The Future of Biomass in SAF with Nova Pangaea

Hannah: From Argus Media, this is the "Biomass Beat," a podcast focusing on all discussions that affect the biomass industry. I'm your host, Hannah Adler, Deputy Editor on the biomass desk for Argus Media. Today, I'm joined by Jonathan Wood from Nova Pangaea. And this week, we're going to take a closer look at the role biomass can play in scaling sustainable aviation fuel production. We're gonna discuss feedstock availability, the potential use of woody and both agri-residues, the emerging carbon removals markets, as well as some of the challenges that are facing project developers, from the feedstock, to the finance, to the regulation and policy support. So, thank you so much for coming on today, Jonathan.

Jonathan: Glad to be here. Look forward to the conversation, Hannah.

Hannah: Yeah, me too. I think, if we could start, Jonathan, just quickly introduce Nova Pangaea, and just tell us a bit about what you do, and what you're up to at the moment.

Jonathan: Yeah, of course. I'm sure the vast majority of your listeners have not come across Nova Pangaea before. We're a UK-based technology and project developer, developing a technology, and implementing it first in UK to convert biomass residues of all kinds, but starting with woody biomass residue, converting that into bioethanol for the SAF industry, the sustainable aviation fuel industry, as well as also producing a co-product, biochar, which is a form of carbon removal. So, in effect, we've got a technology that will enable, all being well, a new market opportunity for biomass residues, as well as also a new pathway to scale up the supply and production of sustainable aviation fuel.

Hannah: Great. So, if we, before we get into more about what you do, if we could just talk about the global SAF market, how do you see that evolving over the next decade? And do you expect demands might outgrow the supply?

Jonathan: Well, certainly, there's a huge growth opportunity, and a huge desire by all stakeholders, the airlines, the producers and suppliers, the policymakers, to move from fossil-based jet fuel to a renewable, sustainable fuel source. Electric and hydrogen power propulsion are not really feasible in the foreseeable future. So, aviation, a bit like shipping, needs to find renewable liquid fuel solutions. And so, in order to get there, we need to develop technology, and we need to develop technologies that enable us to use different renewable feedstocks, rather than crude oil-based production technologies.

So, just to use a couple of figures, the aviation fuel market consumes 300 to 350 million tons worth of jet fuel a year. It's very similar, actually, to the shipping market. So, we need to effectively replace that volume. And of course, aviation is growing as well, so, what, maybe 300 to 350 million tons today might be 450, 500 million tons by 2050, given the aviation market continues to grow, and given, of course, we want to continue to be able to fly, and see our friends and family and do business. So, we need to basically transfer from, and transition from crude oil as a feedstock to different kinds of renewable feedstock, and biomass, biomass residues in particular, as opposed to crop-based biomass, is clearly one of the feedstock pools that we need to tap into, and so there are different production pathways that are being developed. There's one that's already being scaled up commercially, which is using waste oils and fats, and that's great, but it's not going to get us more than probably 10% of the way to where we need to get to. Whereas there are hundreds, if not billions of tons worth of biomass, and biomass residue in particular, which we can tap into, and so the key now is to get the production technologies to a point where they're technically de-risked, economically feasible, and deliverable from a project point of view, not just in one or another location, but actually globally, internationally, in all the regions of the world. And then we can see a pathway to really scaling alternatives to the fossil jet fuel that's currently used.

Hannah: You mentioned...

Jonathan: And, maybe just to build on that, there is a lot of regulatory policy support moving us in the right direction, and the EU and the UK are probably leaders there. The U.S. also has a lot of policy development, so those are going to be key to helping stimulate and catalyze the market.

Hannah: Sure. Are those regulatory frameworks you're talking about, is that the UK's proposed revenue certainty mechanism, which is, basically, it's a CfD-style support mechanism to help SAF products, and projects, sorry, get off the ground?

Jonathan: Yes. That's definitely one part of the mix, because, as we develop these new technologies, and seek to scale up, it won't surprise your listeners to know that, with the first-of-a-kind projects, you're typically not maximizing the efficiency, you're not at the full scale, so the cost of...we haven't come down the cost efficiency curve. We've been developing an oil refining industry over a hundred years, so needless to say, it's come down the cost curve, and has found all the efficiency optimization opportunities. We need to do the same with renewable feedstock sources. So, that's why regulatory policy can be really helpful in these first few years, to help bridge the cost gap versus fossil jet fuel, and catalyze those first projects. And so, in the UK and the EU, we have already a SAF mandate, which obliges all the suppliers to use 2% SAF out of the total aviation fuel pool, and that will increase over time. But, we also need supply-side support to help these first projects get past final investment decision, and be bankable. And that can come in the form of incentives. North America has got a number of incentives that can help bridge the cost gap in the UK. We're looking at, as you mentioned, the so-called contract for difference, or, it's been called the revenue certainty mechanism, where a guaranteed price will be agreed. That then removes the uncertainty around the market price for those initial project developers, and will unquestionably help the bankability of those first projects, which is what we need to build the momentum, because once the first projects are funded and are built, then we can show that the technology works, that they can be operated on an economic basis, and so that should then help stimulate for the investments in subsequent projects.

