Latest Entries »

Singapore has a population of some 180,000 diesel powered Taxis, Buses and Trucks, which are consuming some 18,700 barrels of diesel per day. Singapore also produces some 3.3 million tons of organic waste per year suitable for biofuel production. With second generation biofuel technologies this waste can be turned into enough renewable-diesel to power all Taxis, Buses and Trucks in Singapore. The efficiency of the conversion process will enable a pump price below S$1.20 per liter. The opportunity is there, will we be able to pool the required resources together and make this possible?

Singapore’s Diesel Consumption

Singapore is a country with very high per capita consumption of oil, especially diesel fuel, where most of this diesel is used in the shipping and aviation industry. In this article we only cover the diesel consumption related to the domestic road transportation in Singapore.

According to data available from LTA, Singapore had 178,068 diesel powered Cars, Taxis, Buses and Trucks, and on average these vehicles consumed an estimated 18,676 barrels of diesel per day in 2009. According to data from NEA, Singapore produced some 3,356,540 of organic waste in the form of Food waste, Horticultural Waste, Cardboard paper, etc.

With second generation waste-to-fuel technology, which is available today, the 3.3 million tons of organic waste can be converted to more than 22,000 barrels of Renewable Diesel per day in an economically viable and sustainable way.

Cost of feedstock is key

The failure of the deployment of first generation biofuel in Southeast Asia was mostly to blame on the cost of the feedstock. Crude palm oil prices went up and down with the price of petroleum leaving little or none margin left for producers.

The same principle will of course apply for second generation biofuels – feedstock is the key. The big difference with second generation biofuels is that we will be able to convert waste into valuable fuel which is free or sometimes even paid for.

Implementation Scenario

This is where Singapore will play a crucial role in the implementation of second generation biofuels in Southeast Asia.

First of all technology companies will choose Singapore for its strong IP protection and enforcement schemes. Secondly they will choose Singapore for its well functioning waste management infrastructure.

In Singapore you get paid to take the waste, the revenues from the ‘tipping fees’ will fully offset the higher investment costs associated with second generation biofuels and make a good margin of the fuel.

So deployment second generation biofuels technologies will be trough major cities in Southeast Asia and then spreading into the Palm, Rice and Sugarcane industries where agricultural waste will be turned into fuel.

This is when energy crop plantations will fully take off and it will be important to do this in an sustainable and environmentally friendly way, putting pressure on governments to deliver a clear and consistent legal framework.

Fuel compatibility

Another issue to highlight about the second generation biofuels is also the fact that the fuel produced is 100% compatible with all cars on the streets. Instead of producing ethanol from sugar-based feedstock, the end product is Butanol and from oil-based feedstock Renewable diesel is produced instead of Biodiesel.

Both Butanol and Renewable diesel can substitute crude oil based petrol and diesel without modifications to distribution infrastructure or to the existing car population.

Waste to Fuel is the Future

That municipal solid waste is the way of the future was highlighted this past week with British Airways announcement that it is partnering with U.S.-based Solena Group to build the first European commercial plant that will produce jet fuel from municipal solid waste streams like food scraps, grass, and tree cuttings, as well as agricultural and industrial waste.

What is striking about the BA announcement is the size of the proposed plant, Solena will annually convert 500,000 tons of waste into 16 million gallons of jet biofuels.

Singapore could potentially supply 10-15% of the daily jet fuel needs in Changi, from waste, but then of course there would not be enough fuel left for all the taxis, busses and trucks.

_______________

Per Dahlen is Partner with Portelet Asia Pte. Ltd., Singapore, responsible for the Portelet Cleantech Initiative. Reach him at p.dahlen@portelet.com or +65-8223.5356

Saudi Arabia is the largest crude oil producer in the world and produces some 11 million barrels per day. Southeast Asia has the potential of producing 14 million barrels per day of renewable biofuels in an environmentally and socially responsible manner. The opportunity is there, will we be able to pool the required resources together and make this possible?

Southeast Asia Oil Consumption

Southeast Asia was a net oil exporting region until 1993 but today it is importing some 37% of its oil requirements. The projections for 2020 are that the region will need to import over 50% of its oil requirements at a tune of 2.7 million barrels per day.

Located in the tropics with abundance of available land, water and cheap labor it should be feasible to turn this region into a biofuel producing power house.

