Palm Kernel Shell (PKS) Exporter Company and Developing Wood Pellet Production Business

PKS loading for export

The decarbonization trend that continues to increase along with the increasing demand for biomass fuel has made a number of palm kernel shell (PKS) exporting companies plan to expand their business into wood pellet production. Established palm kernel shell exporters usually have sales contracts with overseas buyers, which can be short-term or long-term contracts. This palm kernel shell exporters only collect palm kernel shells from a number of palm oil mills/CPO factories, then cleans them and simply dries them before they are ready to be shipped. Indeed, there are also a number of overseas buyers of palm kernel shells which do not need cleaning and drying so the price is also cheaper. Cleaning palm kernel shells usually uses a sieve (screening) machine, either a vibrating screen or a rotary screen, for more details, you can read here. Meanwhile, for drying, it is usually only aired by occasionally turning over the pile of palm kernel shells with an excavator.

Palm kernel shells and wood pellets are two popular biomass fuels in the global biomass fuel market. Palm kernel shells are the main competitor of wood pellet products because they have almost the same properties such as calorific value, ash content, size and so on, but palm kernel shells are usually cheaper because they are a by-product or waste from palm oil mills and only require a simple process to produce then exported. Meanwhile, wood pellets, although the raw material can come from woodworking industry waste or sawmills, require a more complex production process and investment in the equipment required. 

Typical Circulating Fluidized Bed (CFB) power plant in Japan

Palm kernel shells and wood pellets are mostly used as fuel for power plants abroad such as Japan and Korea. Wood pellets can be used in almost all coal power plants by cofiring, while palm kernel shells are more limited. This is mainly because crushing palm kernel shells and mixing them with coal powder (cofiring) in pulverized combustion is more difficult. Palm kernel shells can be used 100% in power plants with fluidized bed or stoker technology. And currently quite a lot of power plants in Japan use fluidized bed technology.

And because they are in the same market, palm kernel shell exporters are also very likely to know the need for wood pellets. Buyers of palm kernel shells abroad are usually also buyers of wood pellets too. The practice of collecting palm kernel shells from palm oil mills is almost the same activity as collecting wood waste from wood processing industries and sawmills, so it should not be difficult for exporters of palm kernel shells. But creating energy plantations as raw material for wood pellet production is the ideal solution. Collecting wood waste or collaborating with the wood industry that produces this waste is an intermediate solution and energy plantations are the ideal solution. Thus, it is very reasonable for palm kernel shell exporters to expand into the wood pellet production business.

Projections for Indonesia's Future Waste Management: Production of RDF and Biochar Enriched Compost

Photo taken from here

The MSW problem is a concern in a number of areas currently. This is because MSW, apart from being a serious environmental problem, also has an impact on social problems. The public is starting to become more aware of this MSW problem, especially for urban communities who no longer have land to pile up or burn their MSW and what's more, final disposal sites are no longer able to accommodate the MSW produced by these communities. Flooding, groundwater pollution, air pollution are some of these environmental problems which, if not addressed, will cause a number of serious environmental problems. Public awareness regarding waste should be getting better day by day, and various efforts should be made to overcome it.

One of the composting unit in Indonesia

Currently the central government and regional governments are working hard to overcome the waste problem namely this MSW. Despite hard efforts, generally only a small portion of the MSW can be handled and most of it is still accumulating and accumulating so that it continues to pile up. An example is the current MSW problem in Jakarta, the capital of Indonesia namely with an average daily waste volume of 7,500 tons/day, only around 1,000 tons per day can be processed. With the RDF production unit at Bantar Gebang TPST, with raw materials of 2,000 tons of waste per day originating from 1,000 tons of new MSW and 1,000 tons of old waste (landfill mining), approximately 700 tons/day of RDF is produced. So with only 1,000 tons/day of new waste that can be processed, that means only 13% of the total daily waste volume. Meanwhile, conditions in a number of regions in Indonesia are also almost the same.