Hannah: Yeah. You mentioned earlier that there was different potentials in terms of the feedstock. So, we've got, you know, waste wood, forestry residues, but then also agri-residues and energy crops, and then municipal waste as well. Are there any of these which you see more likely to emerge in, like, the short term? Maybe if there's more supply of them, and maybe there's less supply of others? Yeah, how do you see the feedstocks having their role in this?

Jonathan: So, certainly, all of those categories of biomass, residue, and waste can play a role, and will play a role. It really depends on...I think it will vary by region, and particular technologies. I know that you've got a couple of production technologies that can use biomass. One is the alcohol-to-jet pathway, that Nova Pangea is playing in, but you also have gasification and Fischer-Tropsch as a technology pathway, and a number of technology and project developers in that space. Municipal solid waste has been looked at, but is challenging in terms of the... It's not a consistent source of material and feedstock, and there are contaminants and the like. So, biomass, and woody residues, especially sawdust residues, and residues from the pulp and paper industry, are more consistent, and certainly therefore probably easier to start with. Agricultural residues can certainly be used as well, but once again, the supply chains need to be established. And especially as we go into the Global South, there's clearly a huge amount of biomass that's not being collected from the fields at the moment, and it is even being burnt. So, it's not only not being collected, but it's actually being burnt to clear the fields for the next harvest. So, those show that there's a huge opportunity, but the supply chains are not in place, and it's a very fragmented and distributed ecosystem. So, I think, to start with, biomass residues, leveraging the existing pulp and paper industry and the existing supply chains, is probably going to be a bit easier, but I think, actually, ultimately, agricultural residues offers us even more potential for scale-up, because there's simply more of it, especially as we move, as we deploy the technology in the different regions.

Hannah: Yes. And I think, yeah, I think, as you said, some of the feedstocks, like agri-residues, are maybe a lot more seasonal. Whereas, as you said, wood, waste wood, we've already got those supply chains in place. In the UK, I think this was the figure, it was around 5 million tons of waste woods was generated in the UK last year. How much of that could feasibly be used in SAF production? Or is that mainly sent to other wood processing industries?

Jonathan: So, within the UK, roughly, roughly, there's about 10 million tons per annum of wood production, of which 5 is going into sawmills and the like, so we can take the residues from that, and you've got waste wood, but certainly, for use in a new emerging industry like the SAF industry, we're going to need to be quite restrictive, especially to start with, on the quality of the wood that we use. So, I think it's fair to say we'll be looking at wood biomass residues, but then if we use waste wood, it's going to have to be category A, so, the category which is the cleanest, and without contaminants and the like. Over time, I'm sure the technologies will be refined and optimized, and there may be a bit more flexibility to tap into other waste wood pools. I'm also very conscious that this is a new industry, but actually, these wood residues and waste wood is being used currently in the bioenergy sector and in other sectors. So, whilst the SAF industry represents a huge opportunity, we also need to recognize that these materials are being used in other sectors at the moment, so, it's going to be an evolution, I think, in terms of using more of these materials in the SAF industry, and finding alternatives, lower-cost alternatives, for the other sectors that are currently using this material. Of course, also, where woody residues and waste is used into the bioenergy sector there, I know that in some markets there are schemes to support that, subsidy schemes, or contracts for difference. Those are now running out in some cases, and so there could be some product that's available, that moves away from the bioenergy sector over the coming years.

Hannah: Earlier as well, you mentioned the biochar co-production, which could be used to make it carbon negative. Just from a carbon accounting perspective, could the credits you get through carbon removal become as important as the fuel itself?

Jonathan: Well, you're right. In the case of Novo Pangaea's technology, we, as I think I mentioned, we produce biochar as a co-product, and that has applications in its own right, to improve soil quality, but also in other applications, like in construction. But yes, by virtue of it being seen as a permanent form of carbon capture, it does generate a carbon removal credit value, which has a value today, and that will undoubtedly grow over time. Whether that will become more valuable than the value of the fuel that we're making remains to be seen. But it's certainly an important part of the overall revenue mix, and is key to the economic feasibility of our projects using our technology. Other technologies that are being developed use biomass, and don't create that biochar carbon credit value alongside it. It depends a little bit on the production technologies to whether that's gonna be available or not. But either way, the fuel itself, by virtue of using a renewable, as opposed to a crude oil feedstock, or fossil feedstock, is generating, according to the lifecycle analysis, a carbon, a net emission reduction versus the fossil fuel equivalent.

Hannah: When you mentioned, so, you will have the biochar co-production, I think maybe now we could focus in a little bit about what you're doing. So, you have your first commercial plant, and that's gonna be based in the UK, using UK-sourced woody residues. Can you tell me a little bit about your project, but also how your process differs from other production pathways? So, from my understanding, you're doing pyrolysis-based, rather than gasification.

