Assessment Economic

Sip S. de Vries

Thermodynamic and

Economic Principles

Extended Summary

and the

Thermodynamic and Economic Principles

and the Assessment of Bioenergy

By Sip S. de Vries

Contents The background Complex processes

Energy balances and ratios Shortcomings

Life cycle assessment Link with economics The problem stated

Work content value and lost work Advantages

Single product comparison Illustration

Economic integration In conclusion

Outlook

Contents of study Thermodynamic and Economic Principles and the Assessment of Bioenergy

The background

Bioenergy is energy obtained from biological resources. Energy resources from biological origin are even more diverse than those from fossil origin. Bioenergy will usually be produced from agricultural production systems. However, the types and applications may differ.

The use of bioenergy will reduce the use of fossil-based energy and so a reduction of the excess load of the carbon cycle due to C 02 emission can be realised.

Bioenergy is seen as necessary for increasing sustainability of the energy market. Bioenergy types, resources and processes have different influences on sustain-ability in a technical and economical sense. The analysis and comparison of different bioenergy options is subject of the scientific and public debate. In that debate the central theme is the calculation of 'energy balances and ratios with the help of energy related valuation methods'.

In this study this practice is shown to be unreliable for dealing with sustainability and for comparison of different bioenergy cases. Energy valuation methods used are not equivocal and universally applicable. They result in incomplete

descriptions of processes and products, and in the use of indirect methods to fix values. Calculations turn out to be unreliable concerning contributions of bio-energy products to sustainability. Comparability in the perspectives of bio-energy and economy is obstructed by the methodologies used.

The underlying study offers new concepts and a calculation methodology that fits the problem of comparing different bioenergy types, the processes and the

Complex processes

In the world of bioenergy all sorts of combinations of resources, processes and I d u c l s t e possible. The prodnct itself, for example bioethanol or btoeleetneiy fs s S c U o choree and decision. Different conversion technolog.es are available obtain the components wanted for the bioenergy production P ~ - d the products themselves can have more than one apphcatton. The

possibilities in 'the matrix of resources, processes and products ts extensive. There is a clear need to analyse and compare the options in the 'matrix' in a con-sistent and uniform way. Consistency and uniformity is required for the

bioenergy processes and products among themselves, as well as for the comparison with fossil energy processes and products.

Energy balances and ratios

Energy balances and ratios are generally used for the purpose of comparing differ-ent bioenergy options in the 'matrix'. The concepts of'energy-balance and ener-gy ratio' have diverse interpretations in literature on broenerener-gy. D l « ™

concern inputs, outputs and processes to be taken into account. T h £ « p r e a U o n of 'a unit of bioenergy' may differ, as well as the interpretation of the values to be u ed u i "calculation or the methodology used for the fixation of such^va ues. It

to be realised that from a thermodynamic point of view, concepts like energy ratio' have a different meaning and furthermore they do not

S

the purpose of

expressing

well the total fossil depletion necessary for produc¬ tion of a unit of bioenergy.

Depending on the interpretations a 'liquid only balance' can be found next to an exCdTd net energy balance'. The first includes only inputs that are hqmd fuel ,

t h e ^ Z z r p J \ unit of bioenergy' in the functional way of replacmg fossü

ThXl^ces

and ratios calculated are used in several ways, namely as: - an indication of the contribution to sustainability;

- a means to compare different bioenergy options in the matrix; - a basis for calculating life-cycle environmental aspects; - a basis for cost price calculations.

Shortcomings

Bioenergy will be part of a 'basket of products' from production processes. This is the same in the case of liquid biofuels as in the case of bioelectricity. Moreover, bioenergy does not differ from fossil energy in this respect, except that the products in the basket will mostly be different.

The composition of the 'basket of products' is dependent upon the resource used, the component chosen for bioenergy production and the conversion processes used. The principle shortcoming of energy balance and energy ratio calculations is the impossibility to deal in a consistent and uniform way with products in the basket that are not used as primary energy.

Energy balance calculations do not provide complete process descriptions in terms of the fixation of unambiguous values for all process streams, whether resource, intermediate or final.

Widespread use is made of the 'net energy balance' that relates all inputs to the bioenergy product of the basket, irrespective of the composition of the basket. The absence of a tool to provide values for all product streams not only obscures a complete process description and valuation, but the valuation of individual products from the basket, like different bioenergy products, as well.

The use of the concepts 'energy balance' and 'energy ratio' is not accompanied by appropriate tools that enable comparison between different bioenergy options. In the absence of such tools no reliable indications can be given with respect to the contribution to sustainability in the field of energy production.