To explore the full potential biofuels we must first take a look at the underlying market forces, the price of crude oil, the environmental and sustainability issues and the availability of second generation energy crops and conversion technologies.

Crude Oil Developments

The price of crude oil has been on a steady increase of 15.6% on average over the past 10 years. We have had extreme fluctuations from US$145 down to US$30, but, on average prices have increased steadily.

As a matter a fact since the crude oil price broke the US$50/bbl in July of 2005 the price has remained over US$50/bbl, 89% of the time. The average price of oil has for the past 4.5 years been US$69.7 per barrel of oil. It is our view that these prices will continue to increase but not at the pace as experienced over the past decade.

It is realistic to assume that the price of oil will oscillate between US$60-US$80 with the average dip and high, but it is our firm beliefs that crude oil price will not pass below US$65/bbl on average.

Our projections are that we are going to move from an average price per barrel of oil of US$65 per barrel in 2009 toward US$80-US$90 per barrel by 2020.

Environmental and Sustainability Issues

The US and Europe will continue to set tighter rules and regulations with regards to imported biofuels. We already see momentum with regards to RFS-2 (US) and the RED (EU), and this is likely to increase in the future.

Environmental organizations like Greenpeace already prove its power by forcing Unilever to cancel annual contracts with un-sustainable Palm manufacturers by the end of 2009.

This trend is going to increase when the end-consumer can make informed choices between a sustainable and a less sustainable product or service. According to Procter & Gamble some 70% of the American consumers will choose a ‘more environmentally friendly’ product with the same performance.

So if Southeast Asian producers of commodity food and fuel are going to be able to sell its products in EU and in the US, they will have to become more sustainable.

To quote Ricardo Lagos the UN Special Envoy on Climate Change:

‘There will be green trade barriers. So developing countries which want to sell their produce to the developed world need to demonstrate they have taken measures to avoid that their production increases pollution’.

The Advancements of Biotechnology

Technologies used for the production of renewable fuel and electricity, are really nothing new. We are deploying technologies that are 50, 100 and sometimes several thousand years old. So, what did change?

The answer lies in the tremendous developments we have had over the past 5-10 years in Biotechechnology. Finally the existing biofuel technologies can be deployed in an economically and environmentally friendly manner.

We are now able to engineer microbes to effectively break-down different types of biomass into useful products like biofuels, bio-chemicals and bio-plastics.

Though genetically modified organisms are a source of controversy, deploying it in an industrial environment, rather than on food, is more accepted and almost all countries in the region allow the use of GMO, and are actively deploying biotechnology.

2nd generation technology is ready

In 2009 we saw the first commercial deployments of 2nd generation biofuel technologies from companies like Ibicon and Verenium, to name a few. By the end of 2011 the total installed capacity capable of converting biomass into biofuels is expected to be in excess of 30M tons per year. This is to compare with total biofuel production in Southeast Asia of 2M tons in 2008.

With the use of ‘free’ biomass in terms of biomass waste, these technologies will be able to produce biofuels at a cost of US$50 per barrel and with dedicated energy crops at about US$70 per barrel.

Currently biodiesel is being sold above US$100 per barrel, second generation biofuels is also expected to commence a premium over petroleum equivalent fuels. With such economics coupled with investment levels of less than US$75,000 per barrel per year capacity, an investment will have a payback time of less than 3 years.

Biomass Waste in Southeast Asia

The Palm, Sugar cane and Rice industries together represents 75% of the total agricultural output of Southeast Asia. To date only 25-30% of the harvested biomass ends up as an end-product, the remaining parts are discarded in the field or at the processing plants.

Biomass left in the fields is normally burnt and in the processing facilities the biomass is only partially used to generate processing steam and electricity at rather low efficiency rates. The opportunity for economically viable and sustainable biofuel production is obvious.

Judging from the currently best estimates with regards to operating costs and capital requirements, this is an untapped gold mine. A 100,000 tons per year processing plant should cost in the neighborhood of US$120-150M to set-up, and with an estimated operating cost of US$50-70/bbl including feedstock costs, we are looking at payback time of three to four years at current crude oil prices.

Dedicated Energy Crops

Additionally to being abundant in biomass waste, the Southeast Asia is the ideal region for biomass cultivation.

