Resource study: Recovered vegetable oil and Animal fats in Ireland Project summary

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Resource studyRecovered vegetable oil and
Animal fats in IrelandProject summary
Simon Dick Glasnevin 30 March 2004
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With 20 minutes to cover a lot of ground, this
session is necessarily brief and to the point

• 2 minute background
• Clearpower
• RVO and Tallow resource study
• Taking 5 minutes for each of the two resources
  analysed, we will cover
• What we said we were going to do
• What we did
• What we found
• So what does this mean in the context of biofuel
  potential?
• Following this, we will open up to the floor for
  8 minutes of questions and discussion

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Clearpower is a leading integrated wood energy
and biomass research company

• Energy Crops
• Clearpower Energy Crop Scheme first and largest
  in Ireland
• Proven high yields of woodchip from short
  rotation willow
• Effectively using the plantations in an
  EPA/Council licenced licenced manner for
  effective treatment of liquid wastes and sludges
• Renewable fuels
• Wood chip and sawdust trading
• Wood pellet production
• Sustainable Energy Services
• Design, build, operate and finance wood heating
  and CHP installations
• Client focused project development and research
  services
• Pioneers in Biomass and renewable energy research
  in Ireland with 12 years experience, deep
  analysis and multinational project management
  experience

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For the RVO/Tallow project we ran an intensive 10
week programme, with two parallel workstreams
WHAT WE SAID WE WERE GOING TO DO
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Our RVO workplan tackled the Island of Ireland,
under five main headings
WHAT WE DID - RVO

• Supply?
• Bottom up
• Interviewed major snack food companies (4),
  restaurant chains (8) and catering companies (3)
  to understand supply factors
• Top down
• Analysed CSO stats for overall vegetable oil
  imports, and volume going in to the catering
  industry
• Analysed overall restaurant numbers and
  geographical distribution
• Collection?
• Designed detailed focus interview, and completed
  10 interviews with key collectors/aggregators
• Built up detailed understanding of players,
  volumes, economics and regulatory pressures
• Markets?
• Interviewed end users in the feed (5) and
  emerging biodiesel industries (4)
• Surplus?
• Built up a detailed excel model to evaluate
  current and future surplus up to 2020

While outside of scope, we also included
recommendations on the potential for RVO to be
used as a fuel.
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The RVO resource is growing gradually
WHAT WE FOUND - RVO

• Waste supply rising gradually in line with
  population and economic growth, centred on urban
  areas
• Approx 50 collected, could realistically rise to
  68 as more pressure comes on producers from
  Local Authorities. Very price sensitive.
• Collection made up of a network of players, with
  four major aggregators/cleaners
• gt90 RVO still going to animal feed in Ireland
  and UK, but following ban in Nov 2004 the
  resource will all be exported for fuel production
  unless local markets can be found

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For the tallow research, the workplan focused on
4 major areas, and was confined to RoI
production
WHAT WE DID - TALLOW

• Supply?
• Completed detailed focus interview with owners
  and management teams in each of the eight
  rendering plants
• Met industry representatives from IBEC and
  Rendering Association
• Completed interviews with sample meat processing
  plants
• Markets?
• Analysed current markets for different categories
  of tallow
• Interviewed 10 end users in the feed industry
• Understood trends and likely market impacts of
  price/regulatory changes
• Regulations?
• Built clear understanding of regulatory pressures
  and potential regulatory changes for different
  categories of tallow
• Surplus?
• Assessed current/future potential surplus for
  different categories, and under different
  potential regulatory conditions

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The tallow production is falling gradually, in a
highly regulated market
WHAT WE FOUND - TALLOW

• Tallow production at the eight rendering plants
  will fall slowly in line with predicted fall in
  national herd
• Large volumes already profitably used as a fuel
  within the plants, changeover since 1999
  triggered by regulatory pressures
• Currently no surplus tallow produced, and fuel
  use will not compete with existing markets for
  high-grade non risk tallow. However, 22,000
  tonnes of low-grade, non-risk tallow could be
  diverted for biofuel use
• Changing regulatory environment makes forward
  planning difficult

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In terms of biofuel use for the surplus RVO and
tallow resource, there are three options
SO WHAT DOES THIS MEAN?

• Heating
• Opportuntiy to replace 35cents per litre
  delivered light heating oil
• Economics of necessary cleaning plant are volume
  dependent
• Refit on boilers relatively straightforward, as
  proven in tallow/rendering industry.
• Public perception on tallow buring needs to be
  handled carefully
• Transport
• Biodiesel is attractive given EU Liquid Biofuels
  Directive and emerging biodiesel standards.
  Economics however are volume dependent
• Vegetable oil alone for transport is perceived as
  a cottage industry, engine manufacturers slow to
  provide warranties
• Blends with fossil diesel likely option to hit EU
  targets, or secure tied fleets with 100
  biodiesel.
• Requires a 30 cent reduction in duty per litre in
  Ireland, or RVO/Tallow resource will be exported
• Power production
• Fast rpm engines burn out. Large, slow rpm
  engines now being proven in Germany
• Tallow and RVO targetted for power production in
  UK where ROCS and PPA make it potentially feasible

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Summary

• The 14,500 tonne RVO collected in the island of
  Ireland has good immediate potential for use as a
  renewable fuel
• Price point competitive compared to fossil fuels
  or fresh vegetable oil
• Volume is predictable and likely to increase
  slightly
• Volume controlled by small number of major
  collectors
• Much of this volume will go to energy market in
  UK if nothing happens here
• Regulatory change in Nov 2004
• 22,000 tonnes of non-risk, low-grade ROI tallow
  could be diverted from its current use, although
  the rendering industry as a whole has a less
  predictable future
• Volume and markets are predictable and controlled
  by small number of players
• However investors may not be comfortable
  financing significant tallow only RE projects,
  given flux in regulatory environment
• Thankyou for your time.