Life Cycle Assessment

. , • * T j f pr vc le Assessment need to establish values for all product

and products.

established, reqmnngt o o h J 0 " X " Joined. This requires a uniform and

whether ingoing, intermediate or outgoing.

I n the absence of such a tool, recourse is taken to

JfS^J^S^SÏ...

energy balances or ratios for separate ^ ^ „ ^ ^ c values of the These methods are used in a mixed way too.

show that it are the energy based metnoüoiog ( rf

Link with economics

The contribution of bioenergy to sustainability can be translated in economic terms, when the financial costs of this contribution are calculated. This may be part of the comparison between different bioenergy options in the matrix. I f however no clear picture can be obtained of the contribution of different product streams, economics will be bound to that restriction.

Outcomes of economic cost calculations will be even more doubtful, when economic prices themselves are used to obtain energy balances and ratios for single product streams. This feedback mechanism can often be found in Life Cycle Assessment studies.

The problem stated

'Energy' related methodologies fail to calculate contributions of bioenergy products to sustainability. These methodologies are unable to analyse processes and their 'baskets of products' in detail and can not be applied uniformly and unrestricted. A clear analysis will not result concerning the contribution to sustain-ability. Economic calculations based on such an unclear analysis can not be reliable.

For a scientifically well based discussion of bioenergy in relation to sustainability a tool is needed that enables a full and complete description of processes. The tool has to enable the consistent fixation of values of product streams, whether as resource, intermediate or as final product streams.

Work — v a ! u e and tos, work

or products. w i e s as pressure,

t f 'work content value' depends on WW*^* actual state

The concept of work con T h e d l f f e re n c e ° ^ e

•W 0r k content values 101 P

intermediate or outgoing process

intermediate ui u u ^ * - © r i ' of

p i.t_-«„a r v t- n r l i i c t s .

u s a ge of these products. ^

The latter aspect explains the difference. with ene gy ^ ^

„ « P » ' « • * = f « t t e cone*. » W " * " 1 . Ï , i m * . .

measures based on a stable sctentrt

Advantages

The first advantage is that full account can be taken of the 'basket of product streams' that results from agricultural resources and specific production processes. The values of the product streams are established independent of further use. Secondly, the concept of 'lost work' or 'exergy losses' as applied to processes, offers the possibility to establish process-efficiencies in a detailed way. 'Work losses' are related to process driving forces, while 'energy based losses' reflect only process streams that are not taken into account. Thus, the calculated efficiencies according to 'work losses' deviate from energy-based efficiency calculations.

Thirdly, the concepts are applicable without restriction. This is a basis for the comparison of single products from different 'baskets of products'. It enables to compare different bioenergy types from different processes and possible different resources.

The process and product description obtained from applying the concept of 'work content value' concerns all in and outgoing process streams in the 'basket of products'. Allocation of 'lost work' to separate product streams of the 'basket of products' can take place for fine tuning. The products in the basket can be cate-gorised for this purpose. The categories of 'external products', 'ballast streams' and 'main products' are distinguished.

The allocation problem that is prominent in Life Cycle Assessment is solved by a consistent methodology. The availability of unique 'work content values' of product streams in processes and sub-processes leads to a consistent methodology to allocate costs incurred in those processes and sub-processes. The principle difference with other allocation methodologies, is that decision-making becomes explicit, controllable and open for correction and that outcomes of allocation show well based unique results.

Illustration

The concept of 'work content value' is applied to bioethanol and bioelectricity production in specified production processes and the amount of 'lost work' is determined. The agricultural resource is the same in both options, since this allows a comparison of the conversion processes and a comparison of different energy types. The resource taken for illustration is wheat grain from the wheat crop. The agricultural production process itself is not investigated.

The analysis of these processes entails calculations of 'work content values' for process streams and the determination of 'lost work' in processes to produce bioethanol and bioelectricity from the wheat grain resource. The analysis of the production processes in which bioethanol-100 and bioelectricity are produced takes place until the point where the products from the basket are fitted for further use. These products are characterised by their 'work content value' which is denoted as 'MJ work content value before further use' (M J S,yU ).

The concept of 'work content value' allows value calculations for all product streams in the 'baskets of products' of the two production processes under consideration. The values obtained for instance for starch, proteins, alcohol and ash are fixed regardless the further use of these products.

The study shows how allocation of costs to product streams can take place using the concept of 'work content value' and how it enables controllable decision-making with respect to the products taken into account. Although agricultural crop growing has not been subject of this study, allocation is illustrated for certain aspects of wheat crop growing. The calculation of the 'work content value' of the harvested wheat crop together with the efficiencies in the conversion processes allows allocation of agricultural inputs to bioenergy products.

