Questions and Answers

BIOMASS/Feedstock

» What types of biomass can be used?

It is technically possible to use all feedstocks that contain carbon, provided their moisture content is not too high.

In practice, we are only planning to process biomass in Germany that complies with the German Biomass Ordinance. As well as wood (industrial wood, short rotation coppice, recycled wood), this includes agricultural biomass, such as straw residue.

» Would CHOREN also consider importing biomass?

Both for ecological reasons and taking into account the logistical effort and transportation costs, CHOREN intends to source the necessary biomass from the regions where its plants are located.

During the initial stages, however, while local suppliers are still in the establishment phase (fast-growing tree species can first be harvested after 3 years), recycled or imported wood may also be used as feedstock.

Sustainable production in the country of origin is a key precondition for the import of biomass quantities. We will not be using raw materials originating from clear-cuttings or from production processes that have a considerable negative impact on the climate and the environment. CHOREN therefore expressly supports the activities that are under way on a German and European level to introduce clear sustainability criteria.

» Is there enough biomass available?

The EU Biofuel Vision Report¹, published in 2006, predicts that fuel production from biomass can meet up to 25% of the EU’s automotive fuel needs.

According to the Fachagentur Nachwachsende Rohstoffe e. V., the German government’s Agency for Renewable Resources, the potential for the production of biofuels is even higher. Assuming that energy plants are grown on 4 – 6 million ha of agricultural land, biofuels could in future satisfy 20–25% of fuel demand in Germany. For Europe, the share could even be as high as 40%.²

The last national forest inventory for Germany, for example, pointed to the unused amounts of wood in small private forests, where intensity of use is currently only about half as high as in state forests.³

In 2007, energy crops were cultivated on 12% of agricultural land in Germany (2 million ha). According to a study by the German Federal Ministry for the Environment⁴, this land area could be more than doubled to 4.4 million ha by 2030, without jeopardizing food supplies.

» How much biomass is needed for the production of synthetic biofuels?

Some 65,000 dry tons of wood are needed per year for the operation of our Beta plant at Freiberg, Germany. This consists of recycled wood, low-quality industrial wood, and sawmill byproducts.

Some 1 million dry tons of wood will be needed per year for the operation of a Sigma plant. Alongside local raw materials, imported recycled wood and forest wood will also be processed in the initial phase. The plant will initially not be designed to process straw, as this would require a higher technology input; however, it can be retrofitted to allow this.

Given the current cost structure for long-distance transportation, the use of raw materials from other continents is only likely to be considered in exceptional circumstances, since wood produced in the region will be considerably cheaper when cost of delivery to the plant is included.

» Is it not better to use biomass for production of electricity or heat?

As a basic principle for any raw material, physical use is preferable to use as an energy source.

Therefore, foremost priority must be given to using wood in furniture or building structures. After that comes the production of high-quality chemical products such as fuels and lubricants, which is what we do at CHOREN. In thermodynamic terms, the production of low-temperature heat for heating buildings is the least effective form of use and it is a function that can also be fulfilled by other energy concepts (heat insulation, solar energy, geothermal energy, etc.).

For the needs of the heat market, especially the widely used small heating units, the feedstocks need to be heavily pretreated in order to allow sufficient automation and comply with flue gas emission requirements. The use of recycled wood is thus largely unsuitable for the heat market or would only be possible via heat distribution networks. These only account for a small portion of the heat market and are mainly supplied from efficient CHP plants.

The "Material stream analysis of sustainable biomass use for energy production", commissioned by the German Ministry for the Environment and published by the Ökoinstitut Darmstadt in July 2004, shows that, in 2030, energy production from German-grown biomass can sustainably satisfy not only 16% of power demand and 10% of heat demand in Germany, but also 12% of fuel demand.⁵

» What is the land use efficiency of synthetic biofuel production?