Jonathan: That's correct. So, our first project will be in the UK. We have a demonstration plant already in the UK, on Teesside, where we're fine-tuning the engineering design, because one thing is to show the chemistry works in a lab or pilot plant, but the critical next step is to actually be sure that the engineering design, and operation of it, actually works, at a commercial scale, and so that's the purpose of our demonstration plant, that we're further upgrading during the course of this year and next year. And then, we will be moving forward with our first commercial plant, as part of Project Speedbird, which is a project that has British Airways as the off-taker of the bioethanol that we'll be producing for conversion to SAF, with a partner company called LanzaJet, who are also planning a plant on Teesside. So, it's really an end-to-end value chain, from the biomass residue, through the bioethanol that we will make, into SAF, for use in the UK, to meet the mandate obligations. So, that project will go through final investment decision, and come onstream in 2030-2031, and then it'll be the first of several plants that we plan in the UK and elsewhere. That's one of the production pathways that uses biomass residue. There is, as I mentioned, and as you mentioned, also a production technology which gasifies the biomass and then converts it into a liquid fuel. There are one or two projects also pursuing that pathway in the UK, as well as outside the UK. So, really, we see the demand for biomass residues picking up from about 2030 onwards, when these plants have gone through the construction phase, and start operations.

Hannah: Amazing. Thank you. Could you quickly explain a little bit about how the pyrolysis base process differs from gasification, and if that's almost better to scale?

Jonathan: I think, to be honest, time will tell, as we bring the first commercial plants upstream and onstream, and as we see just how much optimization can be achieved, and how much the cost can be brought down, as we both optimize and scale up into larger facilities. There are various studies that have been done to say that the pyrolysis process has a lower cost of production versus the gasification, Fischer-Tropsch, versus indeed other forms of production technologies, such as the so-called power-to-liquid pathway. But ultimately, the proof of the pudding will be in what actually happens when these plants come onstream and the pricing that these projects can bring to market. Pyrolysis is effectively where we take the biomass and we break it apart at high temperature in a vacuum, and pull out on the one hand the sugars that we convert into ethanol, and on the other hand, we capture the lignin as biochar. Gasification is a quite different process. So, in summary, I would say time will tell which is the most cost-effective and the most scalable.

Hannah: Thank you. I just, quickly, before we move on to final thoughts about your project and the milestones coming up, you mentioned that you would be mainly focusing on biomass woody residues. Are you able to tell us what volume of woody residues you'd be needing per year, and how important maybe flexibility and what you could use is important to your longer-term strategy?

Jonathan: Yeah. So, in the UK, we'll start with woody biomass residues, and we'll be needing over 1 million tons of dry woody biomass to convert into approximately 200 million liters worth of ethanol, as well as also a significant amount of biochar. But actually, as we deploy our technology with partners in other regions of the world, I actually expect us to move quickly towards other agricultural residues, whether it's corn stover, bagasse, as the residue from the sugarcane industry, rice husks, wheat straw. So, there's a whole host of other agricultural residues that I would envisage actually being used as we deploy technology internationally. So, yeah, that's approximately the kind of scale of feedstock we'll need for that kind of a output level.

Hannah: And with that significant biochar output, would that be targeted to, I think you mentioned soil improvement, or is it more to industrial uses, or permanent carbon removal? What's, like, the targets for the biochar?

Jonathan: So, firstly, we see the biochar being deployed in the horticultural and agricultural applications, to improve soil quality, and ultimately yields. But I think that the construction sector, so, concrete and asphalt, is another opportunity. It can be used as a mix-in, together with cement and aggregates, and actually can impart, not only can it even improve performance because of its light weight, but properties that enhance strength characteristics, it can be used for water treatment, sorry, for water filtration, and the high-quality biochar, with a high carbon content, can even be used in lightweight high-performance composite materials. So, there are all kinds of markets that can be developed. This is very much an emerging market, but I see that once the benefits are seen in its application, for example, in farming and agriculture, and in construction, this is a market that's not unique to the UK, but can be deployed globally. So we're very keen on seeding the market and showing how it works here in the UK, and then having those very same companies seek to use the same material in other regions, as we deploy our technology and produce it in those other regions.

Hannah: What are the key milestones for Project Speedbird that we should be watching out for over the next couple of years?

Jonathan: Yeah. Speedbird in the UK is for sure our showcase project, that will demonstrate the technology works technically, but also commercially. So, we are working right now on fine-tuning the engineering design, so that we can get to a final investment decision in 18 months to 2 years from now. So, the first plant will come onstream around about 2030. And then we plan on having subsequent plants coming onstream in the UK, as well as starting to deploy our technology with projects internationally.

Hannah: Brilliant. Thank you so much, Jonathan, for a very interesting chat about SAF and biomass's place in it.

Jonathan: Not at all. Great to have a conversation, and look forward to follow-up conversations in due courses.

Hannah: I agree. Thank you. Stay tuned for the next edition of the Argus "Biomass Beat" 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 reports, and visit us at argusmedia.com.