The Forest Biorefinery
By Pulp & Paper Canada
There is little argument over whether the Canadian pulp and paper industry is in crisis. The Canadian pulp and paper industry strategy in recent years might be characterized as being proactive; cen...
By Pulp & Paper Canada
There is little argument over whether the Canadian pulp and paper industry is in crisis. The Canadian pulp and paper industry strategy in recent years might be characterized as being proactive; centred on company mergers and continuous belt tightening. Merger activity has undoubtedly been critical, and further mergers and acquisitions are a must. But today, it is clear that this strategy alone is not enough.
Recent mill closures are permanently removing production and creating price optimism for the near-term, but this too is not a sustainable solution for the cyclical and increasingly global pulp and paper industry. Some may argue that the Canadian industry has done too much of a good job at tightening its belt, and has not accounted for the reduced return on this strategy over the longer term. Our industry has developed a deep-rooted culture that rewards new cut-and-slash strategies, perhaps to the point where we are throwing-out the proverbial ‘baby with the bathwater.’
Can we change this culture? The North American pulp and paper industry leadership today is rewarded for cost-cutting and responding to the short-term needs of the stock market, however is it possible that tomorrow’s leadership may instead be rewarded for having taken substantial investment risk, and having succeeded? This remains to be seen, but certainly if necessity is the mother of invention, then the pulp and paper industry is ready for big change. At the end of the day, the pulp and paper industry must take care of its own future.
In the days leading up to this year’s PaperWeek Conference, the Montreal Gazette (February 4, 2006), featured an article on the front page of the business section highlighting mill closures, and noting that all of Canada’s pulp and paper companies reported losses in the 4th quarter of 2005. Recently retired Tembec CEO Frank Dottori was quoted in the article as saying, “In my view, it’s almost too late” for the Canadian pulp and paper industry to save itself. In the same article, FPAC President Avrim Lazar talked about “transformative changes” being needed; the risk adverse incremental change culture that is the norm of our industry is no longer adequate. Real options for transformative change are not obvious, and they require the courage necessary to take short-term action for long-term objectives. Can leading pulp and paper companies stake their future on initiatives like the forest biorefinery, for example, by forming industry consortia for its fast-track development, or merging with petrochemical and other energy companies? Can our centre of excellence for research in Canada, Paprican, effectively re-focus talented individuals to biorefinery development — not nominally, but through cooperative fast track research and development involving other industry sectors? The answers aren’t obvious; however, to be successful, past paradigms won’t count for much.
In the January 27, 2006 Science Magazine, Art Ragauskas and his colleagues at Georgia Institute of Technology stated that “in essence, the modern biorefinery parallels the petroleum refinery: an abundant raw material consisting primarily of renewable polysaccharides and lignin enters the biorefinery and, through an array of processes, is fractionated and converted into an array of products including transportation fuels, co-products, and direct energy.”
However, while there are similarities between the biorefinery and the petroleum refinery, there are also important differences. For example, there is more oxygen present in bio-based chemicals which leads to opportunities for easier production of certain organic products. Separations will be as critical for the biorefinery as they are for the petroleum refinery, however since bio-based chemicals are less volatile, it is likely that distillation will be replaced by solvent-based extraction. Ragauskas et al describe how “advances in genetics, biotechnology, process chemistry and engineering are leading to a new manufacturing concept” for converting renewable biomass into valuable fuels and organic chemicals, which is being termed the “forest biorefinery.” Developing the forest biorefinery will require bold research on a fast-track to reduce and eliminate the risks associated with the biorefinery, and enable its full-scale implementation.
The first PAPTAC conference session on the forest biorefinery was held this year in Montreal (see Sidebar 1), and the room overflowed into the corridor. Presentations by SUNY-ESF’s Faculty of Paper Science & Engineering and the Department of Chemical & Biological Engineering at University of Maine at Orono described recently announced U.S.-based biorefinery initiatives. In particular, U.S.$20 million has been budgeted for the implementation of the biorefinery from sugar maple trees at International Paper’s mill in Ticonderoga, NY.
The NSERC Design Chair at cole Polytechnique proposed a systematic methodology for evaluating the “best” biorefinery technology pathway at a given mill through the analysis of markets, product design including supply chain analysis and life cycle assessment, and finally analysis of the emerging processes for manufacturing financially-attractive products.
A presentation by the Faculty of Forestry at the University of British Columbia discussed methods and research needs for producing value-added bioproducts as well as fuel and energy in the forest biorefinery.
The Centre for Biocomposites and Biomaterials Processing at the University of Toronto is seeking to develop the “Agro-Forest Biorefinery” and is focusing for example on the development of new structural materials which could replace glass-fibre reinforcement with natural fibres.
Finally, inspiration for biorefinery supporters was provided in a presentation by Tembec concerning the forest biorefinery which has operated for years at their Temiscaming mill: dissolving grade pulp for textiles and pharmaceuticals, extracted wood sugars to make food-grade ethanol, lignosulphonates mainly for the concrete industry and, most recently, the mill has begun to anaerobically treat its strong wastewaters for biogas energy. The session was a great primer on some of the technical and business issues surrounding the forest biorefinery and, appropriately, more questions were raised in the session than answers.
