3.1.2. Economic Assessment

The economic assessment is presented in Table 4. The tax used in the study is the federal tax in New Zealand, 34% of the taxable income. The HTL process and the upgrading of the bio-crude are the two processes that contribute the highest to the capital cost, comprising 28% and 29% of the total installed cost (TIC). Efforts are needed to decrease the cost of these sub-processes. Zhu et al. [38] reported that the TIC can be reduced by approximately 10% through decreasing of the operating pressure by 37 bar and temperature of the HTL process by 20 ◦C. Zhu et al. [38] also investigated hydrocracking the heavy fuel oil and reported that it increases the production rate by 62.9% as compared with the case without hydrocracking. This is another important direction for further work in relation to the present study.

**Table 4.** Cost results for HTL system with 18% black liquor.


Figure 4 shows the MFSP for redirecting a range of fractions of weak black liquor from the kraft mill to the hydrothermal liquefaction process for biofuel production. The figure shows that the MFSP decreases up to 20% of the kraft black liquor and the MFSP starts increasing again. This is due to the increase in the cost of radiata pine.

**Figure 4.** MFSP and the breakdown of the levelised production costs of the HTL process with different processing size.

At the current forestry activity, there is an excess feedstock supply near the kraft mill [39]. However, at 25% of black liquor, the radiata pine feedstock at that vicinity is insufficient. The cost of the feedstock for the 25% black liquor case takes into account the additional 150 km needed to travel for feedstock collection and an additional 350 km for the 30% case and higher. The cost used to calculate the additional distance travelled for the delivery of the radiata pine is costed according to Robertson [40]. Therefore, the assumption of taking 18% of the black liquor used as the basis of the calculation is near the optimum.

The main products of the HTL process are biofuels, heat utilities, and heavy fuel oil. The biofuels are costed in the MFSP and the heat utilities are delivered back to the kraft pulp process. The heavy fuel oil, in this case, is equivalent to marine fuel oil. It is a revenue stream and is priced at the same cost of fossil fuel-derived marine fuel oil. In the last year, the marine fuel oil price has fluctuated at about 250 NZD/t [41]. The selling price of the heavy fuel oil is studied at low, average, and high values: 800, 1000, and 1150 NZD/t.

Figure 5 shows the change of feedstock (radiata pine and natural gas), electricity costs, and capital cost. The range of price shows the change from −30% to +30% based on the cost used in the calculation. The capital costs were estimates, the probable accuracy of the estimate is ±30% [42]. According to Figure 5, the cost of radiata pine (i.e., feedstock) has the highest effect on the MFSP, as reported in other studies [38,43].

**Figure 5.** Sensitivity analysis of the change in materials and capital cost.

#### 3.1.3. GHG Emission

The calculated GHG emission for the HTL process is a credit of 97.5 kt CO2-e/y due the credits earned from sequestration of the solid residue outweighing the total emissions released by the process, 194.3 kt CO2-e/y.

In this work, the solid residue (biochar) produced from the integrated hydrothermal liquefaction process is used for soil amendment to earn GHG credits [44]. According to He et al. [45], 77.86% of the organic compound in the biochar would break down into the soil while the remaining carbon would be released into the atmosphere as GHG emissions. The net carbon credit of the biochar is estimated at 291.8 kt CO2-e/y. The carbon credit from the by-product earns 7.3 million NZD/y with a carbon price at 25 NZD/t. Sequestering the biochar for soil while producing emissions credits has economic and environmental merit. However, there may be extra opportunities for higher-value markets for the biochar in the future.

Due to the high pressure of the HTL process, a substantial amount of electricity is required by the process. The emissions shown in Table 5 are low because 90% of the electricity in New Zealand is renewable. Table 5 compares the GHG emissions of the HTL system by comparing the emission factor for electricity in Australia. The GHG emission factor for Australia assumed is the National Electricity Market's emission factor [46]. The results in Table 5 show that the HTL production system is carbon neutral fuel, which provides a net reduction in New Zealand, due to the source of the electricity.



A high amount of natural gas is used in the HTL process to supply the required heat demand of the kraft mill. Due to the energy-intensive HTL process, the net GHG credit is less than 100%. One of the ways to reduce heat consumption is in the SCWG process. In the current SCWG process, the reaction process is an endothermic process. The natural gas needed by the SCWG process is used to solely heat the feed and maintain the temperature of the reactor. Studies from Castello [47] and Gutiérrez Ortiz et al. [48] suggest that the reaction process achieves an auto-thermal regime at a biomass concentration of 15 to 20 wt%. At that regime, maximum H2 is produced, as well as methane production. Future work should include other biomasses to have a concentration that is beneficial for both hydrogen production and process energy sustainability.

