Page 1 Report Substrate Materials for intersectoral biogas strategy Foreword

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Increasing uncertainty in the parameters

Cost of measures for supply chain with production of biogas

based on organic waste and use in buses

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By feeding biogas to the gas grid in Rogaland picture looks a little different. This value chain

generally have higher costs than the previous example, because the proportion of manure in

production measure is higher. It is also generally higher uncertainty of both

investment costs and the gas yield of biogas production from manure, because it is so

few existing facilities. There are both low investment and operating costs associated with this

application, which means that production costs will dominate.

The investment costs for biogas plants using manure in our model about 4

times lower (per ton of feedstock that can be treated annually) than the investment costs for

biogas plants treating organic waste. It may thus be that the investment costs

for manure plants are somewhat underestimated. On the other hand, it is expected that

investment costs can be reduced ahead of time, if sufficient focus on research. It is

thus uncertain about future investment costs will be higher or lower than

investment costs we have assumed in this analysis. When it comes to gas proceeds think we

that this is underestimated, and we expect the gas yield may rise ahead of time assuming a certain

R & D efforts. This suggests a higher future gas yield, which will result in

future action cost decreases. Figure 4.15 shows the effect on the costs of variation in the

different parameter values.

Uncertainty interval value chain of production based on sambehandling and application of

gas network in Rogaland in this analysis 1500 NOK - 3500 NOK / ton CO

2

-Eq.

Figure 4.15: Sensitivity analysis of abatement cost in NOK per reduced CO

2

Equivalent, when 500 GWh produced by

sambehandling (1:18) and fed into the gas grid in Rogaland.

-500

500

1500

2500

3500

£ / tonne CO

2

-Eq

The costs of measures for supply chain with sambehandling and feed off the gas at

gas network in Rogaland

+50%

-50%

0%

2207

0

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Commercial profitability

The financial cost of production using manure will primarily be driven

gas yield (kWh biogas per ton manure). This is because the number of kWh biogas produced will

determine the income of the producer, as well as production cost (U.S. $ / kWh) is directly influenced by

increasing the amount of energy. Figure 4.16 shows that changes in the cost of investment in biogas plants will

be very crucial for the commercial profitability.

As mentioned earlier, both investment and gas yield very uncertain quantities due

lack of biogas plants primarily use manure as feedstock. However, based on

same argument as above, over time most likely go towards a better

profitability for the producer.

In the sensitivity analysis varies the commercial cost of producing biogas from

manure between 0.81 NOK / kWh and 2.67 U.S. $ / kWh.

Figure 4.16: Sensitivity analysis of corporate economic losses measured in NOK / kWh when biogas 740GWh

manufactured by based on manure.

-0.30

0.70

1.70

2.70

NOK / kWh

Business Financial deficits in the production of biogas from manure

+50%

-50%

0%

1.27

0.00

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Biogas production from organic waste has a slightly different profile than the production cost

based on manure. Investment costs and gas yield will still be essential for

profitability and investment costs will have a relatively larger impact on production based

the organic waste than from manure. The major difference in relation to manure

Located in the street fee'en. As shown in Figure 4.17, this is the major driving force behind variations in

profitability. Landfill ban has probably helped boost profitability at other

therapies, including treatment in a biogas plant, by enabling a higher gate-fee.

The investment costs are less uncertain for wet organic plant than animal manure plant, because

there are several existing and planned facilities as points of reference. There is more uncertainty

the gas yield, as this is very dependent on the availability of the different types of organic waste. Some

types of waste is very high in energy and will provide a high gas yield, whereas other substrates may provide a

significantly lower gas yield. It is therefore natural to assume that there will be considerable variation in

profitability for each system. Gate fee'en is also expected to vary between different plants,

means we consider the overall cost estimate as very uncertain. Figure 4.18 illustrates the sensitivity and

future uncertainty, and expectations of future business profitability. Overall, suggesting

shape that future costs are reduced.

Uncertainty interval for the commercial cost of producing biogas from

organic waste is -0.31 NOK / kWh to 0.31 U.S. $ / kWh. That is, presumably, a good portion of this

measure be commercially profitable.

Figure 4.17: Sensitivity analysis of corporate economic losses measured in NOK / kWh when biogas 990GWh

produced from organic waste.

-0.30

0.70

1.70

2.70

NOK / kWh

Business Financial deficits in the production of biogas from organic waste

+50%

-50%

0%

0,002

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Figure 4.18 Preparation of fluctuations in production and uncertainty in parameter values ​​in 2020. Color Coding

indicates the direction of the production cost is expected to change as a result of development of each parameter towards

2020.

Commercial profitability of bus measure will vary fried with diesel prices, fuel consumption

gas buses and the price of natural gas, as shown in Figure 4.19 below. Higher fuel prices means that biogas is

relatively cheaper, and it becomes more advantageous gas buses. In the business economic analysis will

also high taxes on diesel to be a major contributor to profitability by switching to gas buses.