The Tembec Temiscaming experience offers insight into the complexity of making a range of biorefinery products. The customer base for their diverse products is established, Tembec understands the factors influencing production and selling prices, and they interact with an established supply chain for direct transport and established intermediaries. Finally, Tembec has analyzed and optimized its mill-based processes over many years to produce products and chemicals in a manner that responds to market needs. The Temiscaming biorefinery has the advantages of manufacturing diverse products; however, to be successful during these times of volatile pricing, one assumes that they must constantly analyze their production constraints and market complexities in order to remain profitable.
A given mill’s pathway to the biorefinery is far from obvious. The overall goal is clear: improve the bottom-line of each facility through a capital cost-effective program that systematically considers technology risk factors, and uncontrollable risk factors such as changing energy prices, feedstock prices and currencies. The competitive opportunity for the forest biorefinery is that the existing pulp and paper mill has organized the supply chain for receipt of biomass feedstock, so that the incremental financial and environmental costs can be quite attractive. The mill transforms the heterogeneous biomass feedstock into still complex, but more predictable, organic feedstocks for transformation into added-value products.
There is no silver bullet. A certain thing is that the optimum solution at one mill is not the best answer for the next mill. The mill strategy will depend on such factors as wood s
pecies, production levels, technology in place, and where the mill is located. The biorefinery pathway possibilities are large in number. Hemicellulose can be extracted from wood chips and converted through fermentation, enzymatic and chemical transformations. Heterogeneous feedstocks such as woodwaste can be gasified into synthesis gas and transformed into chemicals. Methanol or DME can be produced via synthesis gas from the gasification of black liquor, or via the Fischer Tropsch Process and otherwise, other fuel products can be made such as diesel, naphtha, and LPG. Each of these processes implies technology risks, for example, those related to materials of construction, limited process yields, gas cleaning, etc.
On the product side, a company might employ a strategy to enter into the supply chain for fast-growing commodity organic chemicals, might pursue a strategy to joint venture with a specialty chemicals company and supply a local and mature supply chain, or might elect to produce a new fibre reinforced “green” plastic whose market has yet to be developed. Otherwise, products can be made and sold directly within the industry, such as resins or dry strength agents. What is the best path to take? Many paths are less than optimum, and could have dire financial consequences if pursued. Examples of some of the critical questions that are essential for mills to ask in order to identify a successful biorefinery strategy are listed in the sidebar.
The challenge of identifying the right products to manufacture via the biorefinery will be central to success in defining strategy. Commodity industries such as pulp and paper are characterized by a low R&D intensity, and have transformed from process innovation research to enterprise efficiency research (achieved through analysis of the supply chain following the implementation of ERP systems such as SAP, Oracle, etc.). Investments in enterprise efficiency naturally “align” to existing products, and thus commodity industries, and especially those that are capital intensive, create inertia against a model of “punctuated equilibrium” (where punctual innovations result in new products which add significant value to company performance). This innovation challenge is obviously complex for industry sectors such as pulp and paper, which must respond to stock market metrics in the short term. However, it is clear that identifying the biorefinery pathway must begin by identifying a strategic product mix. Mills can implement novel processes, make high quality product on the first day of production — and still not make any money if the marketplace doesn’t co-operate. Having a secure supply chain and secure customers is critical. Increasingly in the chemical and petrochemical sectors, product design is the initial focus for identifying research and development priorities. Pulp and paper mills must seek to produce economically viable, environmentally-friendly products for which the market and supply chain are reasonably defined and secure, followed afterwards by process engineering.
Consideration and analysis of the so-called “carbon value chain” associated with the forest is critical. Based on business principals, an important characteristic of the forest biorefinery will be process flexibility and all that this implies, for example, with respect to process operation and labour. If the industry is to accept the challenge of manufacturing multiple products, it should be able to achieve targeted returns for the biorefinery under a range of volatile market and economic conditions. This will require flexible processes, so that mills can adjust how carbon is consumed to produce pulp and paper, bioenergy, green chemicals or structural material products. The concept of reduced carbon yield for pulp and paper production is contrary to the industry culture, but herein lies the hidden opportunity. At the same time, a given mill may manufacture products that are global (pulp and paper), regional (green power) and local (specialty products) — thus providing an added robustness for maintaining attractive margins.
An objective methodology is needed to evaluate biorefinery options for producing added-value products while preserving the value of the existing processes. Developing a systematic algorithm for analyzing mill biorefinery opportunities is the focus of the NSERC Design Chair at cole Polytechnique. They develop validated process and cost accounting models for case study facilities. Process simulation is used to estimate biorefinery quantities for use in market and supply chain analyses. The simulation can be further used to explore mill-wide optimization, and process flexibility. Energy efficiency analysis techniques (such as thermal pinch) are used to explore the potential for minimizing energy use, thereby maximizing carbon availability to produce biorefinery products. Product analysis tools such as supply chain management (SCM) and life cycle assessment (LCA) are used to explore financial and environmental performance of product mixes. Multi-criteria decision-making (MCDM) methods are employed to systematically raise awareness of decision-makers to the key analysis outcomes, followed by a mathematical weighting of stakeholder values for decision-making.
