 (any end-use) D. More buildings 50% of biomass input (vs 0% optimal) must be transformed into pellets for buildings in 2050 (any end-use) E. More solid carbon storage No additional constraint, but negative emissions are recognized only when based on biochar storage, not biogenic CO2 storage 7
  • 8. RESULTS FOR SCENARIO A: OPTIMAL BIOMASS USE IN 2050 Important role for slow pyrolysis as soon as 2030, followed by gasification later (BECCS for H2) Co-location on heavy industrial sites to enable efficient, direct uses of syngas with CCS Transportation uses biofuels in 2050, but less than electricity, jet fuel, hydrogen and gasoline Industrial steam generation is not entirely electrified; it acts as a swing user for excess bioenergy 8
  • 9. SCENARIO B: INCREASED BIOMASS USE IN INDUSTRY Requiring specific BECCS technologies ends up reshuffling biomass use - and the balance of positive and negative emissions - within industry, without diverting a significant amount from other sectors Additional cost is quite small ($3.2B CAD) because overall electricity demand barely increases No significant change in direct air capture and in overall transformation losses Low additional cost, as industrial uses were already preferred 9 Additional costs (Billions CAD 2016)
  • 10. SCENARIO C: INCREASED BIOMASS USE IN TRANSPORTATION More biorefineries with CCS, less gasification and pyrolysis in industry Less gasoline, jet fuel, and first generation biofuels in transportation $41B additional cost includes $16B to build more biorefinery capacity and $24B to increase electrification overall, including even more electric vehicles (!), to offset transformation losses Moderate additional cost, as vehicle electrification remains maximized to avoid re-emission 10 Additional costs (Billions CAD 2016)
  • 11. SCENARIO D: INCREASED BIOMASS USE IN BUILDINGS More pelletization for residential end-uses, less gasification and pyrolysis in industry Increase in Direct Air Capture (DAC) to recover the leaked (otherwise storable) biogenic carbon $118B additional cost includes $147B to provide more electricity to DAC and other sectors, including in non-residential buildings, offset by $54B savings in residential appliance CAPEX High additional cost, as biogenic CO2 is re-emitted where clearly it should not 11 Additional costs (Billions CAD 2016)
  • 12. SCENARIO E: INCREASED BIOMASS USE IN CARBON STORAGE More slow pyrolysis, less gasification Scenario definition (CO2 never negative) reallocates pyrolysis by-products towards CCS-incompatible applications and natural gas towards CCS-compatible ones, including blue hydrogen A modest amount of industrial CO2 capture is replaced by DAC in 2050 $35B additional cost includes $51B to increase electrification (more DAC, less combustion), offset by savings related to CO2 capture and storage Moderate additional cost, as pyrolysis was already a preferred route 12 Additional costs (Billions CAD 2016)
  • 13. INTERPRETATION FOR POLICYMAKERS Bioenergy pathways that lock-in avoidable CO2 re-emissions will likely be regretted Buildings heat emerged as the worst offender in this work, but this may apply to many other re-emitting schemes Possible consequence: priced out of feedstock, as negative emitters will have a higher ability to pay for biomass Favored bioenergy pathways are 1) highly carbon-negative, 2) highly energy efficient compared to respective end-use electrification, and 3) low CAPEX This favors industrial end-uses, especially where H2, syngas and solid carbon are strictly needed For transportation sector applications that require carbon, low-loss pathways (e.g. petroleum refining) are preferred to high-loss pathways (e.g. Fischer-Tropsch synthesis), biogenic or not Liquid biofuels are less problematic when 1) production facilities are CCS-ready, and 2) not a pretext to slow down non-emitting alternatives Storing carbon in solid form is attractive despite leaving energy behind Analogous to adding negative coal in the energy mix Biomass is more valuable as a carbon store than as an energy source. Everything else follows on from this. 13
  • 14. A PARADIGM SHIFT ABOUT GHG EMISSIONS Modelling brings a new way to think about decarbonization, by showing its emergent properties 14
  • 15. 1615 Lionel-Boulet Blvd. Varennes (QC) J3X 1P7 Phone: +1.450.652.4621 canmetenergy@nrcan.gc.ca Contact infos: Etienne Bernier (etienne.bernier@nrcan-rncan.gc.ca) Industrial Systems Optimization CanmetENERGY in Varennes Energy Efficiency and Technology Sector Natural Resources Canada Government of Canada