If one example removes veibruksavgiften of diesel (about 38 cents / kWh) or add a corresponding

tax on gas, then the loss of bus companies increase of 4 per cent per kWh to 42 cents per kWh. It should

here mentioned that this applies to all gas buses and not just those running on biogas. Fuel

the gas buses will affect the cost through several channels: reduced consumption will increase

investment costs that requires fewer buses, filling stations etc. for a given quantity of gas.

Meanwhile, several diesel buses could be replaced, and the savings in reduced dieslinnkjøp becomes larger.

As the figure shows, the effect of reduced fuel purchases clearly stronger than the effect via

investments, which means that it is economically profitable to use more fuel-efficient

gas buses.

Business Financial losses during production

of biogas from organic waste

Gas Yield

Labour

cost

Investment

biogas plants

Maintenance

Electricity price

Interest

(Bedok)

Gate-fee

Natural gas price

Transport

costs

2020 - reduced

deficit

2020 - unchanged deficit

2020 - increased deficits

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Increasing uncertainty in the parameters

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Figure 4.19: Sensitivity analysis of corporate economic loss for the bus company that uses

gas buses, measured in NOK / kWh.

The uncertainty in the discussed variables is relatively small today, while the time evolution is considerably more

uncertain (see Figure 4:20). Diesel price may be changed directly via price or that the fees be changed.

Similarly, natural gas prices could vary over time. A likely scenario would be that both

price of diesel and natural gas price increases over time, as technology allows

energy efficiency of gas buses to a greater extent than for diesel buses. Increased fuel prices and more

energy efficient gas buses will reduce costs, while increasing natural gas prices will lead to higher

expenses. Since both diesel rate and energy consumption have a greater effect on costs, it is

reasonable to assume that the overall effect will be a reduction in costs over time.

The financial cost of using biogas buses vary in this analysis

between -0.30 NOK / kWh and 0.25 NOK / kWh biogas used. This means that here too it is expected that some of the

potential is already commercially viable.

-0.30

0.70

1.70

2.70

NOK / kWh

Business Financial losses by the use of biogas buses

+50%

-50%

0%

0.04

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Figure 4.20: Preparation of impact on business economic cost using biogas and uncertainty

parameter values ​​in 2020. Color coding indicates the direction of the cost is expected to change that, due to developments in

each parameter towards

Business Financial losses by

application of biogas buses

Diesel price

Interest

(Bedok)

Natural gas price

Additional cost

gas bus

Fuel stations,

flakes, back-up

Fuel gas bus

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Increasing uncertainty in the parameters

2020 - reduced cost using

2020 - unchanged cost using

2020 - increased cost using

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Summary - sensitivity analysis

The two parameters that had the greatest impact in the social production costs,

both substrates, the investment costs for the plant and the gas yield per ton of feedstock. Since

use of gas mains in Rogaland has very low costs, the total cost of this

value chain being driven by production costs. This means that the investment costs for

biogas plant and gas proceeds will be crucial for the total cost of this value chain.

It is expected that the experience and technological advances will help the investment costs are reduced

and that the gas yield increases over time, which in turn will lead to higher cost efficiency in the production stage.

This development depends on technological progress, which means that R & D investment will be

particularly important to reduce manufacturing costs.

Business Economic production costs will have a strong correlation with the economic

kosta ends, ie investment costs and gas proceeds are drivers here, too. The biggest

difference between the economic and commercial cost drivers is that

biogas plants that use organic waste in the production receive additional income through gate-

fee'en they can take waste treatment. The analysis also shows that this income is the

strongest driver of cost reductions in the production stage. One of the conclusions one can draw

from this is that the commercial profitability of biogas production from manure

would have been substantially higher if these plants had access to a corresponding future.

For the purposes of gas in city buses are fuel for gas buses (relative to diesel buses) and

diesel price (relative to natural gas price) the strongest drivers of variation in cost. The

expected that the energy efficiency of the gas buses will be higher than for diesel buses. A

likely future scenario is that the price of diesel and natural gas prices will increase. This would then mean

both the economic and commercial profitability of using biogas buses,

will improve over time. R & D will also be able to engage in technology development, while the difference between

price of diesel and natural gas prices can be maintained or increased by the difference between the fee

the two types of fuel, but this will only impact on the commercial profitability.

An important observation is that the commercial profitability of the production of biogas

based on organic waste and the use of biogas buses varies almost as much between

negative as positive values. This means that some of these measures should be profitable already

with current costs.