 

Future MSW processing must be able to process the 100% of MSW or have zero waste. Apart from that, the MSW processing product must also have useful and economic value. One of them is large capacity RDF and compost production. Almost all organic waste can be composted, while non-organic waste, especially plastic, can be made into RDF. Other waste such as iron, glass, ceramics and metals are separated first so that it does not interfere with the RDF and compost production process. RDF is commonly used as an alternative fuel, especially in cement plants. However, with high chlorine content, the use of RDF in cement plants needs to be limited.

Sometimes the distance between RDF production and the cement plant makes transportation costs expensive and RDF products become uncompetitive. This means that RDF needs to be compressed into RDF pellets. By increasing the density of RDF into pellets, apart from saving transportation costs, it will also make handling, storage and use easier. Meanwhile, biochar can be added to compost to improve its quality. Biochar is added during the composting process and later there will be more nutrients contained in the compost. Biochar with its micro pores will be used as a place to store these nutrients. Apart from that, biochar is used as a carbon sink / carbon sequestration and can survive in the soil for hundreds or even thousands of years. This also has the potential to provide additional income from carbon credits. Biochar production by pyrolysis will also produce heat energy which can be used for drying waste in RDF production and pyrolysis of organic materials.

Decarbonization in the Steel Industry

World steel production reached 1.9 billion tons in 2020, with China accounting for around half and followed by European Union countries. Germany, with annual production of around 42 million tonnes, is the largest steel producer in Europe or around a quarter of European steel production, while the other quarter is Italy and France, followed by Belgium, Poland and Spain. The steel industry contributes 8% of CO2 globally, each ton of steel production produces an average of 1.85 tons of CO2 emissions and compared to iron ore mining, iron and steel production contributes much more to CO2 emissions. Efforts to decarbonize the steel industry begin with the use of renewable energy for its smelters. Biomass-based fuel in the form of charcoal which has a high carbon value can replace the use of coke derived from coal. And the use of hydrogen from renewable energy sources is the ultimate target for decarbonization in the steel industry. 

Currently, the steel industry mostly uses coal as fuel using blast furnaces. To reduce carbon intensity, natural gas is used as fuel. The use of gas fuel in the form of natural gas is also a transition medium and basically because it comes from fossil fuels it is also a carbon positive fuel. Apart from that, the use of CNG in the form of natural gas is also a transition fuel before switching to hydrogen from renewable energy. The use of biomass-based carbon fuel in the form of charcoal has a better effect on the climate because it is a carbon neutral fuel. Apart from that, technically, because it is a solid fuel, the same as coal, practically there is not much or even no need for changes or modifications to the smelting furnace. The availability of high quality charcoal, large volumes and continuous supply are still the main obstacles.

The use of charcoal for metallurgy or steel making has actually become commonplace for some time. In the early 1900s, world charcoal production experienced its heyday with production of more than 500 thousand tons. In the 1940s, charcoal production decreased to almost half of what it was in the early 1900s, due to other carbon materials, namely coke from coal, replacing charcoal in the manufacture of metals.

With the current conditions of using coal as the main fuel in smelting furnaces or blast furnaces, slag will be produced. Slag or GGBFS (Grounded Granulated Blast Furnace Slag) from the steel plant is used in cement plants as a cement additive or SCM (supplementary cementious material) thereby reducing the portion of clinker in cement production. In the cement plant itself, the more slag or SCM used, the more clinker use is reduced, thereby also reducing CO2 emissions. In cement production, the clinker production section contributes the most to the CO2 emissions produced, so the use of slag or SCM is part of decarbonization in cement plants. It is estimated that around 70% of world steel production uses the blast furnace or BF-BOF process which produces quite a lot of GGBFS, even in China more than 90% of steel production uses the BF-BOF process. It is worth noting that the decarbonization of the steel sector is resulting in a shift away from blast furnaces, which will impact the availability of GGBFS worldwide in the coming decade. However, this change will occur slowly and gradually and, in the meantime, there are a number of GGBFS that will be available for use as SCM to reduce the carbon footprint of cement and concrete.