Nie and Bi [44] carried out a life-cycle assessment of HTL fed with forest residues. They reported GHG emissions of 20.5 kg CO2-e/GJ. In Nie and Bi [44], the natural gas needed for producing hydrogen (as feedstock and heating) is 3.0 kg of natural gas per kg of H2 produced. Due to the high temperature in SCWG, the required natural gas for the hydrogen production is 6.2 kg of natural gas per kg of H2 produced. However, the median value for the production of biofuel through the HTL process is 23.58 ± 4.18 kg CO2-e/GJ [44].

#### 3.1.4. Biofuel Policy Consideration

The question to answer is under what situation would the cost of biofuel be sufficiently profitable to compensate for the high level of investment risk. New Zealand's fuel price is governed by global oil supply and demand factors. Table 6 shows the breakdown of the current petrol price in New Zealand.

**Table 6.** Breakdown of petrol price in New Zealand, as of February 2020 [49].


The ETS in New Zealand excludes biofuels from the emissions calculation. The overall carbon balance reported in the previous section only includes the carbon released by the HTL production system, which is calculated to be a carbon neutral system that provides a net reduction in GHG emissions. As a result, the use of biofuel would mitigate the emission of conventional fuel, which is covered by ETS. Therefore, it is assumed that because of the mitigation and that the biofuel is produced in New Zealand, the base cost for comparison with a fossil fuel should include the cost of the refined fuel, plus the ETS liability, shipping cost, and importer margin. The importer margin for the analysis is assumed as the average of 0.45 NZD/LGE. As a result, the current fuel price that the biofuel must compete against is 1.11 NZD/LGE.

Figure 6 shows the effect of GHG prices on the fuel cost. As the GHG price increases, the biofuel MFSP decreases. The increase in GHG price increases the selling price of the heavy fuel oil and revenue earned from carbon sequestration through the solid residue. The current GHG price is assumed to be 25 NZD/t.

At the present time, the GHG price needs to increase its current price to about 47 NZD/t to reach the biofuel MFSP for the current oil price. This price is well within the anticipated range of GHG prices for New Zealand in 2030 [50]. Wetterlund et al. [51] mentioned that the feasibility of the process is highly dependent on policy framework and energy market conditions.

**Figure 6.** Effect of the carbon price on the fuel selling price.

The price of crude oil plays a significant role in the economic viability of biofuels. The crude oil price is often volatile and closely linked to political and economic climates. At the beginning of October 2018, the oil price peaked at about 142 NZD/barrel before falling sharply to around 83 NZD/barrel by the year's end. At the start of 2020, the price had slowly rebounded to 108 NZD/barrel. As a result, it is quite possible in the near future, a 25% increase in the current fuel cost is reasonable. Under this future oil price, the MFSP would be slightly exceeded, favoring implementation of the integrated HTL system.

With New Zealand on its transition to a sustainable economy, one of the ways to pull biofuels onto the market is through favorable policies [52]. In regions like Europe, the U.S., and South-East Asia, governments provide policies to grant biofuel producers tax exemptions and/or subsidies. With a similar effect, governments can also add a tax on specific classes of non-renewable energy fuels, beyond an ETS. To make the biofuel process economical, the New Zealand government could consider either to tax an extra 0.12 NZD/LGE on non-renewable fuels or give a subsidy of 0.12 NZD/LGE to the biofuel producer. An example of emerging markets is the biodiesel program in Colombia. The government implemented a combination of policies which includes the blending of fuels and tax credits for production and consumption, showing success in increasing biofuel production during the early stages of implementation [53]. Developing a comprehensive policy framework for biofuel uptake in New Zealand falls outside the scope of the current thesis but would be an interesting direction for further exploration.

#### *3.2. Scenario 2: Mechanical Vapour Recompression of Black Liquor Evaporators*

Black liquor evaporation in the recovery loop process of a kraft mill is an energy-intensive process. The energy demand of the evaporation process represents 20–30% of site-wide thermal energy demand. Usually, multi-effect evaporators (MEE) concentrate black liquor from about 18% to its firing solids (≈70% for older recovery boilers and ≈85% for modern ones). The first evaporator effect uses low-pressure steam (about 4.5 barab) and rejects heat through a condenser (about 0.18 barab) and cooling tower. To decrease this energy consumption, the integration of the evaporators with the kraft pulp processes is maximised. An alternate approach to energy reduction in evaporation systems is the use of vapour recompression technologies, thermal vapour recompression (TVR) and mechanical vapour recompression (MVR) [54]. MVR technology has rarely been considered for black liquor evaporators due to the availability of "free" energy gained from the recovery boiler as well as black liquor's high boiling point elevation, which reaches about 15 ◦C at 67 wt% solids. However, some older kraft mills burn fossil fuels in supplementary boilers but have access to renewable electricity. As a result, integration of MVR and/or TVR technology into the MEE may be an economic opportunity to reduce fossil fuel use and emissions.

