University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid Optimal Supply Chain Design of Green Biorefineries in Austria - Assessment of Current and Potential Policy Support Schemes Stefan Hoeltinger, Johannes Schmidt, Martin Schoenhart & Erwin Schmid

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 2 Introduction – Biorefineries and the bioeconomy  Biorefinery concept is the key to meet major objectives of a Knowledge-Based Bio-Economy (KBBE)  Substitution of fossil fuels  Reduction of greenhouse gas emissions  Efficient use of biomass resources (for material and energy production)  Establish competitive bio-based industries  Increase regional value added  „Biorefining is the sustainable processing of biomass into a spectrum of marketable bio-based products and bioenergy” IEA - Task 42 Biorefineries

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 3 Introduction – The Green Biorefinery Concept  Feedstocks  green biomass (fresh grass, grass silage, sugar beet leaves, …)  Products  organic acids, feed proteins, fibre products, electricity and heat  Drivers for the green biorefinery concept in Austria  Expected oversupply of grassland areas due to changes in agricultural policies and structures  Alternative utilization for grassland biomass to preserve cultural landscape  Employment opportunities for rural areas

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 4 Green biorefinery systemReference system - biogas Introduction – The Green Biorefinery Concept  Simplified process overview of the green biorefinery demonstration plant in Utzenaich, Austria and biogas as reference technology Grass silage Press juicePress cake Mechanical separation Biogas + Chp Membrane separation Ion exchange chromatography Electrodialysis Amino acidsLactic AcidHeatElectricity Biogas + Chp HeatElectricity Grass silage

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 5 Methods and Data  Spatially explicit mixed integer programming model that maximizes profits of the whole supply chain by selecting optimal plant type, location and capacity  The model considers  feedstock-, transportation-, operation- and capital costs  revenues from product sales  Regional disparities in biomass supply and heat demand determine profitability and sustainability of biomass supply chains  Spatially explicit data for  Regional biomass supply (aggregated to 250 supply regions)  heat demand (MWh) pro km² (Schmidt et al., 2010)

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 6 Methods and Data  Sensitivity analysis - Monte-Carlo simulation to deal with uncertainties of input parameters  varying market conditions  upscaling costs  efficiency of conversion technologies  5 Policy Scenarios  No policy support schemes  Feed-in tariff 150 € per MWh electricity  Feed-in tariff 100 € per MWh electricity  Investment subsidy 20 % of total investment costs  Processing-aid for cascade utilization of grass silage in a green biorefinery 10 € per t dry matter (dm) grass silage

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 7 Results – feedstock assessment  Positive Agricultural Sector Model Austria (PASMA)  Supply curve for energetic and material utilization of grass silage  No effect on livestock numbers  Additional supplies through  Intensification measures (Nitrogen fertilizer inputs)  Crop rotation changes on arable land  Increased feed imports

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 8 Results – feedstock assessment  Feedstock prices paid by biogas plants and green biorefineries for all 500 simulation runs

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 9 Results - capacities  Mean capacities and transportation distances for the realized green biorefineries and biogas plants for all 500 Monte Carlo simulation runs Biorefineries are more capital intensive than biogas plants -> larger capacities to benefit from economies of scale for capital costs

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 10 Subsidies Amino acids Lactic acid Electricity Heat Results – profitability  Relative revenues for different policy scenarios  Guaranteed feed-in tariffs contribute to up to 55 % of biogas revenues  Revenues of green biorefineries largely dependent on market prices for organic acids

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 11 Results – profitability Feedstock costs Transportation costs Variable operation costs Capital costs  Relative costs for different policy scenarios  Feedstock costs contribute about 50 % of biogas costs  Energy intensive downstream and separation technologies are the main drivers for the costs green biorefineries

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 12 Results – profitability  Boxplots for the profitability of green biorefineries (GBR) and biogas plants  Higher profits for green biorefineries, but also higher uncertainty

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid 13 Conclusions and outlook  Green biorefineries can offer a profitable utilization pathway for grass silage in Austria under favourable market conditions  Profitability of green biorefineries is very sensitive to  market prices of organic acids  the development of separation and downstream costs  upscaling costs from pilot- to industrial scale  Profitability of biogas plants is largely dependent on the current policy support schemes (feed-in tariffs)  Sustainability assessment along the whole supply chain to prove ecological sustainability of green biorefinery concept  More intensive cultivation methods and longer transportation distances

University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Hoeltinger, Schmidt, Schoenhart, Schmid University of Natural Resources and Life Sciences, Vienna Department of Economics and Social Sciences Institute for Sustainable Economic Development Stefan Hoeltinger, Johannes Schmidt, Martin Schoenhart & Erwin Schmid Feistmantelstraße 4, A-1180 Vienna Tel.: Thank you for your attention