Development of Malaysia Biomass Industry Linking to Global Value Chain Tang Kok Mun, Technical Coach EU-Malaysia Biomass Sustainable Production Initiative (Biomass-SP) Briefing Session to Financial Institution on Green Technology Financing 26 September 2011, Cyberjaya

Presentation Outline 2

• Introduction to Biomass-SP • Biomass Resource Potential in Malaysia • Benchmarking the Economic Values of Biomass • Waste to Wealth Initiative • Incentives for biomass as energy Funding Opportunities for Biomass Commercialisation • Innovative SMEs Briefing Session to Financial Institutions on Green Technology Financing

26 September 2011

The Project 3

• A development cooperation initiative of the European Union (EU) under the SWITCH-Asia Programme – to promote implementation of sustainable production practices in small and medium enterprises (SMEs) who are involved in biomass utilisation and production • Nurturing 40-50 Malaysian biomass SMEs for commercialisation in line with sustainable production principles Co-funded by:

Synergised stakeholders

Briefing Session to Financial Institutions on Green Technology Financing

26 September 2011

Biomass resource potential 4

Biomass resource potential 1%

•

•

1%

4% Oil palm Wood

•

Rice 94%

Sugarcane

•

• • Training Seminar on Renewable Energy

4.7 million ha cultivated with oil palm (13.6% of the country’s total land area) 421 mills operation – only 20% crude palm oil and 3% palm kernel oil and 3% palm kernel cake, 74% byproducts (wet biomass) Wood residues aplenty – but a lot of competing uses e.g. furniture-making & particleboard. Average rice production is 3.95 t/ha/season, 5 seasons in 2 years cultivation. Paddy : straw output is 1:1.4 (80% burnt, 10-20% compost/geomat). Rice husk production 19.75 mil tonne/year 30 June 2011

Values of biomass residues and their availability in Malaysia 5

CATEGORIES OF BIOMASS Oil palm waste

Timber waste

Agricultural waste

PRICE (RM/TONNE)

PRODUCTION (MILLION MT/YEAR)

45

7.73

170-178

4.46

EFB

10-30

21.34

OPF

65

45

Sawdust (ex-factory price)

80-120

37

Wood chips

90-130

Wood residues

30-50

Mesocarp fiber Palm kernel shell

Rubberwood

90

Rice husk

40

19.75

40-100

0.25

45

0.3

Coconut fiber Sugarcane bagasse

Source: Compiled by Biomass-SP from MPOB, MARDI,& MTIB

Oil palm biomass in 2010 6

No.

Biomass

Amount (dry weight)

1.

OPF (from pruning activity) OPF (from replanting activity)

42.21 million tonnes 3.28 million tonnes

2.

OPT (~5% replanting rate)

33,299,000 trunks 17.5 million tonnes

3.

From the 421 palm oil mills operating at total capacity of 97.40 million tonnes of FFB, ~ Estimated EFB = 22% x 92 million tonnes

21.34 million tonnes

4.

Mesocarp fibers

7.73 million tonnes

5.

Palm kernel shells

4.46 million tonnes

6.

POME generated from per Energy tone ofCommissions FFB is 62 million tonnes ** Source: Malaysian (2007) about 67%. ** (million M3)

Training Seminar on Renewable Energy

30 June 2011

Source: Anis Mokhtar et al (2010), Oil Palm Biomass Products and Comemrcialisation, MPOB

The way forward 7

Training Seminar on Renewable Energy

30 June 2011

High demand for biomass fuels – pellets, briquettes, PKS 8

• By 2015, global pellet demand is projected to be at 25 million tonne • At present, 97% of the global pellet demand is met by Europe and North America • EU Renewable Energy Directive 20-20-20 – – – –

20% reduction in energy consumption 20% consumption from RE 20% reduction of GHG emission 10% consumption of biofuels in transport

Scenarios for European pellet consumption 1980 - 2019 9

Latest statistics for European consumption: •2009 - ~8.5 million tonnes •2010 - Probably around 10 Source: Danish Technological Institute & Propellets 2008, and Junginger 2011

Individual EU countries to come up with own nREAP 10

• Under the EU Renewable Energy Directive (RED), every Member State is requested to provide a National Renewable Energy Action Plan (nREAP) – By 2020,19.1% of electricity should come from biomass – Solid biomass contributes 69.2% towards heating and cooling

Denmark nREAP projection 11

2005

2010

Biomass heat 2015

2020

Biomass market development around the world 12

Biomass Fuel

Price (USD/t)

PKS

60-75

Palm Briquette

50 (preliminary price) – 100

Wood Pellet

160-180

AS OF JUNE 2011…

GERMANY

13

AS OF JUNE 2011…

UK

Biomass market development around the world 14

AS OF JUNE 2011…

ITALY

MALAYSIA: SREP Projects with REPPA No

15

Pemaju

Lokasi Projek HS(D) 12572, Lot PT No. 3226, Mukim Serting, Negeri Sembilan Lot 227, Mukim Of Jimah District of Port Dickson Negeri Sembilan Parit Ju, Batu Pahat, Johor Kilang Sawit Serting Hilir, Jempol Negeri Sembilan

Kapasiti (MW)

Jenis Bahanapi

10

EFB

5

EFB

1.7

Biogas

0.5

Biogas

1

MHES Asia Sdn Bhd

2

Sunquest Sdn Bhd

3

Bell Eco Power Sdn. Bhd.

