vti, Bundesallee 50, Braunschweig, Tel.: , Fax: ,

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1 vti, Bundesallee 50, Braunschweig, Tel.: , Fax: , Oliver von Ledebur 1

2 Institute for Market Analysis and Agricultural Trade Policy Feedstock Potentials in Germany and Global Markets Aspects Ernst-Oliver von Ledebur and IEA-Bioenergy Task42 Biorefineries - German Workshop on Biorefineries 15th September 2009

3 Renewables use in Germany Energy - vegetable oils (biodiesel) - crops mix (biogas) - starch crops /sugar molasses (ethanol) Non-energy industrial (chemical processes) - starch for fermentative processes - oils - sugar - medical herbs/crops - fibres Processing of wood (furniture, paper, insulating materials) Oliver von Ledebur 3

4 Development of the use of ag. renewables in Germany Oliver von Ledebur 4

5 Distribution of biogas plants in Germany IE-Leipzig (2008) Oliver von Ledebur 5

6 Use of renewables in biogas plants Survey by Survey by Use incidence in % Corn Gras silage cereals cereal silage others Corn Gras silage cereals cereal silage others Quoted in: IE (2008) Oliver von Ledebur 6

7 Biodiesel facilities But decentred production is of importance and newest surveys indicate that: from 585 existing facilities in 2007, 434 remain existing in 2009 (-25%) Capacity [t/year] The oilseed quantity processed decreased by 40% from 2007 ( t) to 2008 ( t) due to the changes in the policy framework as well as in changed relative prices > Status of facility in operation scheduled / under construction FNR (2009) Oliver von Ledebur 7

8 Feedstock availability for biodiesel in Germany CROPS AREA SHARES Changes in the German feedstock/ crops supply since the biofuels boom - Increasing oilseeds area share (agronomic limit due to crop rotation requirements) - Rapeseed crushing expansion BASEDATA GR ASH DE BASELINE GR ASH DE SCENARIO GR ASH DE BASEDATA OS ASH DE BASELINE OS ASH DE SCENARIO OS ASH DE RAPSEED CRUSHING TO OIL BASEDATA RS UCR DE BASELINE RS UCR DE SCENARIO RS UCR DE Oliver von Ledebur 8

9 Biofuel market situation in Germany Rapeseed production [Dim: 1,000 tonne] BASEDATA RS SPR DE BASELINE RS SPR DE SCENARIO RS SPR DE Rapeseed imports [Dim: 1,000 tonne] Changes in the German feedstock/ crops supply since the biofuels boom - Increasing oilseeds area share (agronomic limit due to crop rotation requirements) - Rapeseed crushing expansion - As a consequence of increased rapeseed production and imports BASEDATA RS SM T DE BASELINE RS SM T DE SCENARIO RS SM T DE Oliver von Ledebur 9

10 Biofuel market situation in Germany Rape oil processing in bio diesel [Dim: 1,000 tonne] Changes in the German feedstock/ crops supply since the biofuels boom Increasing oilseeds area share (agronomic limit due to crop rotation requirements) - Rapeseed crushing expansion BASEDATA RO UOD DE BASELINE RO UOD DE SCENARIO RO UOD DE - As a consequence of increased rapeseed production and imports Rape oil imports [Dim: 1,000 tonne] Oil and Biodiesel demand increases backed by the initial fiscal measures (competitiveness of domestic biodiesel vs. diesel), then by the blending requirements and the overall biofuel targets - And also imports clear the oil market balance BASEDATA RO SM T DE BASELINE RO SM T DE SCENARIO RO SM T DE Oliver von Ledebur 10

11 Biofuel Production Costs in Selected Regions 2004 and 2007 *Net price of petrol or diesel in national markets. Source: OECD FAO, 2008; quoted in FAO: The State of Food and Agriculture 2008 Oliver von Ledebur 11

12 Use of ag. renewables in the chemical industry Area cultivated to produce renewable feedstocks in DE: 11 Mio. ha forest in Germany 1,5 Mio. ha renewable crops ( ~ 9 % of the area in DE) Area cultivated for the supply of feedstock for non-energetic processing in Germany Crops Substance Area (ha) Share (%) Potato, Corn, Wheat, Rye Starch ,4 Sugar beet Sugar ,1 Rape, Sunflower veg. Oils Manila, flax fibres ,7 medicinal and spice plants special contents ,7 Total area cultivated ~1,6 % of the area dedicated for renewables Source: Meo Consult (2008) Oliver von Ledebur 12

13 Use of ag. renewables in the chemical industry tonnes % techn.-chem. Industr. uses: 2,7 Mio. t/year of renewables only marginal use of residual material (waste) thereof 2,1 Mio. t in the chem. industry (11,5 % of raw material) 0,6 % in paper and pulp processing industry % of the feedstock used is produced in Germany. Than means Imports linkage to the World Market 23 % % 12 % 11 % % 4 % 0 Vegetable oils Starch Animal fats Cellulose/ pulp Sugar Natural fibres Others Source: FNR (2008) Oliver von Ledebur 13