To be able to produce charcoal in large quantities, raw materials are also needed in large quantities. Raw materials in the form of biomass, especially wood, can be produced from energy plantations. Energy plantations from fast growing species and short rotation crops will be suitable to meet the need for raw materials because apart from the fast harvest period they also have high productivity. Apart from that, there is no need to replant every time it is harvested and it is easy to grow and easy to maintain. To produce steel per ton, an average of 6,000 MJ of energy is required (equivalent to 50 kg of hydrogen) or the equivalent of 200 kg of charcoal and requires around 600-800 kg of wood biomass as raw material. Apart from raw materials from energy plantation wood, raw materials from agricultural and plantation wastes can also be used.

The future palm oil industry could produce hydrogen from biogas. Each ton of steel will require 50 kg of hydrogen, while each palm oil mill with a capacity of 30 ffb/hour can produce 1 MWh of electricity, while the production of 1 kg of hydrogen requires 50 KWh, so that with the capacity of the palm oil mill it can produce 20 kg of hydrogen. Areas with a high concentration of palm oil mills such as Riau province could create a hydrogen pipeline network for environmentally friendly steel mills.

With higher prices for steel produced with renewable energy (green steel), market share is also limited. Currently, only certain uses, such as automotive, buy such premium or green steel. Decarbonization efforts in steel industries can also be carried out in stages, along with the development of renewable energy. With the increasing supply of renewable energy, the price will decrease so that environmentally friendly steel (green steel) will also become more competitive in price. New steel industries can be built close to these cheap renewable energy sources so that green steel production can become competitive.

Coal Companies and New Business Development in Renewable Energy (Wood Pellets and PKS)

Coal is a fossil fuel which is one of the main causes of greenhouse gases, especially CO2, which causes global warming and climate change. Even though this fuel is cheap and available in abundance in Indonesia, its use will be increasingly reduced over time to achieve safe conditions for the earth. Indonesia is the 5th largest coal producer in the world with production of around 570 million tons per year with reserves reaching 38 billion tons, the main production of which is on the islands of Sumatra and Kalimantan. A large coal company in Indonesia can produce 50 million tons of coal every year.

Policies to reduce consumption of fossil fuels, especially coal, also continue to be implemented globally. For Asia, for example, Japan and Korea with their Feed in Tariff and Renewable Portfolio Standard (RPS) are leading the way in the use of renewable energy, especially wood pellets. Meanwhile in Europe, with the Renewable Energy Directive II (RED II), renewable energy is targeted to reach 32% by 2030, biomass fuel is predicted to reach around 75% of the share of renewable energy and the target is that coal will not be used completely by 2050. Germany has announced that it will not use coal. By 2038, the UK is even targeting no longer using coal for its electricity production starting October 2024. North America, namely the United States and Canada as members of the G7, are also committed to reducing coal consumption, in 2018 Canada even announced regulations to no longer use coal for electricity generation by 2030. On the other hand, coal power plant construction projects funded by China in various countries have collapsed. Plus, the G7 countries (Canada, France, Germany, Italy, Japan, England and the United States) are aggressively blocking the use of coal. Countries that still support coal use, such as China and Indonesia, are increasingly isolated and could face more pressure to stop such activities.

Seeing the world energy trend which is starting to decarbonize, many coal companies are then developing new businesses in the renewable energy sector. A number of coal companies are known to have planned to produce large capacity wood pellets and also become palm kernel shell (PKS) exporters. And seeing the global trend in the use of renewable energy which continues to increase, especially biomass fuel, it is possible that in the near future they will immediately execute this plan. With the large profits from the coal business, developing new businesses should also be easier.

For these coal producers whose business sector is in the energy sector, marketing these biomass fuel products should not be difficult. Wood pellets and palm kernel shells / pks can be used as fuel in power plants just like coal. In fact, a number of coal-fired steam power plants also use certain amounts of biomass fuel which is mixed with coal, namely by cofiring. In fact, biomass fuel can be used 100% in certain types of technological power plants such as stokers and fluidized beds. As both products for energy, more specifically solid fuels with the same users, it is indeed easier for coal companies to develop into the wood pellet industry and export palm kernel shells / pks.