4

Felda Palm Industries Sdn Bhd

5

Sediaplas Sdn Bhd

Daerah Rompin, Pahang

6

Achi Jaya Plantation Sdn. Bhd.

Segamat,Johor

1.25

Biogas (sisa ubi kayu) Biogas

7

Bell Bio Power Sdn. Bhd.

KKS Bell-KSL,Linggi,N Sembilan

1.4

Biogas

8

Bell Green Power Sdn. Bhd.

KKS Bell Sri Lingga,Melaka

1

Biogas

9

Maju Intan Biomass Power Sdn Bhd

Teluk Intan, Perak

10

Biomass (EFB)

10

Agni Power Sdn Bhd

Jln Gugusan Bera,Bera,Pahang

10

Biomass (EFB)

11

Garisan Etika Sdn Bhd

Bandar Tenggara,Kota Tinggi, Johor

10

Biomass (EFB)

10

12

TSH Bioenergy Sdn. Bhd.

Kunak, Sabah

10

EFB

13

Seguntor Bioenergy Sdn Bhd

Jalan Seguntor, Sandakan Sabah

10

EFB

14

Kina Biopower Sdn Bhd

10

EFB

5

Tangkai sawit (EFB)

15

Lot 2, Jalan Seguntor, Batu 11 Labuk Road Sandakan Sabah Kalansa Energy Corporation Sdn Lot NT, 08301544, KM 3, Jalan Beluran, Beluran Bhd Sandakan Sabah

Source: Energy Commissions Malaysia (2010), Personal Communication

Feed-in-Tariff System 16

• Guaranteeing access to the grid and setting a favourable price per unit of renewable electricity – make RE viable and sound long-term investment Type of RE

Capacity

Rate (RM/kWh)

Biogas

Up to 4 MW

0.32

Up to 10 MW

0.3

Up to 30 MW

0.28

Up to 10 MW

0.31

Up to 20 MW

0.29

Up to 30 MW

0.27

Biomass

Training Seminar on Renewable Energy

30 June 2011

Value-adding bioenergy ventures with CDM/VCS 17

• Indirectly supports IRR/ROI of RE development projects – reduction of carbon emissions are registered and verified as certified emission reductions (CERs) under Clean Development Mechanism (CDM) or Verified Emission Reductions (VERs) under voluntary carbon market – CER price (as of August 2011) - €9.09 – VER price (Q2 2011) - US$3-4 Training Seminar on Renewable Energy

30 June 2011

Financing your CDM projects 18

• Model A Project owner to come up with all costs involved in CDM, then sell the CERs at a premium market price. No management interference from CER buyer. Project of any size is possible, as long as the project owner to bear the project costs. • Model B Investor comes up with technology and bear all costs for CDM project, but project owner gets minority share from CERs sales until project costs are covered. For large CDM projects, e.g. landfills, biomass power plant, POME biogas. Training Seminar on Renewable Energy

30 June 2011

Financing your CDM projects 19

• Model C Investor to pay upfront for 10 years CERs at agreed price in exchange of 30% equity for the CDM project. Less financial burden to project owner, but may take long time to start because due diligence is required.

Briefing Session to Financial Institution

26 September 2011

How Biomass-SP can help? 20

• Expert consultancy services for the development of CDM (from PIN to PDD)/VCS projects; major costs funded by Biomass-SP – Biomass utilisation RE generation – Biogas – Biocomposting project

• Business partnership opportunities with CDM investors in terms of equity participation and carbon credits trading Briefing Session to Financial Institution

26 September 2011

Challenges of using biomass as energy 21

• Uncertainties of long term biomass supply & pricing mechanism, logistic and transportation cost • Inconsistency of biomass fuel quality – EFB requires pre-treatment to increase efficiency • Technical & financial issues related to grid connection Training Seminar on Renewable Energy

30 June 2011

Competitive use of biomass 22

• Survey by MPOB/Greentech Malaysia in 2007/2008 on 100 mills

Source: Malaysian Palm Oil Board & Ministry of Plantation Industries & Commodities Training Seminar on Renewable Energy

30 June 2011

Benchmarking the value of biomass & their utilisation 23

• Assessment of the biomass resources base and its availability for commercialization has to be made. • To evaluate the sustainability of present consumption and the feasibility of higher value biomass utilizations.