Today biomass yields for Cassava and Sweet Sorghum in excess of 75 tons per hectare, in some cases even 120-150 tons per hectare. The main secret to achieving these high yields is the deployment of modern agricultural technologies, with the use of biotechnology over the next decade we could see yields in excess of 200 tons per hectare.

Second generation conversion technologies are able to convert one ton of biomass into more than 300Kg of biofuels. So a combination of high yielding biomass crop (+100 tons per hectare per year) and effective conversion technologies (+300Kg fuel per ton biomass) we are able to ‘harvest’ 30 tons biofuel per hectare per year in Southeast Asia today, increasing to over 50 tons over the next decades.

Let us put this in context with current first generation technologies. Palm is able to produce, on average 4 tons oil per hectare per year and Jatropha, at best, 2.5 tons oil per hectare per year. With first generation technologies this would yield 2.25-3.6 tons of biofuels per hectare per year.

Putting all this data together we seen that Southeast Asia requires some 2.7Mbpd, or 135 million tons per year to eliminate oil imports and to increase energy security. With second generation biofuels crops and technologies we would only need 4.5 million hectares of land for full oil independence.

According to WWF and Food and Agriculture Organization of the United Nations, Southeast Asia has an estimated 17.5 million hectares of additional land available for energy crops and food production. Using only 25% of this additional land Southeast Asia can become oil independent and the total arable land occupied for energy production would be about 5%.

If all potential land were to be used and all biomass waste utilized for biofuel production, Southeast Asia would be able to produce in access of 14 million barrels per day, making it the largest ‘oil’ producer in the world.

Food, Fuel and Employment

So what are the impacts of ramping-up energy crop production in Southeast Asia? We need 4.5 million hectares for oil-independence and this should be compared to the additional land used for primary crop production which grew 18 million hectares between 1998 and 2008, an increase with 20% over ten years.

Cassava is ready for harvest within 8-9 months; sweet sorghum is harvested each 4 months so two, maybe even three harvests are possible each year.

With all these facts available there should be no questions about the viability of producing energy crops from more than 4.5 million hectares in Southeast Asia within a decade.

Biomass is the only renewable energy source able to produce fuel, but it is also the only source able to create massive employment opportunities, something desperately required in most countries in Southeast Asia. On average agriculture in Southeast Asia employs 1.25 farmers per hectare, compared to 0.01 farmers per hectare in the US.

4.5 million hectares could potentially employ 5-6 million people and at its fullest potential of 17.5 million hectares over 20 million people could be employed in energy farming.

We should easily be able to produce food and fuel and at the same time employ literally millions of people.

Financing and Government Support

As we have seen there are no barriers to increased employment and increased energy security for the region, nor are there any technical barriers or conflicts with land rights or competition with food resources.

No, the major barriers for large scale deployment of second generation biofuels in Southeast Asia will be the required capital for financing the deployment, estimated to US$200-300 billion dollars and the political will of the regional governments.

When the will is there, markets move. Let us use Sweden as an example. Back in 1981 Sweden used oil for 84% of its heating requirements, twenty years later the percentage was 7%. Today more than 30% of Sweden’s total energy requirement comes from biomass, more than hydro and nuclear put together.

We have all the required necessities to turn Southeast Asia a major biofuel producer in a sustainable way; will we be up to the task?

_______________

Per Dahlen is Partner with Portelet Asia Pte. Ltd., Singapore, responsible for the Portelet Cleantech Initiative. Reach him at p.dahlen@portelet.com or +65-8223.5356

Hi again,

I will be putting up two new blogs about the potential for Biofuels in Southeast Asia after this entry, but before doing so I would like to highlight that the content in the coming two blog-entries are, at best, theoretical, typical MBA products which any consultant can provide you.

I do not think anyone, including myself. believes that my projections will come true, hovever it is my hope that, both atricles will initiate a debate about the tremendous oppotrunities we have, if we play it right.

I hope you enjoy the stuff and I welcome comments.

Thanks,

Per Dahlen

Dear All,

This week I was reminded that I had written a blog-post about “Singapore is not ready”. This was due to a discussion I had with a girl from Denmark, who is here doing a research about the potential for Scandinavian Cleantech companies in Singapore and in Southeat Asia.

