Hannah: From Argus Media, this is the "Biomass Podcast," focusing on all discussions that affect the biomass industry. I'm your host, Hannah Adler, senior reporter on the biomass desk for Argus Media. Today we are talking torrefaction. So how a new factory in Finland built with Taaleri is turning alternative feedstocks into coal-replacing fuel. And we're going to explore the tech, the timeline, and then what's next for the tech developer NextFuel. I am with Audun Sommerli Time, the chief marketing officer at NextFuel. Thanks for joining today, Audun.
Audun: Thanks for having me.
Hannah: So you've worked with Taaleri to build a torrefaction factory in Finland that went into its commissioning phase in February this year. Can you just start by telling us a little bit about the project and the role that NextFuel is playing?
Audun: Our client, Taaleri, with the support from NextFuel our industrial partners, built one of the largest biomass plant in Europe, and it's situated in Joensuu in the northern parts of Finland. And the reason why this project is receiving a lot of attention is because it's the first time this new feedstock-flexible NextFuel torrefaction technology is showcased on a large commercial scale. Today we have one [inaudible 00:01:39] factory in Austria. But this new factory can produce up to 8 tons per hour with just one single NextFuel terrefaction ramp. And this is the first time we actually are showcasing it in such a large scale.
Hannah: I mean, yeah, that is great for the industry. What sorts of feedstocks will the project use?
Audun: Yes. Joensuu is often referred to as the forest capital of Europe. So in this particular project, it's very easy to use waste wood because there is a lot of waste wood in Finland. But in other places around the world, the challenge is often to get enough feedstock since there is not enough waste wood in the world to cover the huge demand for coal replacement. And this has been the big challenge keeping the biomass industry from scaling. So what's unique about this NextFuel technology is that we can use any type of feedstock to produce our fuel, this including different types of agriculture waste, it's bagasse and even elephant grass.
Hannah: So let's say you've got all these different types of feedstocks that you can use, what would you say are the advantages of using feedstocks such as elephant grass or the agricultural waste like the bagasse and the sugar cane leaves compared with the waste woods that you're using at this project?
Audun: The big economic benefits is that these feedstock just have a fraction of the feedstock prices as wood. So this means that we can compete with coal in terms of prices, even in the areas of the world without carbon taxes. It can also make it possible for us to deliver renewable energy project, with an internal rate of return even higher than most oil project. So, you know, feedstock prices is extremely important.Today there is a lot of agriculture waste that is not used. But because we now have the technology to transform all these different types of organic waste, like you mentioned, sugarcane leaves, to a valuable product, we make it possible to make a lot of profit by implementing this project. It's also a lot of waste, we can make them more efficient. For instance, today there is a lot of companies that are burning the bagasse from sugarcane directly, but then they're generating very little energy. But what we can do is that we can use it much more efficiently by turning it to this fuel that can have energy content very close to coal.
And you also mentioned elephant grass, Hannah. I know there's always a lot of media interest for this new feedstock that is one of the unique feedstock that we can use. An elephant grass, that is a plant that can grow 4 meters in just 100 days. So that means we can get several crops to harvest each year, and we can get a yield that is 10 to 100 times higher than wood. And also, since this plant can grow on marginal land, it doesn't hurt food production. So it's massively scalable. And one thing that is also very good in terms of the environment is that the plant can store about 20% of the carbon it absorbs from that atmosphere in the roots below ground. So when you have this combination of a carbon cycle that is just a few months, and you also get this biological carbon capture due to the carbon storage in the roots, that means that we in NextFuel can deliver many carbon negative projects on a yearly basis, even before adding carbon capture technology. So this is one of the reasons why a lot of people are calling it the world's first carbon-negative fuel.
Hannah: And you mentioned that it can be used obviously in place of coal. And what's great about this is that I think it can also use the same infrastructure, so there's no need to retrofit, which makes it really quite advantageous to the energy sector. Do you think that this torrafaction NextFuel technology is going to have a big impact in the energy sector in the coming years?
Audun: Yes, it can have a very high impact. First of all, of course, this feedstock flexibility makes the biomass industry scalable. So that means we can be able to cost-efficiently produce this huge volume that is needed to replace all the coal. But as you mentioned, it's also very important that we can use this fuel directly in the existing energy infrastructure because one of the reason why it's so hard for the world to be able to reach this 1.5 degree target is that most of the energy infrastructure around the world is built around the burning of fossil fuel. That means it'll take billions of dollars just to change this and start to rebuild a new energy infrastructure for other types of renewable energy. And this is, of course, one of the thing that the politicians doesn't always want to spend that amount of money to rebuild the whole energy grid.