Benchmarking the values of biomass products 24 Product

Raw material

Feedstock Availability (million MT/year)

Value RM/MT

Resource Efficiency (1:1)

Sugar derivatives

EFB

42.0

1000-10000

Activated carbon

EFB / PKS

42.0 / 7.3

3000-14000

10% from wet EFB

Pulp

EFB

42.0

1500-2000

78%

Animal feed

OPF

65.0

425

1.5:1

Particleboards

OPT

34.0

600/m3

1.5:1

Compost/Fertiliser

EFB + POME

42.0 + 45

550-600

50% (100% EFB), 80% (80% EFB, 20% Chicken Manure)

Pellets

EFB

42.0

300-400

15:1

Briquette

EFB + PKS

42.0 + 7.3

185-215

3:1 (70% EFB, 30% PKS)

POFF

EFB

42.0

67

2:1

Source: Compiled by Biomass-SP from MPOB, MARDI, Biotechcorp, etc.

Waste-to-wealth initiative 25

• Oil Palm Biomass Roadmap that will streamline efforts to convert oil palm waste into wealth-generating industries • To contribute to the nation’s economy through production of high value chemicals such as ethanol or lactic acid from biomass resources • To convert agricultural by-products through bioprocessing technologies into bio-based products (biofuels, biochemicals, biomaterials, and biosugar) • Malaysian BiotechCorp • MiGHT • Agensi Inovasi M’sia (AIM) Training Seminar on Renewable Energy

30 June 2011

26

Training Seminar on Renewable Energy

30 June 2011

Biomass energy incentives 27

• Economic Transformation Programme – commercialisation of oil palm biomass into high value products as part of the National Key Economic Area (NKEA) • Under MIDA, incentives for the use of renewable energy resources – biomass/undertaking waste recycling activities/energy conservation activities – Pioneer Status (PS) with a tax exemption of 100% for 10 years – Investment Tax Allowance (ITA) of 100% on qualifying capital expenditure within a period of 5 years

• Green Lane facility under SME Corp for innovative SMEs – 2% interest rebate for approved loans and tax deduction to get 1innoCERT • Green Technology Financing Scheme for producers and users of green technology – The Government will bear 2% of the total interest rate, and guarantee 60% of the financing amount Training Seminar on Renewable Energy

30 June 2011

Biomass refinery? 28

Source: Biomass Opportunities & Biotechnology Funding (2011) Malaysian Biotechnology Corporation Training Seminar on Renewable Energy

30 June 2011

Biomass refinery? 29

Source: Biomass Opportunities & Biotechnology Funding (2011) Malaysian Biotechnology Corporation

Funding for biomass commercialisation 30

• TechnoFund (MOSTI) – a bridging fund to address the funding gap between earlier basic research and commercialisation. Up to RM 1.5 million • Commercialisation of R&D Fund (MTDC) – Comemercialisation of R&D output from public and private universities up to RM 500k – RM 4 million • Business Start-Up Fund (MTDC) – to fund new startup technology-based company up to a maximum of RM 5 million

Training Seminar on Renewable Energy

30 June 2011

Funding for biomass commercialisation 31

• Cradle Investment Programme (Cradle Fund) – funds development of prototype to facilitate commercialisation - CIP Catalyst (pre-seed fund: RM500k), CIP 500 (commercialisation fund:RM500k, 2 applications/company) • 1-InnoCERT (SME Corp) – innovation certification to develop innovative SMEs; opportunities for innovation coaching programme and SME Innovation Award which offers RM1 million to the Top Most Innovative SME Training Seminar on Renewable Energy

30 June 2011

Funding for biomass commercialisation 32

• Green Technology Financing Programme (MDV) – contract financing for green certified companies from RM250k to RM2mil • Machinery loan by OCBC (4%), Project financing (Bank Pembangunan, CIMB), Soft Loan Schemes for SMEs by MIDF (4%)

Training Seminar on Renewable Energy

30 June 2011

E.g. Current R&D projects 33

Research Institutions

Feedstock

Product

Universiti Putra Malaysia

Oil palm decanter cake

Sugar

Empty fruit bunch

Lactic acid & PHA

Universiti Kebangsaan Malaysia

Empty fruit bunch

Phenolic resin/adhesive

Universiti Sains Malaysia

Lignocellulosic biomass

Bioethanol

Forest Research Institute Malaysia

Empty fruit bunch

Pulp and paper products

Rice husk

Solid biofuel

Malaysian Palm Oil Board Oil palm trunk

Training Seminar on Renewable Energy

Particleboard & MDF

30 June 2011

SMEs: Agriwaste into lactic acid/PLA 34

Training Seminar on Renewable Energy

30 June 2011

SMEs: EFB into fibre and pulp 35

Training Seminar on Renewable Energy

30 June 2011