Export of PKS and Wood Pellets for Biomass Power Plants and BECCS in Japan

In Japan, with approximately 290 biomass power plants, the transition to BECCS should be faster, but it's just a matter of policy and regulation. Installing CCS (Carbon Capture and Storage) units at biomass power plants makes the plant's operation carbon-negative, or carbon dioxide removal (CDR) mode. The amount of carbon captured and stored, separating it from the atmosphere, can earn carbon credits that can be used for CCS operations at biomass power plants. Decarbonization to achieve the 2050 Net Zero Emissions (NZE) climate targets and the Paris Agreement are the driving force.

And because biomass power plants always require biomass fuel for their operations, this presents an opportunity for Indonesia to supply wood pellets and palm kernel shells (PKS). Power plants in Japan, most or the majority of biomass fuel comes from imports, such as the Kanda Biomass Power Plant (Kanda Biomass Energy) in Kanda City, northeast of Chiyoda, Tokyo. Kanda Biomass Energy uses three types of biomass: wood pellets (60 percent), palm kernel shells (PKS) (30 percent), and wood chips (10 percent). Wood pellets are imported from British Columbia, Canada and Vietnam, palm kernel shells (PKS) from Indonesia, and wood chips are imported locally from northern Kyushu. This facility consumes approximately 170,000 tons of wood pellets, then 120,000 tons of palm kernel shells (PKS), and 60,000 tons of wood chips per year.

Biomass power plants in Japan generally use fluidized bed combustion (FBC) technology in their boilers. The reasons for using this technology are higher fuel flexibility, high efficiency due to good mixing, relatively low combustion temperatures, which minimize the problem of ash deposits due to melting and the use of excess air. It also further increases efficiency and reduces flue gas production. FBC technology is suitable for large capacities above 20 MW. Over time, this technology has been divided into two types: bubbling fluidized bed (BFB) and circulating fluidized bed (CFB). Generally, the differences between the two are not significant, such as fuel size, unit construction, and air-fuel ratio. Palm kernel shells (PKS) are more suitable for CFB power plants because they are less than 4 cm in size. Power plants in Japan, in particular, that use PKS or palm kernel shells as fuel because they use CFB technology.

With relatively low operating temperatures of 650-900°C, ash problems can be minimized. Certain biomass fuels sometimes have high ash content and ash chemistry that can potentially damage the generating unit. Furthermore, fuel cleanliness is also very important, this is because technically certain impurities such as metals can block the air pores in the perforated plate of the FBC unit, even though air, especially oxygen, is absolutely necessary for the combustion process and also maintains the fluidized fuel bed condition. These fuel cleanliness requirements must be met by the supplier or seller of the biomass fuel. Therefore, the buyer requires the amount of impurities (impurities/contaminants) that can be accepted is very small, namely around less than 1%. PKS cleaning is done by sieving either manually or mechanically. For more details on biomass fuel cleanliness issues can be read here.

The demand for biomass fuel is predicted to continue to increase. And biomass power plants continue to expand, with an estimated 6 GW of additional power plants projected to be installed in Japan by 2030, with an installed capacity of 7.3 GW by 2024. In fact, 11 new power plants are scheduled to come online by 2025, increasing annual biomass fuel demand by approximately 1.1 million tons. If Indonesia could also supply wood pellets to Japan by maximizing forest residue, sawmill waste, or other wood processing industry waste, that would be extraordinary.

As an estimate of forest waste utilization, for example, a production forest with an area of ​​200,000 hectares (approximately 2,000 km2) and because it is located in a tropical area with an average woody biomass growth rate of 20 tons/hectare/year, then the forest will produce 4,000,000 tons/year of wood every year from new growth. An area of ​​200,000 hectares may seem very large, but with Indonesia having almost 70 million hectares of production forest, an area of ​​200,000 hectares is only 0.29%.

For example, we set the default setting for wood utilization from production forests: 35% for building materials, furniture, flooring, etc., 30% for paper, tissue, and packaging, with 5% of the harvested wood remaining in the forest. Furthermore, 15% of sawmill waste (sawdust, chips, etc.) is used for wood pellet production, and the remaining sawmill waste is sent to pulp and paper mills and engineered wood industries.