The groundwork is thus laid. Perhaps the biorefinery offers a once-in-a-lifetime opportunity for the forest industry to prosper as a consequence of increased prices for fossil fuels, a premium for green fuels and chemicals, and all that the Kyoto Protocol might or might not imply. Companies must have the courage to invest now, or miss the opportunity. Companies that succeed in implementing the biorefinery will question existing business paradigms every step of the way, preserve existing pulp and paper markets while they develop new ones, identify mill-specific strategies for incremental implementation of the biorefinery, and accrue “quick wins.” These companies will likely begin with a product-driven strategy, will make strategic alliances with companies in other sectors, and will stay away from “innovation-driven” agendas by technology-developers. The Canadian Forest Innovation Council (CFIC) is taking important steps by having recently commissioned four “White Papers” on transformative technologies: biochemical products, bioenergy products, pulp and paper products, and wood products. This has been a critical initiative that, we all hope, may lead to concrete investment into transformative change for our industry. [see page 17]
Implementation of the forest biorefinery implies significant risk, and during a period when the pulp and paper industry is going through difficult economic times. Can our industry leadership identify how to mitigate this risk, and convince shareholders and private company stakeholders that this is the best route to take for future value? The data and techniques exist today for reasonably accurate technical and economic risk analyses to be made — let’s get going.
Open Session on the Forest Biorefinery
Held in February 2006 During Paperweek International in Montreal
Session Co-Chairs : Paul Stuart (cole Polytechnique) and Philippe Navarri (Natural Resources Canada CETC-Varennes)
The Biorefinery in New York – Enhancing the speed to application
Thomas Amidon, State University of New York (SUNY)
Converting a Kraft Pulp Mill Into an Integrated Forest Products Biorefinery
Adriaan van Heiningen, University of Maine
The Canadian Forest Biorefinery
Ulrika Wising and Paul Stuart, cole Polytechnique
The Potential of Bioconversion to Produce Fuels and Chemicals
Jack Saddler and Warren Mabee, University of British Columbia
Biorefinery: Opportunities and Barriers for Petrochemical Industries
Mohini Sain and Muhammad Pervaiz, University of Toronto
Bioenergy and Bioproducts at Tembec: Synergies in Integrated Processing of Biomaterials
Leon Magdzinski, Tembec Inc.
How to implement the forest biorefinery at your mill: The answer is not obvious
Investing in the forest biorefinery implies investment and risk-taking. How can companies stay in business while moving forward with the development of biorefinery technologies, when the short-term bottom-line implies a survival mode for continued operation? Stalemate? A sound business plan is needed for presentation to the investment community, justifying the capital employed as well as a systematic risk assessment to ensure that the existing production facility and customers are not compromised. The following are some of the design criteria and questions that need to be addressed before establishing which biorefinery path a mill should follow.
* The analysis for a given mill must begin with reconciled process and cost accounting data for the existing facility.
* What might be produced at the mill in addition to pulp and paper products, e.g. heat, power, ethanol, methanol, diesel, methane, hydrogen bio-oil, and a range of other downstream products?
* Consider the long-term perspective, and all product options including emerging product needs and commodity products.
* Is there a known customer base and an attractive price for the new products over the long-term?
* How big is the product marketplace currently, and its predicted growth?
* Who are the competitors and what are their production costs?
* Can the new products feed a mature supply chain, likely in collaboration with a company already supplying similar or competitive products?
* Establish a biorefinery strategy through the incremental implementation of new processes, allowing for the time needed to establish quality customers and maintain a positive cash flow.
* Do not compromise the existing pulp and paper mill processes and product quality as the biorefinery is implemented, nor the customers and markets. Identify improvements to the existing processes at the same time as evolving into the biorefinery, e.g. optimize process energy efficiency to maximize carbon availability for the biorefinery.
* Consider the “new paradigm” of energy and furnish costs and their uncertainty.
* Incorporate flexibility into the process units to produce different carbon-based products that maximize profitability under a given set of market conditions.
* What are the lead candidate biorefinery technologies being developed by the marketplace, and what are the technical risks implied by their implementation? Favour processes that imply minimum new risk, e.g. wood gasification has been proven at scales of 100+ MW.
* Consider technology synergies through industrial ecology, i.e. neighbouring production facilities, agricultural wastes in rural areas, MSW municipal solid waste in urban areas.
Once attractive product and process strategies have been established, we must ask the difficult business questions. Will petrochemical companies allow pulp and paper companies to enter in their markets, or resist joint ventures and systematically insist on controlling their supply chains? What is the viable business case that must be presented to shareholders such that they see value in biorefinery investment in a company? It is quite possible that the first companies to enter into joint ventures with others in different product sectors will be the ones who succeed to a far greater extent than those who follow with other strategies.