The methodology for this scenario applies TSHI to correctly integrate MVR and TVR with MEE to significantly reduce the use of fossil fuel and its associated emissions. The methodology is further presented in Walmsley et al. [55].

3.2.1. Total Site Heat Integration for Conventional 7-Effect Black Liquor Evaporators

The total site profiles (excluding the evaporator) and the site utility grand composite curve for the studied kraft mill are shown in Figure 7. The T\*\* denotes double-shifted temperature, a notation used in Total Site Heat Integration (information available in [34]). Weak black liquor enters at the lowest pressure effect at 85.0 ◦C, which initially operates with a saturation temperature of 66.8 ◦C. For each of the following effects, black liquor increases in pressure and enters at a temperature lower than its saturation temperature. At present, the 7-effect evaporators bleed 2.6 MW of steam from the 2nd effect to the foul condensate stripper column (in place of low-pressure steam). The net SEC (specific energy consumption) for the 7-effect evaporator is 420 kJ/kgevap.

**Figure 7.** (**a**) Total site profiles and (**b**) site utility grand composite curve with existing integration for a conventional 7-effect black liquor evaporator.

3.2.2. Black Liquor Evaporators with Vapour Recompression

Figure 8 exhibits the TSHI of the 3-stage MVR system. There are two integration points: condensate heat recovery and a vapour bleed from stage 2 for the stripper column. Condensate from the 3-stage MVR system is available at 90 ◦C, which is hotter compared to 72 ◦C condensate from a conventional 7-effect set-up.

**Figure 8.** Total site heat integration of 3-stage mechanical vapour recompression (MVR) evaporator with the site steam and hot water utility system using the site utility grand composite curve.

A thermo-economic assessment of three options to retrofit black liquor evaporators with vapour recompression has been studied with results presented in Table 7. Table 7 shows a re-evaluated result from Walmsley et al. [55]. It is crucial to indicate that the modelling accounted for electricity use and includes the loss of cogeneration opportunity, increased heat integration, reductions in low pressure steam use, cooling tower expenses, carbon emission cost, and added maintenance due to MVR and TVR equipment.

The 2-stage MVR system attains a simple payback of 1.7 y and an internal rate of return (IRR) of 57%, which is better when compared with the 3- and 4-stage MVR systems. However, the challenge with implementing the 2-stage system is that the required saturation temperature lifts (8.8 and 9.5 ◦C) for the two MVR fans. These levels of saturation temperature lift push the upper design and operational limits of an MVR fan. The 3-stage MVR system requires lower temperature lifts (7.0, 3.3, and 8.0 ◦C) and achieves a greater levelised profit than the 2-stage MVR system. The 4-stage MVR uses less electricity than the 2- and 3-stage MVR systems but the higher capital of a fourth MVR fan offsets the energy benefit.

Figure 9 shows the MFSP of the kraft mill-integrated HTL process with the 3-stage MVR upgrade. The MFSP of the fuel is higher by 0.02 NZD/LGE, as compared to the base kraft mill due to the electricity use by the MVR process. The higher grid sourced electricity use in the HTL system increases the GHG emissions, and the production system is no longer a carbon credit production system.


recompression options with an existing effect evaporator. The

> **Table 7.**

Thermo-economic

assessment

 of

retrofitting

 various

multi-stage

mechanical

 vapour

**Figure 9.** MFSP and the breakdown of the levelised production costs of the kraft mill-integrated HTL with MVR upgrade, with different processing size.

#### *3.3. Scenario 3: New Modern Recovery Boiler*

To increase the energy efficiency of the existing kraft mill, a new recovery boiler to replace the "old" style RB is considered. The aim of the new recovery boiler is to minimise the energy purchase and maximise power generation. This is achieved by producing higher steam parameters. The current recovery boilers in the existing kraft mills are fired with black liquor at about 67% dry solids to produce superheated steam at 400 ◦C at 45 bar. Over the years, recovery boiler technology has been improved and developed to fire black liquor at 72% to 85% dry solids. Environmental benefits include reductions in SO2 and H2S emissions with dry solids above 75% dry solids [56].

Figure 10 shows the utility system of replacing the old recovery boiler with a higher solids recovery boiler. As compared to the old recovery boiler, the new recovery boiler produces very high pressure (VHP) steam at 110 bar and 515 ◦C.