And it is estimated that 35.3% of the 3.8 million tons/year of wood waste annually goes to wood pellet factories (approximately 1.34 million tons annually). In some locations the actual percentage is much lower because paper mills and engineered wood industries use more raw materials with the same raw materials as wood pellet factories. Therefore, in general, wood pellet factories are not located in locations that already have demand or existing use for pulp and paper and engineered wood industries. With the high water content, drying is necessary for wood pellet production, so the estimated wood pellet production is 650,000 tons/year. With the size of a handymax vessel that can carry 25,000 tons/shipment, this means 26 shipments are needed to Japan each year, or with a panamax vessel that can carry 50,000 tons/shipment, this means 13 shipments to Japan each year. 

Decarbonization of the Iron and Steel Industry Part 3: from Low Carbon Production to Carbon Neutral Production

When the decarbonization target must be achieved according to the specified deadline, various efforts will also be made, including through a transition phase. The transition phase in the iron and steel industry is from low carbon production to neutral carbon production. There are a number of factors that influence towards this goal, especially the readiness of the market to buy iron and steel products produced from the production process and also the readiness of fuel and reducing agents for blast furnaces in the iron and steel industry. Charcoal is a fuel and reducing agent derived from biomass which has great potential for use in this transition phase. Charcoal as a carbonization or biomass pyrolysis product has a high calorific value, high fixed carbon and is stable.

Meanwhile, carbon neutral production conditions will be achieved when iron and steel production in the industry uses 100% renewable energy. The use of an electric furnace (EAF/Electric Arc Furnace) can be done as long as the electricity is produced from renewable energy sources. Likewise, the use of hydrogen fuel in blast furnaces (with electrical energy for plant operations also from renewable energy) is also able to achieve carbon neutral production conditions, and even the use of hydrogen fuel in blast furnaces is considered to be the ultimate goal in decarbonization of the iron and steel industry. With the target of achieving net zero emissions by 2050 and the average service life of blast furnaces being 20 years, the iron and steel industry's efforts to achieve the target must be well formulated and programmed. Even if efforts to replace blast furnaces do not follow this target time, it will put the achievement of net zero emissions by 2050 in jeopardy.

In fact, currently it is still far from achieving this goal because the construction of blast furnaces - basic oxygen furnaces (BF -BOF) is still being carried out, which should be EAF (Electric Arc Furnace) or currently only around 30% of the global iron and steel industry uses this EAF. Even the International Energy Association (IEA) highlighted this critical issue to achieve the Paris Agreement's net-zero target by 2050. CO2 intensity in this industry has only slightly decreased so that the use of renewable energy becomes increasingly important and accelerated.

A case example is the Japanese iron and steel industry. As a steel producer of more than 85 million tons per year with main use in domestic construction projects and automotive manufacturing and with more than 25% (more than 21 million tons) being exported, the Japanese steel industry has a significant influence on the global market. The dominant dependence on coal is the main problem of decarbonization and moreover, Japan is also the third largest coal importer in the world. Furthermore, decarbonization in Japan is considered inadequate because the Japanese steel industry lags behind other major world steel producers. Japan is a G7 country that does not implement a coal phaseout period.

Nippon Steel has even been labeled a climate laggard or slow to respond to the climate crisis in the Asian region. This is because the decarbonization strategy is inadequate or not in accordance with the IPCC's 1.5°C warming pathway or the IEA's net-zero pathways. This condition threatens national and global decarbonization targets and puts Japan's steel industry at risk. Meanwhile demand for low-carbon steel is increasing rapidly because steel industries and governments around the world are committed to reducing carbon emissions from fossil fuels. The Japanese steel industry needs to immediately decarbonize to remain competitive in the global market. Decarbonizing by investing in low-carbon steel production will address these risks and can position the Japanese steel industry as a leader in the green transition of the global steel industry.