Synthetic biofuel has the best land use efficiency of all liquid biofuels. According to the FNR it achieves an efficiency at least three times higher than biodiesel from vegetable oil or grain-based ethanol.⁶

» Does the production of synthetic biofuels compete with food production?

CHOREN will be using organic residues and short rotation coppice energy crops as feedstocks.

The use of recycled wood, forest wood, straw or other organic residues in BTL production does not involve any competition with food production.

Where agricultural land is used to grow fast-growing woody crops, there is much less land use competition than with biodiesel or ethanol production, since one hectare yields about three times as much fuel, with a considerably better carbon balance.

Moreover, even agricultural land that is less suitable for growing food crops (for example, because of waterlogging, contamination, dryness or stony ground) can be used to cultivate fast-growing woody crops.

Example of the Sigma plant at Schwedt, Brandenburg, Germany: industrial-scale production

• Total agricultural land in Brandenburg: 1.35 million ha
• Sigma plant’s land requirement (with 60% of feedstock sourced from short rotation coppice for production of 270 million litres of synthetic biofuel): approx. 40,000 ha depending on crop yield.
  (This calculation is based on FNR figures for an average annual production capacity of 4,000 litres BTL per hectare.)²
• Land use efficiency compared with biodiesel: approx. 3 times better, i.e. to produce the same quantity of biodiesel would require roughly 200,000 ha of agricultural land.
• The Sigma plant will initially be operated with recycled wood and wood energy crop, some of which will be imported. CHOREN has decided to set itself strict sustainability criteria right from the start.
• It is planned to gradually increase the share of short rotation coppice in feedstock to at least 50%.

BTL plants

» How much did the construction of the Beta plant at Freiberg cost?

The investments amount to roughly 100 million euros.

» How much synthetic biofuel will be produced?

The plant at Freiberg known as the Alpha plant (pilot plant) produced up to 100 litres per day. The pilot plant is currently not in operation.

The so-called Beta plant, the world’s first commercial plant for the production of synthetic biofuel, which is also at Freiberg, will produce up to 18 million litres of synthetic fuel per year. That is equivalent to the annual fuel consumption of roughly 15,000 cars.

Plants with a fuel capacity of at least 100,000 tons per year have the potential to achieve greater economic efficiency. CHOREN is therefore planning to construct standard plants, known as Sigma plants, with an annual output of 200,000 tons or 270 million litres of synthetic biofuel.

» Where will the first Sigma plant be built?

In an intensive site evaluation process, CHOREN rated more than 20 sites in Germany as good or very good.

CHOREN is currently looking into the construction of the first Sigma plant at Schwedt, in Brandenburg, Germany.

Key reasons for choosing Schwedt include:

• proximity to the Schwedt petroleum refinery, which promises a range of synergy effects,
• the availability of agricultural and forestry land in the region
• and site factors (industrial infrastructure, transportation links etc.).

» How much will the construction of the Sigma plant at Schwedt cost?

Investments for the Beta plant at Freiberg amount to some 100 million euros. The Sigma plant will be around 15 times its size, but we expect considerable economies of scale, which will have a major impact on the costs.

» What is the schedule for the construction of the Sigma plant?

Five years are needed to plan, build and commission a plant for industrial-scale production (270 million litres of synthetic biofuel per year). The design will of course draw on experience from the Beta plant at Freiberg.
Provided the final decision on investment is made in 2010, production could begin in 2013/2014.

» Are there any caveats regarding construction of the Sigma plant?

Now that the Beta plant has started production, any caveats are of a financial rather than a technical nature. The decision to invest in the Sigma plant depends on secure long-term industrial policy conditions in Germany. The key element in the critical path is the lack of a reliable planning basis for investors beyond the year 2015.
CHOREN will put together a broader basis to finance the investments for the construction of the Sigma plant. That involves both bringing in further co-investors and procuring outside capital, partly secured by guarantees.

The environment and climate protection

» How is synthetic biofuel’s climate balance?