Economic integration

Product costs of the 'basket of products' are usually economically calculated according to the market price in a specific application. Cost prices of bioenergy will fluctuate according to the accidental market prices of the other products in the basket. The traditional methods for cost price calculations of bioenergy may hinder stable, long term and international public policies in the field of bioenergy. They may hinder 'internalisation of external effects'.

The 'exergy based cost price accounting' is introduced for the purpose of deter-mination of shadow cost prices. Exergy based cost price accounting is related to the total production costs of the 'basket of products' in terms of the calculated 'work content value' of the products and the allocation of costs.

When applied consistently to production processes for both bioenergy and fossil energy, the shadow cost prices form a stable and well-based indication for public authorities of price differences between different bioenergy options and between fossil energy and bioenergy. These shadow cost prices can also be related to dif-ferences in 'external effects' of energy products, like greenhouse gas emissions over the life cycle of the respective products.

Differences in shadow cost prices of energy are related to differences in resource prices and to differences in the production processes that are analysed using the concepts of 'work content value' and 'work losses'. Since the same resource is used in the cases of the 'Illustration', shadow price calculations are related only to the industrial processes and not to the agricultural processes.

In conclusion

prices or with the help of 'exergy based cost price accounting t

Alternative cases have been studied in Ï m T "

electricity from bioethanol-96 in a gas and steam n

with gasification.

T he conclusions are only b . e d on « n s 1 ^ ^ ^ ,

in a broader context. A p p l y i n g t h e ^ f ^ ^ ^ ^ ^ ^ , ^ ^

Outlook

A consistent analysis of fossil resources and linked processes with the help of the EBC-methodology will provide scientifically based price differences between bio-energy and fossil-based bio-energy. It is these price differences that may be used as instrumental for public authorities.

Besides the opportunities mentioned this form of shadow cost price accounting offers a methodology for industries to allocate costs (i.e. environmental and over-head costs) to main product streams of processes. In this context it links up with the international discussion on 'Activity Based Cost Price Accounting on Firm Level'.

Moreover, the 'exergy based cost price accounting' offers the possibility to inves-tigate the market structure in a product sector by calculating differences between market prices and shadow prices for separate product streams from a 'basket of products'.

Contents of Study 'Thermodynamic and Economic Principles

HO pages and the Assessment of Bioenergy'

Introduction

Agriculture for renewable energy; Complex matrix and shortcomings The necessity of new concepts; Method and illustration

Complex Processes

Agricultural resources; Wet and dry recource processes; Applications

Energy Ratios

The energy ratio; Direct and indirect energy; Extended energy ratio; Allocation problem; Shortcomings; Definition of research required

Thermodynamic Principles

Work content; Lost work; Universal and functional efficiencies; Allocation; Results of cases

Economic Intergration

Welfare economics; Internalising external effects;

Exergy based cost accounting; Comparing bioenergy; Results

Conclusions

Principles of comparison; The cases studied

Strength and Potential Literature

Agricultural Crops

Agricultural yield; Composition of crops; Nutrients; Values; Data battle

Wet and Dry Recource Processes

General; Dry resource process: gasification for electricity; Wet resource processes; Bioethanol: resources and processes

Applications of Bioethanol

Ethanol and its applications; Replacement in the gasoline market; Replacing fossil diesel and diesel additives

History of Energy Balances

Energy crisis and agriculture as alternative; Energy balances in a multiple way; The issues of discussion

Determination of the 'Work Content Value' of Wheat Grain by the Group Contribution Method

General; Determination of the molar masses of the substance; Determination of 'work content values' of components in a substance

Determination of the 'Work Content Value' of Wheat Straw by the Quick Method

General; Applying the quick method

Lost Work Analysis

General about work losses; In and outgoing streams for three cases; Interpretation of work losses: efficiencies

Modelling Cost Prices

Total annual costs of production; Insecure modelling in literature; Unit production costs: EBC accounting

Cost Calculations

General to the calculations; Calculating the cases; EBC pricing of costs

Strenght and Potential

Cost price of single product streams; Cost price comparison of energy products; Inter company comparison of product efficiency; Instruments to encourage substitution

Contents of Book of Surveys

140 pages

Literature

Cover and lay out of this summary by Stephanie Knage, Grafisch Ontwerp Buro. Printed by Ando bv The Hague, The Netherlands. Thermodynamic and Economic Principles and the Assessment of Bioenergy

Extended Summary Sip S. de Vries.

ISBN 90-805051-3-7