 

Regarding the issue of fuel or renewable energy sources, biomass has a strategic position and role, namely in blast furnace operations, charcoal, which is a product of biomass carbonization, is used as a fuel and reducing agent, while in electricity production for iron and steel plant operations, biomass can be used as a renewable energy sources or biomass power plants. This is why the availability of biomass is very important so that the creation of energy plantations as a source of biomass is very necessary. Not only is the plantation a source of energy, it can also play a role in the production of food and feed, both of which are very beneficial for human life. And of course optimizing the use of the plantation by utilizing all parts of the tree (whole tree utilization) also provides maximum financial / economic benefits and with good management it will also provide benefits or improve the environment. And ideally by 2050 the steel industries will use electric arc furnaces / EAF, 100% hydrogen in blast furnaces and even a combination of carbon capture, to achieve net zero emissions in 2050 or even negative emissions so it is very good for the climate.

Looking for PKS Supply from Indonesia

Palm Oil Mill

With the number of palm oil mills estimated to reach more than 1,000 units with 12 million hectares of palm oil plantations and more than 40 million tons / year of CPO, the potential of the PKS (palm kernel shell) produced reaches 15 million tons / year. With properties almost similar to wood pellets and prices are much cheaper, PKS is a prime of biomass fuel. But with the location of palm oil mills located mostly very remote and PKS still considered a waste for palm oil mills, often getting PKS supply is not easy. Infrastructure factors and the distance from export ports are often obstacles. This makes some palm oil mills only dispose of or stockpile PKS in locations around their mills. For palm oil mills that have the main business of palm oil or CPO, there are still many palm oil mills lacking attention to PKS as an additional source of income.

PKS Stockpile

Japan in particular is the largest PKS consumer, followed by Korea and several European countries. Their needs are estimated to be up to millions of tons every year. PKS exports to Japan and Korea are easier and often done because the distance is relatively close compared to Europe. PKS exports to Japan and Korea are usually quite economical with a volume of 10,000 tons per shipment while for Europe with a longer distance so in order to remain economical the shipping volume must be quite large, for example more than 25,000 tons per shipment. It is predicted that in 2021 or 2022 the needs of Japanese PKS will increase rapidly and then be relatively stable for the next 20 years. This is because biomass power plants can be said to be fully operational that year. The original plan for 2019 is that the biomass power plants can operate, but because of a number of obstacles, it will be delayed until 2021 or 2022. For more details about the delay in the construction of power plants in Japan, please read here.

The PKS comes from a palm oil mill and is collected somewhere to reach a certain volume so it is ready to be shipped. In order to be accepted by the power plant, PKS is cleaned from a number of impurities and dried until the water content is below 20%. Cleaning of the impurity is done by means of a sieve and drying is carried out only with the sun light or aerated. In addition to being able to maintain the cleanliness and dryness of PKS, especially in the rainy season, buildings such as large warehouses and concrete floors are needed. Even not a few PKS buyers from Japan require large warehouse buildings with concrete floors so that the quality of PKS can be maintained.

Typical Biomass CFB Powerplant in Japan

Fluidized bed combustion technology for electricity generation is widely used in Japan. With the circulating fluidized bed combustion technology, PKS can be used as fuel, even biomass pellets from agricultural waste can also be used for this technology. Fluidized bed combustion technology with lower operating temperatures than pulverized combustion makes it more tolerant of various types of fuel. It also means EFB pellets (empty fruit bunch pellets), and wood pellets from energy plantations can be used for fluidized bed combustion fuels.

Biomass power plants that rely on PKS for a period of 20 years certainly pay close attention to the continuity of PKS supply in that range. Anything that can interfere with the supply of PKS both in the short and long term will seriously concern them. As an example of the use of domestic PKS there is also an increasing tendency which could be an increase in the use of biomass as fuel or other sectors such as the production of activated carbon from PKS. In these conditions, of course they will make calculations regarding PKS supply and PKS exporter. The palm oil plantation extensification program will also increasingly supply PKS on the other hand because the palm oil mill will process FFB  (fresh fruit bunch) from the plantation and produce PKS as waste or by-products.

PKS Loading into Mother Vessel for Export Market

PKS players or exporters now generally have contracts with Japanese buyers both for spot trading and even for longer contracts. And not a few of the exporters have run out of PKS quota / supply for new buyers. In such conditions a new buyer must be able to find another PKS supplier / exporter. New suppliers may not have export experience and do not even have a number of facilities to process PKS, but only have a network with a number of palm oil mills as PKS sources or producers. This condition makes the PKS export unable to be carried out directly, but requires a number of preparations from both parties. Considering there are still more than 1-3 years from now on, both parties can prepare the business from now on, so that the long-term business can be carried out and as expected.