How much things can change in just 20 months in a typical Singaporean way. Once Singapore decides to move into a new area you can bet it is happening, and happening with lightning speed, at least compared to Europe.

Since then we have at least 30 different grant structures for Cleantech initiatives, we have a new Cleantech Park opening up in 2012 and we ourselves (Portelet)  have been approved by EDB, SEAS and Spring to run the first truly dedicated cleantech springboard/incubaror in Singapore.

No doubt in my mind we will see even greater efforts put in place to promote Singapore as the Ceantech Hub of Southeast Asia in the near future. We are leveraging the fact that we are one of the only obvious place in the world to do adoptation of proven cleantech for the tropics.

We already have NEC, Neste Oil, Vestas and soon EADS here, making big progress in (tropical) renewable energy. We are now moving into the SME-segment where most of the innovations and creativity recides for sustainable renewable energy solutions.

We welcome you all to explore the tremendous opportunities in this part of the world. We are ready, the region is ready, and ripe for a change.

Please call us on +65-8223.5356 or send a mail to me at p.dahlen@portelet.com and we will be happy to see how we can make your business grow in Southeast Asia, home of more then 500 million peoiple, all needing sustainable solutions.

10.Mar.2010

Per Dahlen

CNBC Asia – CNBC’s Cash Flow

Airtime: Thur. Feb. 25 2010 | 10:19 AM ET

Per Dahlen, partner at Portelet Asia discusses investment opportunities in biotechnology with CNBC’s Oriel Morrison.

Per Dahlen

Per Dahlen

There is a big growth opportunity for biomass in Southeast Asia, notes Per Dahlen, partner at Portelet Asia. He sheds more light on investing green, with CNBC’s Sri Jegarajah.

Per Dahlen

Per Dahlen

// Wed. Nov. 18 2009 | 09 08 00 ET

Per Dahlen, partner at Portelet Asia says the region has potential to produce much more green energy, and that Southeast Asia could someday be a net exporter of clean fuel. He talks to CNBC’s Martin Soong. (Link)

Per Dahlen

Per Dahlen

So we have a crisis, bith economical and environmental, well why not combine your efforts into one single solution – the bicycle wash machine!

Go on, get going build your own and get fit!

Go on, get going build your own and get fit!

When you come home after a tough day at work and you know you will need to do the washing and head to the gym, just jump on the enviromentally friendly washer, you will save on gym fees, laundry ditergents, water, electricity and you will make a good deed for mother earth.

Estimated ROI should be a couple of hundered percents, even better if you have an old bike which you have not used in the past years, with a little bit of handyman work (TJ, Greg?) you are up and running in a day.

And do remember you get fit at the same time you save money and the environment. Bish, Boom, Bang – and you are the hero at home, Mama will love you.

I call for action right now, take your responsability – biuld a bike-washer today!

Full story here form MIT.

:) Per

Eugene wrote a great article about the current status in Singapore with regards to its readiness for Renewable Energy. I was thinking of writing a something similar after having attended the same meeting, but I decided it would better to just add a comment to Eugene’s article. :)

Per

The price of oil is for me a very fascinating topic as you can see from my previous postings, here and here. Yesterday the price reached another high, passing $145 per barrel, and where every you look you read stories about how it will continue. In today’s Business Times (Singapore) there is a story about some investors buying futures for oil at $300 by December this year, that is 2008!

So is this a bubble or is it here to stay? Well looking at the steep increase recorded in  the past 18-24 months, everything points to a bubble ready to burst. However the more I read about this I do believe that we are actually seeing the market forces playing out, it is a simple question about supply meeting demand.

Goldman Sachs, which I do believe knows what they are talking about, they were among the few to recognise and act on the recent Credit Crunch, they just released a report claiming that the current raise in oil prices are not due to speculation, it is a result of too much demand and too little supply.

Supply of Oil

Supply has been flat since 2003, that is 5 years ago, at around 85 million barrels per day. I recommend you to read this very interesting story from National Geographic. If true, which is very likely, then we have reached the end of cheap oil, anything from here will be more difficult and more expensive to extract, process and to distribute.

Scary actually, when it is time for Karl, our 2,5 years old son, to get his drivers licence the oil production may be half of what it is today. Just imagine the prices by then, maybe €1.000 to fill-up the tank? Not a fun prospect, especially taking into account that the demand is growing extremely fast, especially in this part of the world.