But NextFuel can actually use the existing energy infrastructure, so you don't need to build a new one. And that means that for many industries, it's not possible to go green just by switching fuel. Let's say you're a coal plant, you can just throw away the coal and [inaudible 00:06:48] instead. So I think you can't find a more cost-efficient way of fighting climate change. So yes, we have a really, really big effect on climate change if we are succeeding.
Hannah: I mean, it sounds like a dream. So what other key industries do you think maybe could use the briquettes as well, like apart from the energy sector?
Audun: We actually have tested the fuel in many different industries. So what we can say is that today we can deliver the fuel directly to all coal user, for instance, like the cement industries, utilities, and most of the steel industry. And together these industries are nearly 60% of the world's CO2 pollution. I also think going forward, it'll quite likely that we will enter a lot of other industries as well that, for instance, I know there are people talking about they want to use NextFuel to create clean backup power for wind and solar project when there is no wind or no sun. And we also are working with partners that may be able to use Fischer-Tropsch technology to make it into a liquid SAF for airlines in the future. So that means that going forward, I think you can see NextFuel in a lot of different industries. But at the moment, we are focusing mostly on cement utilities and steel industry.
Hannah: I mean, they're obviously the sectors everyone's watching at the moment anyway, so they're obviously very key sectors to get into. We've spoken about all the different types of feedstock varieties you can use, the ability to sort of throw it into different technologies without the need to retrofit. Is there any other sort of unique, I could say maybe qualities that this fuel can provide that maybe other fuels can't?
Audun: If you look at the technology we have developed, of course the feedstock flexibility is the big game changer, as I mentioned, because of the cost and profit margins that makes it very attractive to implement this project. But there is also a lot of other things about the patents that is quite unique. For instance, usually when people have been working with torrefaction, they are struggling to get a lot of production from a single unit. And we are able to get 8-ton power just with one single NextFuel reactor. That means it's massively scalable and it's also very good for the unit economics.
But another thing, is that we can use the energy from the feedstock to actually power the reactor. So that means that the electricity usage in the factory is quite low. You only need to add electricity for the first 20 minutes to just power up the systems. So I would say that there is a lot of different benefits about this unique technology that are able to deliver very low production costs, very high project profitability, low prices, high scalability, and also, of course, huge CO2 savings.
Hannah: Well, this sounds brilliant. So let's talk timelines. So when can the market expect the rest of the timeline to pan out? So sort of focusing back on the project that you've got at the moment, the factory in Finland, when do you expect that to ramp up to...I think is it 60,000 tons per year capacity?
Audun: Yeah, that's correct. So what's happening, of course, like everyone that is working with factories, they know it's usually a six to nine months commissioning process just to get all the systems working. And the good news is that things in Finland must be going exactly as planned. Taaleri deliver the first fuel to the customer at the end of May. And after the summer break, we are now in this final stage of the commissioning process. So personally I think it will be in full-scale operation during the autumn.
Hannah: Nice. Do you have any other projects in the pipeline? And if so, are they also focused in Finland, or are they in other regions?
Audun: Yes, there are, of course, a lot of demand for this technology around the world. So we actually working on many different follow-up projects to Finland, although we have been focusing mostly on this project, of course, during the last two years. But just to give you some examples, together with Taaleri, the plan is actually to build up to 10 new 120-ton factory in Canada. And the first one could happen very, very early, even next year based on the current timeline. We are also working on project for other types of customers that we have around the world. For instance, some of the largest cement companies in Europe. We have a project that was announced in New Zealand. We have a project that has been going on for a long time in East Africa that is now moving fast forward. And also in America there are project based on our technology in the early stages.
So of course, the only thing, or the next step for us is actually to then start raising more growth capital. So this is something we have started working on now. And we also noticed that the demand for this technology is very high around the world. So we also need to start prioritizing project because, on average, we're receiving like two new clients just each week. So this is really close to getting to the tipping point. And what we're saying is that, of course, in the long run, the bold ambition is, of course, to make NextFuel a clear successor to fossil fuel. So Finland is just the first step.
Hannah: Well, I'm very excited to hear about the projects. I can't wait to see them all come online and to see what it does for the industry. But thank you so much for chatting today, Audun.
Audun: Thank you.
Hannah: Stay tuned for the next edition of the Argus "Biomass Podcast." In the meantime, if you want to learn more about this topic and other factors driving the biomass industry, follow all our coverage in Argus Biomass Markets report, and visit us at argusmedia.com.