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Chapter 5 - Existing measures and barriers

Existing instruments

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There are currently a number of measures affecting the production and use of biogas directly or

indirectly. Figure 5.1 provides a schematic overview of the value chain of biogas and bio fertilizer with

examples of how various existing measures hit. The figure is not exhaustive, but

illustrates some of the relationships and shows that the current measures are effective in multiple joints in

value chain.

Figure 5.1 Examples of how the value chain existing tools meet (not all measures are taken).

The figure points to two important measures affecting the supply of raw materials, namely landfill ban of

vårorganisk waste and delivery support in manure. Delivery Support manure to

biogas plant is a pilot scheme from 2013 administered by SLF with a limit of one million

million per year.

To increase production have been established arrangements for investment from both Enova and from

Innovation Norway - which targets different sizes of plants.

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The information in this section is based mainly on descriptions of Earth Course Assessment (CPA, 2010a),

Climate Courses sectoral report for farming (CPA, 2010c), sector report for waste (CPA, 2010b) and Mepex report

Increased utilization of resources of organic waste (CPA, 2012).

Fertilizer

Household

waste

Sewage sludge

Industrial waste

Large-scale

biogas plants

Small-scale

biogas plants

Biogas

Up

grading

Transport

sector

CHP

Fertilizer

SURFACE-

plant

Combustion

Flaring

Gas Supply

Heating

NOT EXCLUSIVE

Innovation Norway -

investment

El certificates

SLF - delivery support

Transnova -

investment

Exemption

veibruksavgift

Disposal Prohibition

Enova -

investment

Bio fertilizer

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To increase the use of biogas in the transport sector will be exempted from veibruksavgift be one of the

important work the agents, together with investment to build infrastructure from

Transnova. The system of green certificates could affect the development of heat & power plants, which also

Biogas can be a source of energy.

Appendix 3 provides a more detailed description of existing measures in the waste sector (Appendix 3a),

agricultural sector (3b), transport (3c) other sectors (3d), as well as overall measures

affecting biogas (3e).

Waste Hierarchy

Framework Directive on Waste (2008/98/EC) lays down a fairly detailed waste hierarchy to be

serve as a guideline for the design of waste policy and its instruments. This

hierarchy shows that waste prevention should have priority. It is further stated that the preparation of

waste for reuse shall be given priority over recycling, which will be given priority over

Another utilization of contents (for example incineration with energy recovery and use of waste

fill materials to replace materials that would otherwise be used). Finishing shall have the lowest

priority. The order of priority may be waived for specific waste streams when justified

including technical, economic and environmental considerations. Framework Directive also contains

specific targets for reuse and recycling of household waste.

The state - including the state pollution authorities - are already committed to taking into account

the waste hierarchy and work to achieve recycling targets.

Figure 5.2: Avfallshierakiet

Prevention

Preparation for reuse

Recycling

End-

treatment

Energy Utilization

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Priorities in the Waste Framework Directive implies that biological treatment of organic waste by

composting or biogas production and use of residual products from this fertilizing purposes or

soil should be given priority over incineration with energy recovery unless an overall assessment

of environmental, resource and economic factors have come to a different conclusion.

Through controlled landfill ban today organic waste away from landfills, primarily to reduce

greenhouse gas emissions from the disposal of this waste. Organic waste is then either delivered to

incineration with energy recovery, composting or biogas plants. Rest Product

of compost used as fertilizer products or fertilizer, while biogas plant both

producing biogas for energy purposes and provides an organic fertilizer which may be used as a fertilizer product.

Description of existing measures

The description of existing measures are divided into measures that increase the supply of raw materials to

biogas plants, measures that increase the production of biogas and actions that increase

application of both biogas and organic fertilizer. The breakdown of the value chain in these three categories are shown

in Figure 5.3 below.

Figure 5.3: Layout of the value chain in categories that measures directed against

Access to

feedstock

Production

Application

Fertilizer

Household

waste

Sewage sludge

Industrial waste

Large-scale

biogas plants

Small-scale

biogas plants

Bio fertilizer

Biogas

Up

grading

Transport

sector

CHP

Fertilizer

SURFACE-

plant

Combustion

Flaring

Gas Supply

Heating

NOT EXCLUSIVE

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Existing measures - access to raw materials for biogas plants

Measures affecting the supply of raw materials for biogas plants is given in Table 5.1. Regulatory

instruments in particular waste industry are important tools. In addition, requirements for

field equipment and support for R & D activities. A more detailed description of these

instruments are also found in Appendix 3

Table 5.1 Existing measures of resource waste, sludge and manure

Existing measures for access to raw materials

Comments

Economic

Tax on the disposal of waste

D - Support

Research Council (Energix program Norklima

program), SLF: Development of mitigation in

agriculture

Delivery Support from the Norwegian Agricultural Authority

Is being established. Given to agricultural enterprises that supply

manure to biogas plants. Given in terms of £ / tonne.

Pilot Scheme, will be evaluated in 2017

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