Demand for Oil

On the demand side there are two major drivers, India and China. In China they are adding 20.000 cars on the roads EACH DAY! India are launching Nano’s and other similar, small vehicles at an ever increasing rate. Now clearly these cars are much more fuel efficient that a gas-guzzling SUV’s in the US, but the sheer numbers is just mind boggling. The underlying reasons for this, is the economic growth of 8-10% per year, that brings more disposable income to the local population.

Today in China you have about 250 million middle class workers, and this will increase to 750 million in just 10-15 years. Imagine, that is adding the population of Europe being able to purchase a car, in China alone, then add India and the rest of Southeast Asia and we are facing a massive growth in the number of cars.

I do believe that this will be somewhat self regulating by the fact that the infrastructure just can not grow that fast. Roads, bridges and parking garages, can only be built at a certain pace, but the trend is irrevocable.

Implications

Setting aside the Climate Change issue, power generation for electricity will be OK for the next 50-80 years by the supply of Coal and Gas, just dig it up and burn it, to generate electricity and distribute through the grid. Fuel on the other hand is much more difficult and is the biggest worry for the future. If I were to bet on anything related to CleanTech and Green solutions, transportation sector must be the obvious choice.

In the next coming 5-10 years the cost of transportation will have paramount implications on how we live, work and play, due to the reliance of Oil as the only resource to power our cars, trucks, planes and ships. Currently about 60-65% of all oil is used for transportation and when demand continues to increase and supply is limited, alternatives to this dependence is required now.

Future scenarios

Looking into the future of energy supply and demand for the transportation sector, what will be the evolution? I normally use a very simple model when dealing with Cleantech related business opportunities:

  1. What can we reduce?
  2. How can we make things more effective?
  3. What alternatives to clean fossil fuel are there?
  4. Renewable energy alternatives?

Let us review the future using this simple model.

What can we reduce?

Well it is simple really – Drive less. And we will do. We are going to travel less and making more intelligent choices when travelling. We are already seeing changes in behaviours. For example schools in the US has already been reported to go to 4 days in school and one day of home studies.  I live in Changi, a remote location in Singapore, and we see a drastic drop in people coming out here to eat, despite the reputation for some of the best food in Singapore.

We will also see less travel to work, working from home is a trend that will increase over the next few years and video conferencing and Skyping will be even more important. Vacations will probably also be effected, we will travel less and we will travel shorter distances in the future. Distribution and logistics will become a more important cost factor for products and locally produced products will be more competitive, hence reducing the demand for logistics transportation.

To sum it up high oil prices will reduce the demand for transportation. The businesses to be in is Communications, SOHO equipment and services and local tourism. However we will always need to move around.

More effective transportation

When we travel we will use more public transportations in the future. Buses, Trains and Metros will be more important and more and more people will use them. Cities and regions will increase spending on infrastructure and public transport will be easier, faster, more convenient and will reach longer distances that what it does today.

Making the cars and trucks more fuel efficient is something that the manufacturers has been doing for decades and not much will be happening here. What will happen, and what is happening, is that we will choose smaller and more fuel efficient cars. GM, Ford and Chrysler has seen dramatic drops in SUV sales and has announced the closure of several plants making big, fuel thirsty cars.

If you are to invest in something here, betting on car manufacturers of small cars (Tata, Smart, etc.) and public transportation infrastructure companies (ABB, Alstom, etc.) would be good bets.

Clean Fossil Fuel?

There are a lot of activity in using other fossil fuels for transportation instead of Oil and Petrol. CNG, compressed Natural Gas, is the clear alternative and is better then oil from a climate change perspective. Many countries, including Singapore, has started to promote the conversion and sale of CNG compatible cars. I do believe that we will see an increase in the use of CNG cars, if not just due to the cheaper price then petrol.

CNG still has one major obstacle and that is infrastructure, to build a network of Gas filling stations is a major undertaking and similar to the needs for Hydrogen to take off (more about Hydrogen later). As a owner of a CNG car you also have the inconvenience about having a big gas tank in your trunk.

Coal to gas is also being worked on, both converting coal to liquid fuel and to gas. Clearly an alternative looking into, in order to supply enough fuel, however it is not a long term viable proposal, in the end coal will also run out and prices will increase.