In contrast to palm kernel shells / pks which is waste or by-product from palm oil mills or CPO mills which are obtained by collecting from palm oil mills, wood pellet production for large capacities requires a stable and sustainable supply of raw materials with one of the best options being wood from energy plantation. Energy plantations with a certain area need to be created according to the wood pellet production targets to be achieved. Post-mining land can be reclaimed for energy plantations. And for coal companies developing renewable energy also gives a positive image because it contributes to the decarbonization program and if in time the coal business has to be reduced or even stopped, they will be ready with a new business in the form of renewable energy.

Turning on Indonesia's “Green Battery”

With its position on the equator so it has a tropical climate, it will receive sunlight all year round. Energy from sunlight should be utilized optimally in the current era of decarbonization. So that solar energy can be used at any time, this energy must be stored. This is like a battery mechanism for storing energy, so that the energy does not just pass through and disappear. Storing and converting solar energy has been done naturally since life existed, namely in plant biomass. With photosynthesis in plants, solar energy with water and CO2 is converted into biomass in the form of wood, fruit, leaves and various parts of these plants as well as O2 for us to breathe. Solar energy does not just pass and disappear but is stored in the plant as an energy source or "battery" that can be used at any time.

With this paradigm, of course efforts to maximize energy storage in "green batteries" must be maximized as an effort towards low or carbon neutral fuel. With the largest land area in Southeast Asia, of course efforts to maximize "green batteries" become more important and strategic. The use of fast growing species and short rotation coppice will be very suitable for converting and storing solar energy. Moreover, in tropical climates the wood harvest is also faster than in sub-tropical countries or cold areas, due to the abundance of solar energy.

The potential land area for making "green batteries" is very large, reaching tens of millions of hectares. In addition, reclaimed land reaches millions of hectares, more details can be read here. The "green battery" is in the form of an energy plantation whose wood is used for the production of wood pellets. In the form of wood pellet products, biomass energy becomes easier to store and use at any time. Unlike intermittent solar or wind or water power plants, biomass fuel in the form of wood pellets is not like that. It can be used according to your request and desired target, making it more practical and reliable. The reasons why the "green battery" in the form of energy plantations has not been developed can be read here.

Apart from "green batteries" from energy plantations, "green batteries" can also come from production forests in general. In these production forests, the main product is wood which can be used for various purposes such as building wood, furniture, plywood, flooring and so on. The wood industry waste is then used for the production of wood pellets. Wood pellet production basically has to use wood waste or wood that worth as wood waste such as wood from energy plantations, so that the wood pellet industry is economical and profitable. It is estimated that there is 25 million tons/year of wood waste that can be used for the production of wood pellets In Indonesia. And specifically from the plywood industry alone, wood waste is estimated to reach 5 million tons every year.

It is estimated that the Indonesian wood industry can actually be optimized until its production capacity reaches 91 million cubic meters per year, but in reality in 2022 the forest products industry will only be able to produce 42.19 million cubic meters per year or around 48.7% of its optimum capacity. There are 3 factors that cause the low realization of the wood industry, namely, efficiency of the wood industry, problems related to raw materials and market availability.

Research on batteries continues along with the global decarbonization trend and the energy transition is a necessity to achieve the decarbonization target. Large capacity batteries so that electrical energy produced from renewable energy plants such as wind and solar can be stored is the target of this research. This research costs a lot of money and takes a long time, it is estimated that in the next 20 or 30 years, these large capacity batteries will be available. Meanwhile, currently most power plants use fossil fuels, especially coal. Energy transition efforts at power plants can be carried out by substituting coal for wood pellets. Moreover, as a tropical area, biomass energy can remain as the main energy in the future non-carbon era.