A mass and energy balance of the recovery boiler is carried out to evaluate the economics and operating costs using an Excel spreadsheet. The spreadsheet includes the existing supplementary boilers and turbine, process heat demands, and a new turbine. The design of the new turbine is based on satisfying the steam demand of the kraft pulp process. The new recovery boiler generates as much steam as possible and is primarily expanded in the new turbine. Any additional steam is sent to the existing turbine in the kraft mill. The splits of the expanded steam are determined by optimising maximum power generation in both turbines.

Comparing Figure 10 with Figure 2, PB2 was eliminated and the heat supplied by PB1 is reduced by half. The low-pressure steam demands increase slightly due to the higher evaporation demand needed to concentrate the black liquor solids. The difference in the performance of the boilers is presented in Table 8.


**Table 8.** Performance data.

**Figure 10.** Utility system for kraft mill with a new recovery boiler.

Table 8 also compares integrating HTL into the new recovery boiler case, taking 18% of the black liquor solids for biofuel production, as shown in Figure 1. The wood residue used as marginal fuel in PB1 reduces from 8.4 to 5.4 t/h. However, the power generation decreases with the reduction in the marginal fuel used.

Figure 11 shows the effect of increasing the black liquor solids in the HTL process on the power generation and marginal fuel used. The marginal fuel decrease is due to the lower steam demand from the kraft process, which is supplied by the HTL process. When about 52% of the black liquor is diverted to the hydrothermal liquefaction process, the kraft mill will be self-sufficient, in terms of energy demand. The 72 t/h of wood residue would be used as low-cost feedstock in the HTL process.

Figure 12 shows the MFSP of the kraft mill-integrated HTL process with a new recovery boiler. The new recovery boiler generates more electricity through the expansion of the VHP steam to lower quality steam as compared to the current recovery boiler. The decrease in black liquor flow has a higher impact on the decrease in electricity generation. Therefore, higher electricity is needed to replace the losses, which increase both the cost of electricity and the GHG emission cost.

**tŽŽĚZĞƐŝĚƵĞ WŽǁĞƌ'ĞŶĞƌĂƚŝŽŶ Figure 11.** Effect of black liquor solids in HTL.

**Figure 12.** MFSP and the breakdown of the levelised production costs of the kraft mill-integrated HTL with a new recovery boiler, with different processing size.

#### **4. Conclusions and Directions of Future Work**

Hydrothermal liquefaction is a promising biorefinery technology that could be integrated with existing kraft mills. The comprehensive flowsheet of the hydrothermal liquefaction, upgrading of bio-crude, and auxiliary processes analysed in this study was developed in a PhD thesis. The economic evaluation of the integration of the HTL system design has been undertaken to establish key price points that would indicate full-scale implementation can compete with conventional fuels. The net reduction in GHG emissions of the system is 441.8 kt CO2-e/y due to the substitution of conventional petrol and diesel fuels with the biofuel and sequestration of the biochar product. Vapour recompression technologies and a new high solids recovery boiler are considered for the integration with the HTL process. Vapour recompression can be economically integrated into a multi-effect evaporator at kraft mills with older recovery boiler technology, causing a step reduction in steam use. Since vapour recompression acts as an open cycle heat pump, the benefit gained from reducing carbon emissions in supplementary fossil fuel boilers is magnified. A new high solids recovery boiler produces very high-pressure steam that is expanded to generate electricity. The high solids recovery boiler eliminates the use of the natural gas boiler and increases the power generated by 76.8%. Integrating the HTL process in these scenarios increases the MFSP due to the higher electricity consumption of the process.

Future work should focus on improving the economics of the process by reducing the temperature and pressure of the process. The current study of the HTL process is fixed at 355 ◦C and 230 bar due to the availability of data at this condition. Experimental testing on the effect of temperature and pressure on the bio-crude yield and quality should be tested, as the processing conditions play significant roles in the outcome. Looping of a co-solvent in the hydrothermal liquefaction process has been proven to reduce the energy requirement of the HTL process.

**Author Contributions:** This paper is based on the work carried out by B.H.Y.O. in his Ph.D., under the supervision of M.J.A., T.G.W., and M.R.W.W. Writing—original draft preparation, B.H.Y.O.; writing—support, T.G.W.; writing—review and editing, T.G.W. and M.J.A.; supervision, T.G.W. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research was funded by the New Zealand Ministry of Business, Innovation and Employment (MBIE), through project "Catalysing Investment in New Zealand Wood-Energy Industrial Symbiosis Opportunities", grant number CONT-37659-EMTR-FRI.

**Conflicts of Interest:** The authors declare no conflict of interest.