Short term business opportunities in businesses related to CNG, if there is a support from the different governments and industries. In the end though we will have to look for Renewable Energy alternatives.

Renewable Fuel Alternatives

There are three major alternatives and a host of variants to choose from. The major alternatives are BioFuel, Electricity and Hydrogen. This definition is chosen due to the use of engine, Biofuels uses the traditional internal combustion engine and the current fuel distribution infrastructure and be reused. Electric cars just need a plug into the wall to charge the batteries and an electric motor is powering the vehicle. Hydrogen cars are using a FuelCell as the power source.

BioFuels

Ethanol and BioDiesel are the two major potential fuels. Ethanol is derived from sugar based feedstock (Corn, Sugar, Wheat, etc.) that has been destilled to alcohol and to be used in petrol engines with a sparkplug. BioDiesel comes from oil-based feedstock(Rape seed, Palm, Algae, ect) and has been processed to be used in Diesel engines.

Current debate about Food-for-Fuel is a result of ineffective first generation technology for ethanol production and poor agricultural subsidies and political decisions. With improved technology and proper regulations and government, Biofuels are to play an important part in replacing Oil for transportation in the future. The biggest advantage for Ethanol and BioDiesel is the possibillity to blend it with fossil fuel in existing vehicles and distribution infrastructure.

Biogas is an alternative with potential, especially if CNG distribution networks and installed vehichle park increases. The use, and growth, of Biogas for transportation will be in direct relation to the use of CNG, Argentina, Sweden and maybe Singapore are potential markets.

Electric Cars

The electrical engine has an efficiency of close to 90% compared to the 35% efficiency of an internal combustion engine, making it a great propulsion solution. The problem with electrical cars is not in the engine, nor in the distribution of the power, the problem lies in Electrical Storage (batteries) and the source of the electricity.

If I take the electricity from the plug in the wall and the electricity is generated from a coal fired plant, then the net effect is very questionable, as well if the source is an HFO plant, Natural Gas plant or a Newclear plant. We would just be shifting the problem to another souce. If electrical cars are to have a real impact the electricity must also come from a renewable source.

Now thanks to the introduction of renewable alternatives to energy generation, electrical cars can be very interesting. PV, Photo Voltic solar panels is of course the best, and ideal solution for local electricity generation. Many may not know this, but today (2008) it is possible to drive 80 Km powered from 10 m2 of PV solar. When prices of electric cars and PV comes down we will see a lot of PV installed on-top of garages, especially in sunny regions like California, Spain and in the Middle East.

The biggest problem for electric cars is however the storage of the electricity, we need a small, fast loading and long lasting battery in the vehicles in order for electric cars to take off big time. A lot of money is going into this at the moment, recently a Dutch company announced a battery able to be charged in just 10 minutes for 80 Km of driving, pretty cool when this comes into production.

Hydrogen and Fuelcells

Hydrogen and Fuelcells has been mentioned as an alternative to petrol for decades and a lot of money has been spent on this, notably from companies like BMW. Infrastructure is however a major blocker for widespread acceptance, so is the generation of the Hydrogen. I do believe that we have niche applications for Hydrogen in Forklift trucks, Golf carts and Delivery trucks, however it will not be a mainstream solution for the majority of our transportation needs.

Conclusions

I do not believe that there is an Oil Bubble, we are just experience the natural market forces of supply and demand. There is just not enough oil around to power all the cars, busses, planes and ships out there. This will make the oil price continue to raise, how fast I leave to the investors and economists to work out, but we are experiencing a major shift in how we use oil and petrol.

The future may look very grim, especially since it is happening as fast as it is. On the other hand, and from the perspective that I choose, the future looks extremely bright. Never have we had such a huge business opportunity in world history, it is estimated that 45 trillion dollars (!) are to be spent to sort out Climate Change and dependence of Fossil Fuel over the next 20 years.

As Nicholas Parker, the Chairman of Cleantech.com told me, “While our past generations had to fight for independence, or to fight fashism, the only thing we have to do is to be smart and bring in the money”. :)

I guess this article raises more questions than answers, however it is a great framework to use for the continued effort in finding the best business opportunities related to the Cleantech revolution.

See you soon again….

Per

Follow

Get every new post delivered to your Inbox.