BTL technology has a key role in achieving the ambitious political climate objectives for the automotive sector. Emissions from the production and use of synthetic biofuel are roughly equivalent to the amount of CO₂ absorbed by the plants from the air during their growth.
The life cycle analysis (LCA) of synthetic biofuels as carried out by an independent institute in accordance with ISO 14040ff has shown that, compared with fossil diesel, synthetic biofuels can reduce greenhouse gas emissions by up to 90%.⁷
The use of one litre of mineral fuel results in emissions of about 3,000 g of fossil CO₂. With the use of woody crops for BTL production and largely avoiding the use of external energy sources, net CO₂ emissions per litre of BTL fuel are 300g on average.
This permits reductions in CO₂ emissions of up to 90 % compared to fossil fuel. This is achieved without negative impacts on other aspects of the environment, such as water or soil pollution.
In the cultivation of fast-growing trees (short rotation woody crops), the use of fertilizer and pesticides is generally very low, as is the production of laughing gas compared to rape cultivation.
With the use of recycled wood, forest wood, straw or other organic waste, the environmental balance is even more positive.

» Does its use emit any other substances that are harmful to the environment?

Synthetic biofuel is a diesel fuel free of aromatics and sulphur and has considerably lower pollutant emissions than conventional diesel.
For example, combustion of synthetic biofuel produces 30 to 50% lower particulate emissions (soot) and up to 90% lower hydrocarbon emissions.

» Does the use of biomass permanently remove nutrients from the soil?

It is currently not known whether the plant nutrients are bound in the slag following the conversion process, or whether they are washed out during gas treatment. There are currently no reliable data regarding nutrient quantities.
However, the low level of ash formation during wood combustion would indicate that only small nutrient quantities are bound in the wood.
Investigation of the nutrient cycle, possibly leading to process engineering modifications, will be the focus of future R&D projects. There isn’t enough sample material (slag, cooling water) available yet to allow this.

Product

» Where can synthetic biofuel be purchased?

CHOREN will produce synthetic biofuel, to be distributed by our partner Shell.
In general, it can either be blended with conventional diesel or sold as pure synthetic biofuel. CHOREN will not build up its own distribution system to reach the end customer.

All of the fuel produced by the Beta plant at Freiberg is sold to our partner Shell. The availability of the fuel to the end consumer will be the subject of future announcements by Shell.

» Are all diesel engines suitable for the use of synthetic biofuel? Or does the engine have to be converted?

Synthetic biofuel can be used in any diesel engine (in every old, current and future engine) and in any blend ratio, and thus also in pure form. No form of engine conversion is required.

» Can synthetic biofuels also be used in gasoline engines?

Synthetic biofuel from CHOREN can at present only be used in diesel engines.
The light components generated in its production (naphtha) can be used in refineries as part of gasoline. It is technically possible to produce pure fuel for gasoline engines, but it requires additional process stages and is not currently planned.

» What are the advantages of BTL diesel?

BTL diesel has outstanding performance characteristics:

• BTL diesel is free of aromatics and has a high cetane number. That results in better ignition and combustion properties. Exhaust emissions are considerably lower than with fossil fuel (soot: 30 to 50%; hydrocarbons: up to 90%).
• BTL diesel is compatible with particulate filters and even lengthens filter life.
• BTL diesel is sulphur-free (better than the 10 ppm contained in so-called sulphur-free diesel).
• BTL diesel is the fuel of choice for the next generation of engines because it is "designable".

BTL diesel has the greatest potential of all biofuels because

• it can be made from a very wide range of feedstocks.
• the whole plant is used, not just its oil, sugar or starch content.
• in the short term, the yield per hectare is at least three times higher than that of biodiesel. In the long term, the use of optimized crops and the integration of regenerative hydrogen may improve this advantage to a factor of 10.

