Why the Bioeconomy is Inevitable

1
Why the Bioeconomy is Inevitable

• Pat Walsh
• Energy and Environmental Specialist
• UW- Madison/Extension

2
Overview of Presentation

• The move toward a bioeconomy Why is it
  inevitable?
• Mega-trends The Three Es
• Energy Supply
• Environmental Concerns
• Expanding Population
• Conclusions

3
What is the Bioeconomy?

• Fuels and feedstocks from biomass
• Carbon neutral where possible
• Goal of zero waste (residuals have value)
• Emphasis on efficiency and sustainability

4
Mega-Trends in Worldwide Energy

• Energy Consumption Growing
• Energy Security Issues Growing
• Petroleum Energy Supply Peaking
• Wisconsins Challenges

5
Peaking Supply Vs Major Growth
6
Automobile holdings in China
Million cars
High GDP Growth
Reference
Low GDP Growth
(FY 2000) Vehicle Stock Ownership rate Japan
73 mil. cars 57 S.Korea 12
mil. cars 26 USA 220 mil.
cars 79
GDP Growth 2000-2030 Reference6.3
High7.3 Low4.8
7
Energy Security Issues Are Growing

• Three quarters of the worlds known petroleum
  reserves are in the Middle East
• Most of these are in three countries
• Saudi Arabia
• Iran
• Iraq

8
Natural Gas
Source Community Office of Resource Efficiency
9
Conclusion-For Energy, Challenges Abound

• Petroleum and natural gas will be more costly
• Interest in energy conservation and renewable
  energy technology will grow.
• Federal, state and public utility support for
  development of green power will continue
• Energy Policy Act of 2005
• Wisconsin Focus on Energy Program
• Renewable energy portfolio standards
• Conclusion
• ENERGY PRICES WILL INCREASE, PERHAPS
  SUBSTANTIALLY
• Since cost of natural gas feedstock is about 70
  of fertilizer cost, agriculture will take double
  hit
• Disruptions in supply may occur
• Only options
• Increase supply
• Decrease demand (conservation)

10
Mega-Trends in the Environment

• Global warming
• Green house gas controls
• The emerging carbon economy

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Carbon Growth Highest in Developing Countries
Annual Carbon Emissions
GT/yr
Industrialized
0.8
0.7
1.2
2.4
2.3
Developing
2.2
Developing Share
50 52 56 60
13
Shrinking Polar Ice
Extent of Arctic summer ice in 1979 (top
satellite image) and in 2003 (lower satellite
image).
NASA photograph
14
The Economic Impact Of Global Warming On U.S.
Agriculture

• Economic loss could amount to 13.6 billion
  annually in 1990 dollars

Source Schlenker, Wolfram, et al., The Impact
of Global Warming on U.S. Agriculture,
University of California, Berkeley, June 2002
15
Projected Changes In Vegetation
16
Worldwide Likelihood Of Insect-borne Diseases
Will Increase
Source Modified World Health Organization (WHO),
as cited in Stone (1995).
17
Cap and Trade System

• an environmental regulator establishes a cap
  that limits emissions from a designated group,
  such as power plants, to a level lower than their
  current emissions
• The emissions allowed under the cap are then
  divided up into individual permits that represent
  the right to emit that amount
• Companies are free to buy and sell permits in
  order to continue operating in the most
  profitable manner available to them

18
The Carbon Trust is making business sense of
climate change
Low Carbon Technology Assessment, December
02 Developing and managing sustainable offices,
April 03 Brand Value at Risk from Climate
Change, March 05 Investor Guide to Climate
Change, Jan 05 The European Emissions Trading
Scheme Implications for Industrial
Competitiveness July 04
RDD Carbon Vision Open call RDD Technology
acceleration Marine Energy Challenge European
Marine Energy Centre (Orkney) Small CHP field
trials Smart metering trials Investment
Incubators Venture capital 3rd party funds
Direct engagement Customised services Carbon
Management for Business and LAs On-site
surveys Design Advice Investor
Engagement Indirect engagement Helpline,
website, publications, events Sector,
technology and professional bodies Financial
incentives SME loan scheme LA financing ECA
scheme
19
Chicago Climate Exchange (CCX )

• Chicago Climate Exchange (CCX ) is a
  voluntary, legally binding pilot greenhouse gas
  reduction trading program for emission sources
  and offset projects in North America and offset
  projects in Brazil
• CCX is the world's first multi-national and
  multi-sector market for reducing and trading
  greenhouse gas emissions
• An unprecedented demonstration that a
  cross-section of North American private and
  public entities can design and implement a
  voluntary, legally binding market-based GHG
  emissions reduction program

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Conclusion-Pressure to control green house gases
will increase worldwide

• Continued search for ways to economically reduce
  emissions
• Continued search for carbon neutral or non-carbon
  emitting power sources
• Increased competition for biomass worldwide
• Required upgrading of pollution controls on coal
  power plants
• Conclusion
• Energy prices will increase
• Energy conservation will become necessary
• The impact of the carbon economy could be large

21
Mega-TrendWorld Population Growth

• World Population
• Today 6.7 billion
• 2030 8.3 billion
• US Population
• Today 300 million
• 2030 376 million
• Wisconsin
• Today 5.5 million
• 2030 6.5 million
• Impacts on Agriculture?
• Need to feed more people with less land
• More animals and more people in less space

22
Demographic trends
Wisconsin Population Growth by County 2000 to 2020
Greater than 19 growth
Between 9 and 19 growth
Less than 9 growth
Slight population decline
Source WI Dept of Administration, Demographic
Services Center, October 2003
23
Wisconsin Dairy Farms and Milk Production
1930-2004
of Farms
Milk Production
Preliminary estimate. Source USDA/NASS, Milk
Production.
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Community Conflict
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Conclusion Population Growth Will Exacerbate The
Problems

• Demand for energy will increase
• Need for food will increase
• Land areas to grow crops or raise animals will
  decrease more marginal land may be farmed
• Resource and energy conservation will be
  necessary
• Conflicts will result
• Food vs fuel
• Siting problems
• Resource use issues (eg. water quantity and
  quality)
• Environmental impacts-residual control will be
  required

27
Back to the Future?
of total
Renewables - Electric - Low temperature -
Catalysts
Traditional - Biomass - Wind - Water-
Animals
Fossil Fuels - Mechanical- Combustion -
High temperature
100
75
50
25
0

1800
1850
1900
1950
2000
2050
2100
2150
Source Ewald Breunesse, Shell Netherlands, 14th
IAMA Annual World Conference, Montreux, June 14,
2004

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Conclusion

• The Worlds economy runs on energy
• Traditional fuels sources will be too costly or
  too dirty
• Improved energy conservation will be necessary
• Movement to a bioeconomy is only sustainable
  path it will happen
• The bioeconomy is not the answer, but is part of
  the answer
• Road will be bumpy
• There will be unintended consequences
• There will be winners and losers