14 Impacts of the Bioenergy Policy e.g. on the Dairy Sector Impact of the Global Bioenergy Boom Crude oil price price for land, concentrates, fertilizer, milk Locational impact is limited (increasing costs in all regions) Advantage for milk production on permanent grassland (low opportunity cost) Impact of National Bioenergy Support Bioethanol and biodiesel admixing legislation: see above Biogas support is different (corn silage, high transport costs); Germany: 2000 /ha support, cost of milk increase by >2 ct/kg. If such a policy is only implemented in one region (or nation): Investor (perhaps only in the short run) Dairy farms & dairy factories in the region Dairy farms & dairy factories in other regions Source: Isermeyer (2008) Oliver von Ledebur 14

15 Physical potentials or economic feasibility Some related issues Questions related to energy and environmental policy and security became increasingly relevant worldwide increasing demand for agricultural commodities - population growth - incomes continue to increase - persistent expansion of the biofuel/bioenergy sector (based on governmental support) increasing impact of the world markets on the EU ag. markets additional impacts due to changes/reforms of the ag. policies, WTO higher transmission of commodity prices volatility exploitation of production reserves - expansion of ag. areas (set aside, South America, Africa?) - increase and protection of yields (intensification, new seeds, reduction of losses) - alternative use of biomass (second generation biofuels) Oliver von Ledebur 15

16 The particular background story * West Texas Intermediate in constant (July, 2005) U.S. dollars Source: Federal Reserve Bank of St. Louis, and Bureau of Labor Statistics in LEMIEUX (2006) Oliver von Ledebur 16

17 The particular background story * West Texas Intermediate in constant (July, 2005) U.S. dollars Source: Federal Reserve Bank of St. Louis, and Bureau of Labor Statistics in LEMIEUX (2006) Oliver von Ledebur 17

18 Technical progress ( infant( industry argument) Brazilian ethanol production costs (learning curve) Oliver von Ledebur 18

19 All new after the crisis? US$ 600 US$ barrel Soy beans Corn Wheat Crude oil (barrel) M1 1982M1 1984M1 1986M1 1988M1 1990M1 1992M1 1994M1 1996M1 1998M1 2000M1 2002M1 2004M1 2006M1 2008M1 Quelle: IMF, WB-Pink-Sheet, 2009, Juli Oliver von Ledebur 19

20 All new after the crisis? US$ US$ ct. per pound of sugar Sugar (free market) US$ ct. per pound Wheat US$/t Corn US$/t Crude oil US$/barrel M1 1982M1 1984M1 1986M1 1988M1 1990M1 1992M1 1994M1 1996M1 1998M1 2000M1 2002M1 2004M1 2006M1 2008M1 Quelle: IMF, WB-Pink-Sheet, 2009, Juli Oliver von Ledebur 20

21 Thanks for your attention! Dr. Ernst-Oliver von Ledebur Institut for Market Analysis and Agricultural Trade Policy Bundesallee Braunschweig Tel.: +49 / 531 / Mail: oliver.ledebur@vti.bund.de Internet: Oliver von Ledebur 21

22 Vielen Dank für Ihre Aufmerksamkeit! vti, Bundesallee 50, Braunschweig, Tel.: , Fax: , Oliver von Ledebur 22

23 Global Situation on the Corn Market 2009/10 Quelle: GMR-390 IGC, mai/juni 2009 Oliver von Ledebur 23

24 Developments on the Corn Market % Lagerb. Als % des Verbr. US No.2, Yellow, U.S. Gulf 250 US$/t FAL-MA, FAPRI, USDA (2009) Oliver von Ledebur 24

25 Remaining issues Oliver von Ledebur 25

26 Oliver von Ledebur 26

27 All new after the crisis? ct/ bu Mais/ Weizen/ Soja (Futures), Wochenpreise Corn Soybeans Wheat Quelle: CRB, Reuters Oliver von Ledebur 27

28 Situation an den Pflanzenölm lmärkten t Ölimporte nach Verwendung ZMP Sojaöl Non-Food Sojaöl Food Rapsöl Non-Food Rapsöl Food Palmöl Non-Food 500 Palmöl Food s Oliver von Ledebur 28

29 Oliver von Ledebur 29

30 World Production (Million tonnes, 2005) Raw Material FOSSIL RENEWABLES Fuel Fuel Raw Material Petroleum MT (184,9 BGJ) Gasoline MT (53,8 BGJ) Diesel * MT (46,1 BGJ) LPG 391 MT (11,9 BGJ) Kerosene 92 MT (3,9 BGJ) Ethanol 36 MT (0,96 BGJ) Biodiesel 3,2 MT (0,12 BGJ) Total (Energy Equiv.)** = 115,7 BGJ 1,1 BGJ Renewables / Total: 0,9 % Notes: 2003 for palm, gasoline, Diesel, LPG and Kerosene. * Distillate Diesel. LPG: Liquefied petroleum gases. ** BGJ = Billions of Giga Joules. Sources: Based on ICONE, FAO, Oil World, F.O. Licht, LCM, EIA.. Corn 702 MT Soy 214 MT Sugar Cane MT Wheat 628 MT Rapeseed 47 MT Sunflower Palm 31 MT 8 MT Castor Seed 1,4 MT Oliver von Ledebur 30