BTL diesel has a high greenhouse gas mitigation potential (CO₂ reduction):

• The life cycle analysis (LCA) submitted by the independent experts shows that even the relatively small Beta plant at Freiberg is capable of reducing CO₂ emissions by up to 90% compared with fossil diesel fuel.
• The LCA also shows that there is a similar reduction in photo-oxidation potential (summer smog)⁷

The use of synthetic biofuels involves no additional costs for alterations to vehicles (engines) or the distribution system (gasoline stations), while offering a potential for the next generation of engines (for example, VW’s Combined Combustion System).

» What is SunDiesel^®?

SunDiesel^® is a trademark for BTL diesel.
The trademark SunDiesel^® is a registered trademark of Volkswagen Aktiengesellschaft in the European Union and additional countries and is used under license by Volkswagen Aktiengesellschaft.

» How much will synthetic biofuel cost at the pumps?

CHOREN will produce synthetic biofuel, to be distributed by our partner Shell. Since the project has not yet been completed, it is not yet possible to conclusively determine the price for the end consumer. Shell will be responsible for determining the price.

Company/cooperation

» Workforce and capital employed

• Workforce: The group has some 300 employees (as of December 2008).
• Sales: The main activities of the CHOREN group currently focus on technology development, thus paving the way for future sales. Nevertheless, some subsidiaries, for instance CHOREN Components GmbH, post profits due to a significant proportion of external orders.
• Capital employed: >180 million euros, including some 100 million euros in investments for the Beta plant.
• The vast majority of finance has so far been provided by the private shareholders.

» What companies belong to the CHOREN group?

CHOREN Industries GmbH is the parent company and is based in Freiberg. The group has a number of subsidiary companies, including CHOREN Components GmbH, CHOREN Technologies GmbH, CHOREN Biomass GmbH and CHOREN Export GmbH. CHOREN Export GmbH is the parent company of CHOREN USA LLC, based in Houston/Texas.
Alongside these are project companies such as CHOREN Fuel Freiberg GmbH & Co. KG.
CHOREN also has offices in Hamburg and Beijing.

» Who are CHOREN’s shareholders?

The majority of shares in CHOREN are owned by private individuals. They include a number of noted business leaders from northern Germany. Daimler Aktiengesellschaft and Volkswagen Aktiengesellschaft are minority shareholders in CHOREN.

» What role does Shell play?

Shell contributes the FT technology for the production of synthetic biofuel in the Freiberg Beta plant.
In addition, Shell receives the product and thus guarantees its quality to the end customer.

» What involvement does the automotive industry have in CHOREN?

In 2002, cooperation contracts were already concluded with Daimler and Volkswagen, covering areas such as collaboration on certain R&D projects.
Both companies have held minority shares in CHOREN since October 2007.

¹ "Biofuels in the European Union", Final draft report of the Biofuels Research Advisory Council (BIOFRAC) dated March 14, 2006
² Fachagentur Nachwachsende Rohstoffe; http://www.fnr.de/cms35/BTL-english-version.788.0.html; last accessed: September 2008
³ "Die zweite Bundeswaldinventur – BWI" (Second National Forest Inventory – NFI²); Federal Ministry of Food, Agriculture and Consumer Protection 2004
⁴ "Der volle Durchblick in Sachen Bioenergie" (The lowdown on bioenergy); Agentur für Erneuerbare Energien (Agency for Renewable Energies) 2008
⁵ ”Stoffstromanalyse zur nachhaltigen energetischen Nutzung von Biomasse" (Material stream analysis of sustainable biomass use for energy production); BMU final project report; May 2004
⁶ "Pressegraphik Biokraftstoffe im Vergleich" (Press diagram: Comparison of biofuels); Fachagentur Nachwachsende Rohstoffe; http://www.bio-kraftstoffe.info/cms35/Archiv-Nachricht.998+M579ca3f465d.0.html; last accessed: September 2008, April 2008
⁷ PE Europe GmbH: "Vergleichende Ökobilanz von SunDiesel (CHOREN-Verfahren) und konventionellem Dieselkraftstoff" (Comparative ecobalance of SunDiesel (CHOREN process) and conventional diesel fuel), September 2004