Surplus Conditions, Why Import? Does Not Make Sense!!!

It is common practice that a country always protects its domestic products. Developing and increasing the quality and quantity of domestic products is one of the country's responsibilities in the economic field. It is strange and implausible when a country has a surplus of certain products, but on the other hand it imports similar products. This, of course, besides damaging the economy also directly affects the producers. The easiest example is in food or agricultural products. As an agricultural country producing rice when the surplus is clear, there is no need to import. Rice produced by farmers is not bought as well as sugar cane and so on, if at the same time a surplus such as a harvest is imported similar products. This is an economic murder for these farmers.

When the market goes increasingly liberal, the chances of cheating are also getting bigger. It could be that a country makes a hoax that discredits certain state products to protect the country's products. Especially if this is done by a large influential country. Of course this has a negative impact on the target country products so that the product does not sell well in the market or at a minimum the price falls. The evil trade politics are mostly done to bring down business opponents. Such efforts should not be carried out, but can use other better methods such as providing incentives for producers or users of domestic products. This further encourages the use of domestic products and revives the country's economy without harming other countries.

Recently Korea made a slight revision of the use of wood pellet fuels. Wood pellets produced from within the country are prioritized over imported products. This has encouraged the growth of the wood pellet industry in the country. With the large amount of wood pellet needs, it is very likely that the country will still not be able to meet its needs due to the lack of raw materials related to its natural factors. This is how it keeps them imported. But with this policy, Korea has taken sides with its domestic industry. As more and more countries in the world use wood pellets, wood pellet producers can also choose buyers at the best prices.

Tips for Choosing PKS

For the CPO producers, tenera is preferred because the thick coir (mesocarp fiber) will produce more CPO. Whereas for PKS (palm kernel shell) users such as power plants and a number of industries, the type of dura palm oil is preferred. PKS tenera has a thin shell (0.5-4 mm) so that the calorific value tends to be lower than the dura with a thicker shell (2-8 mm). Old palm oil plantations usually use tenera types to maximize CPO yield, while old palm oil plantations usually use a type of dura. PKS as a byproduct or one of the solid wastes in a CPO mill is actually not a major concern for palm oil mills, and CPO is clearly the main focus. PKS is primarily a concern of traders and users, so quality factors emerge as a consequence of buying and selling transactions.

Indonesia has around 12 million hectares of palm oil plantations at present, consisting of 4.8 million hectares of smallholder plantations, 6.2 million hectares of private plantations and 0.8 million hectares of state plantations. There are still many regions in Indonesia that use the type of dura on their palm oil plantations. Smallholder palm oil or community palm oil plantations are one of the many that produce this type of dura palm. When PKS demand increases sharply as it is today, especially for export markets to Japan and Korea (more information read here), then PKS dura types are the first choice. In practice it is difficult to find PKS that is 100% dura because the source of palm oil fruits used in CPO production also comes from various sources. The source of the nucleus (company plantation) can be the majority in the form of tenera, while palm oil from community plantations can be the majority of the dura. The composition of the dura and tenera also varies depending on composition the nucleus and plasma plantations. For example, a CPO mill with a nucleus plantation which is majority still new plants so that the palm oil fruit majority comes from the community plantation. Or it could be that the nucleus plantation has entered the replanting phase so that supply is limited and relies on community plantations and so on.

According to botany, dura-type plants have dominant alela homosigot (sh + sh +) so produce thick shells. Whereas hybrids from dura with pisifera, which are tenera-type plants that have alela heterosigot (sh + sh-) have thin shells and are surrounded by fiber rings in the mesocarp. Pisifera type plants themselves have recessive alela homosigot (sh-sh-) so they do not form shells. Generally this type of pisifera is not used as a commercial for palm oil plantations because it fails to form fruit. But indeed there are several types of pisifera that are still fertile and capable of reproducing. Dura type plants can also be said to be parent plants because the tenera type is a crossing of dura and pisifera.