Profitable... straw

Young is a co-founder of the Hashtag Bio project (#bio), which aims to create a complete chain of production and marketing of charcoal. Young has already made a practical contribution to the field by developing his own technology of producing charcoal from... straw.

The Day visited a shop in Brovary, Kyiv region, where Ukrainian straw is converted into a high-quality charcoal, and found out who buys this product, what are its prospects in Ukraine, and why, in fact, our country is best-placed for launching such an operation.

NINE MILLION TONS OF STRAW REMAIN UNUSED...

The shed smells of burnt matter, air is stuffy and engine buzzes aloud. Sunshine, penetrating through the small windows, reflects from silvery-metallic piping of the machine which Young and his colleagues have developed. It processes straw into charcoal.

 “What we are doing is called torrefaction or, to put it simply, roasting of straw. We produce solid biofuel from it, which is similar to the conventional coal but has better properties,” Young tells The Day.

 He takes a wad of straw, carefully stored around the machine, and demonstrates how the transformation works. Straw is loaded into a container where the low heat and the limited access of oxygen act to launch a kind of baking process. Thus, it retains dry matter only. The end product’s properties resemble coal, but its energy density is 25 percent higher. This charcoal is then passed through a special press from which it emerges in the shape of ready-for-transportation briquettes. “Western Europeans have been processing straw for a long time, while Ukrainians have not, although there are about nine million tons of straw here which are not used for commercial purposes, and most of it is simply burned,” Young explains Ukraine’s advantages for such activities.

UKRAINIAN SUPPLIER AND FOREIGN BUYER

The businessman explains that the hardest part was to develop a system that would enable the enterprise to save on external energy while consuming mostly the heat that is produced by the machine itself. Young is sure that these savings are the secret of success. There were several attempts before where foreign companies brought their equipment for processing Ukrainian straw. But the cost of energy consumed by their machines was prohibitively high, making these plants lose money.

The biggest costs in Young’s whole scheme are electricity that runs the engine and transportation expenses for straw and the end product. However, the businessman managed to reduce even these expenses by making the processing machine mobile. Having concluded an agreement with an agricultural enterprise to supply straw, he brings the machine there in containers. After the contract has expired, Young’s employees will repack it and take to another supplier.

 His machine is now ready for its first commercial test. In a few weeks, it will be sent to Lviv region. There a local agricultural enterprise will provide straw for processing. “We are looking for straw suppliers and end product buyers that sit as close as possible to each other. It is best when they have water or rail links, as any mistake in logistics can send our costs above revenue,” the businessman explains.

 Even as he looks for a supplier of Ukrainian straw, Young tries to find a foreign buyer for the end product. He has found a buyer in Poland, but there is an interest from other Western European countries’ companies as well. “The Polish market is very large, because their government has placed emphasis on biofuel. More generally, the market for biofuel in Europe is growing rapidly, so they have gone as far as to harvest biomass in Africa and America... So why not Ukraine?” the Briton asks.

70 PERCENT FOR EXPORT

According to the EU Commission on Agriculture and Rural Development, the biomass market in Western Europe will double by 2020, reaching 30 million tons per year. It all will come thanks to the legislation which targets an increase in the use of renewable energy by 20 percent over seven years and a reduction of carbon emissions by a fifth as well. However, Young predicts that in a few years Ukraine will also become not only a supplier of biomass, but a consumer of it, too. “Ukraine will also move in this direction, you need to do it even to sign the Association Agreement with the EU. The closer Ukraine will be to Europe, the more important the alternative sources of energy will become. The problem is that the product that one produces for the biomass market is quite expensive, the people are not willing to pay the full price, while Ukraine lacks subsidies,” Young explains.

 According to the Ukrainian Pellet Union, about 70 percent of Ukrainian-produced pellets and briquettes are exported, with just 30 percent consumed locally. Poland alone consumes 200,000 to 300,000 straw briquettes from Ukraine per year. I ask Young how he manages to convince Ukrainian farmers to sell straw to him for processing, rather than simply export it to Poland?

 “Agricultural enterprises are not interested in how we will process their straw and what quality the resulting charcoal will be; they are interested, however, in how much will it cost them to bring the straw to our plant and take back the end product, and, most importantly, how much will they earn doing it. Many farmers were considering the idea of selling straw to Poland before refusing because of the risks. A thin margin between their costs (freight included) and unstable selling price may make such export unprofitable,” the businessman explains.

 While Young talked about his machine’s features, the wad of straw which he had loaded into it went through the whole processing cycle, and the resulting mixture was loaded from the container into a bag. The businessman collected a handful of the black mixture by hand and began to check the quality of his “gold.” He was pleased with it.