Bio­fu­els look be­yond set­backs

The Weekend Australian - Review - - Clean Energy - Bren­dan O’Keefe

THE Aus­tralian bio­fu­els in­dus­try has had a rough trot in the past two years. A triple hit has tem­po­rar­ily pulled the rug out from un­der an in­dus­try that a few years ago ap­peared to be ful­fill­ing its po­ten­tial as the green- tinged al­ter­na­tive to fos­sil fu­els.

The po­ten­tial re­mains, but only more ef­fi­cient pro­cesses can help it re­cover from the dam­age caused by three ex­ter­nal fac­tors: loss of an im­por­tant fed­eral tax break, ris­ing cost of feed­stock, and ap­pre­ci­a­tion of the dol­lar.

In 2006 the for­mer Gov­ern­ment closed a loophole that had al­lowed bio­fuel pro­duc­ers to dou­ble- dip: they had been able to claim a re­bate on prod­ucts that had not been taxed. A num­ber of ex­cise re­bates ex­ist through­out the in­dus­try.

Bio­fu­els are fu­els made from agri­cul­tural byprod­ucts such as sug­ars and starches in corn, sugar cane or pota­toes that are fer­mented to pro­duce ethanol; and oil from prod­ucts such as tal­low ( an­i­mal fats) and palm nuts. Al­gae are also pro­cessed to make biodiesel.

It is a small in­dus­try, con­tribut­ing less than half of one per cent of Aus­tralia’s fuel. But in­dus­try lead­ers plan to cut fur­ther into the tra­di­tional mar­ket. Aus­tralian Bio­fu­els As­so­ci­a­tion chief ex­ec­u­tive of­fi­cer Bruce Har­ri­son says: ‘‘ Aus­tralia uses 19 bil­lion litres of petrol ( a year) and at the end of this year, we will be pro­duc­ing 240 mil­lion litres of ethanol.

‘‘ We think that by 2010 there’ll be per­haps 700 mil­lion litres ( of ethanol) and then we think it will go up quite a bit af­ter that through the use of lig­no­cel­lu­losic ethanol ( which ex­tracts fuel from the woody parts of plants).’’

But back to the triple whammy. Flin­ders Univer­sity chemist and biodiesel ex­pert Stephen Clarke says: ‘‘ First there was a fed­eral Gov­ern­ment tax break that all the biodiesel com­pa­nies could get but — prob­a­bly due to lob­by­ing from the petrol in­dus­try — they lost that last year.

‘‘ Sec­ond is that most ( biodiesel) plants in Aus­tralia us­ing tal­low as a feed­stock got fund­ing and started be­ing set up in 2005 but by the time they were op­er­a­tional, the price of tal­low had gone up to close to $ 1000 a tonne, from $ 400’’, due to in­creas­ing de­mand from China.

The third hit was the ap­pre­ci­a­tion of the Aus­tralian dol­lar.

‘‘ Even though the price of oil has hit $ US100 a bar­rel, the price of our dol­lar’s been go­ing up at the same time. That has kept the price of Aus­tralian fuel rel­a­tively sup­pressed. Ev­ery­one said biodiesel would be­come eco­nomic when the price of oil hit $ US60 a bar­rel, but that never hap­pened,’’ Clarke says.

But ethanol, long dogged by mo­torists’ fears that the fuel would dam­age their en­gines, ap­pears to be on the up.

Har­ri­son says: ‘‘ We’ve got two plants pro­duc­ing ethanol: Manil­dra’s flour mills at Nowra ( on the NSW south coast) and CSR’s at Sa­rina in Queens­land ( us­ing mo­lasses). The ca­pac­ity of those is 150 mil­lion litres a year. And there is a new plant to be com­mis­sioned in Oc­to­ber this year at Dalby in Queens­land and that will pro­duce about 90 mil­lion litres a year.’’

Har­ri­son says the Dalby plant will use sorghum grain but as­sures crit­ics of bio­fu­els, who say the in­dus­try takes food from hun­gry mouths, that it would use less than 10 per cent of the an­nual crop mainly used for an­i­mal feed).

At a con­fer­ence in Lon­don last week, Bri­tain’s chief sci­en­tist John Bed­ding­ton warned that the world­wide bio­fu­els in­dus­try threat­ened food pro­duc­tion and the lives of bil­lions of peo­ple.

He said: ‘‘ It’s very hard to imag­ine how we can see the world grow­ing enough crops to pro­duce re­new­able en­ergy and at the same time meet the enor­mous de­mand for food.’’

CSIRO sus­tain­able ecosys­tems an­a­lyst Deb­o­rah O’Con­nell says there ‘‘ is no food ver­sus fuel de­bate in Aus­tralia’’. The scale is too small.

But, ‘‘ if the in­dus­try grew then, yes, it could cut into food sup­plies. That’s a very emo­tive de­bate,’’ she says.

It would seem coun­ter­in­tu­itive that a prod­uct that is a cleaner al­ter­na­tive to fos­sil fu­els ( the CSIRO says waste veg­etable oil can emit up to 89.5 per cent less green­house gas com­pared with un­leaded petrol) that can use waste byprod­ucts and that might turn wood, grass or pa­per into fuel would strug­gle for a foothold. But still, Har­ri­son says, there are hur­dles: mar­ket ac­cess is dif­fi­cult in the face of the big petrol com­pa­nies; de­mand from grow­ing off­shore economies has forced up the price of feed­stock; and start­ing a sup­ply chain from scratch won’t ‘‘ hap­pen overnight’’.

The great hope of the in­dus­try — at least for the biodiesel side — ap­pears to be mi­croal­gae.

‘‘ I can’t see any other way for them to go,’’ says Clarke.

In a new pol­icy ini­tia­tive, the fed­eral Gov­ern­ment has an­nounced it will put up $ 15 mil­lion in com­pet­i­tive re­search and de­vel­op­ment grants for sec­ond gen­er­a­tion fu­els, such as mi­croal­gae.

Clarke says: ‘‘ Us­ing the right strain in the right con­di­tions, about 50 per cent of mi­croal­gae can be con­verted into biodiesel. You can, in the­ory, get the same amount of oil from about 30 times less land than by grow­ing agri­cul­tural crops.’’

Mi­croal­gae can grow in saline wa­ter and it se­questers car­bon diox­ide, so it could be grown next to a coal- fired power plant. Pro­duc­tion costs about $ 5 a litre, but Clarke be­lieves biodiesel from mi­croal­gae would be close to com­pet­ing on price with reg­u­lar fuel in two or three years’ time.

Plant power: The CSIRO’s Deb­o­rah O’Con­nell says there is no food ver­sus fuel de­bate in Aus­tralia

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