Indonesia's "green battery" must be activated and developed, because apart from its function as an energy source, the "green battery" is also a CO2 storage or carbon sink. As long as the amount of wood harvested is smaller or the maximum is equal to the growth of the energy plantation or "green battery", the amount of CO2 absorbed by the plants does not decrease or the CO2 released into the atmosphere does not increase, and the same goes for production forests in general. When at a certain age the growth becomes saturated and begins to decline in CO2 absorption, meaning that the forest cannot permanently store CO2 in a fixed volume, so it needs regeneration/replanting. Meanwhile, in energy plantations, due to the characteristics of the plant species, regeneration/replanting is not necessary every time it is harvested, but can be done decades later. And furthermore, the use of carbon capture and storage (CCS) technology in power plants that use 100% of their fuel from wood pellets means that the CO2 produced is not released into the atmosphere or is carbon negative, which reduces the concentration of CO2 in the atmosphere.

Why Has Large Capacity Wood Pellet Production from the Calliandra Energy Plantation Not Been Realized?

 

As a tropical country that has the largest land area in Southeast Asia, the potential for fuel or renewable energy from biomass, especially wood pellets, is very potential and promising. To maintain the stability of large capacity production volumes and their continuity, wood pellet production must use raw materials from energy plantations or biomass plantations. Energy plantations from short rotation coppice & fast growing species from legume groups such as red calliandra (Calliandra calothyrsus) have been a concern for quite a long time, but why has this large capacity wood pellet production not yet been realized or has no industry realized it? Below could be two main factors causing this:

1. Quality of calliandra wood pellets

The characteristics of rotational crops and fast growth of the legume group are that they contain quite high levels of potassium and sodium (K+Na) in their wood. Potassium has the property of having a low melting point so it will be problematic for heat exchangers in power plant boilers in general. The high potassium content makes its use unsuitable for power plants in general, namely those that use pulverized combustion (PC). Red calliandra (Calliandra calothyrsus)  in particular is the same, so with a large production capacity, the quality of export-oriented wood pellet products needs to be improved by reducing the content, especially potassium and sodium (K+Na). 

The process of reducing K + Na, which is part of the ash content, is carried out using a leaching / washing process. This unit needs to be added to the wood pellet production process from red calliandra. Apart from making calliandra wood, the raw material for wood pellets, this process becomes wetter, it also produces waste water. This will increase the production costs of red calliandra wood pellets.

Although it is possible that the leaching/washing process was not carried out so that the resulting wood pellets still have a fairly high K + Na content, they still have the potential to be used for certain types of power plants, such as those with fluidized bed and stoker technology. However, this type of power generation technology is not as common as the use of pulverized combustion (PC) technology. So that market acceptance for the production of calliandra wood pellets is large or can be used in all types of power plants, the leaching/washing process should be carried out.

2. Utilization of only certain parts (partial) of the plant, and not comprehensive (whole tree utilization)

When it only use wood for wood pellet production, it means that only part of the plant is used (partial) or there are other parts of the plant that are not used, namely the leaves and flowers. In fact, these two parts of the plant will be able to maximize income or profits which will provide the impetus to accelerate the realization of large capacity wood pellet production from the energy plantation. The additional costs incurred for the leaching/washing process will be compensated by the income/profits from leaf processing and flower utilization.

Calliandra leaves which have a high protein content are processed into animal feed, especially into flour or also pelleted into feed pellets. Meanwhile, the nectar from flowers is used as food for honey bees in beekeeping to produce calliandra honey. By maximizing the potential of all parts of the plant (whole tree utilization) of calliandra, various products (multiple products) are produced so that the driving force to accelerate the realization of large capacity wood pellet production from energy plantations becomes stronger.

One form of gratitude for Allah SWT's blessing in the form of a country with a tropical climate with vast land is to use it in an environmentally sound and sustainable manner. Tropical areas like Indonesia are a "paradise" for biomass production, especially for biomass energy (bioenergy) in the form of wood pellets. Optimizing this potential, especially with large capacity production of wood pellets and additional products, could be a boon and a blessing for prosperity as well as a solution to global climate problems (carbon neutral fuel). And basically business judgment is also needed from the entrepreneur's side so that the entrepreneur has the courage to decide to execute this business opportunity.