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Overview of Bioenergy in Australia

RIRDC new ideas for rural Australia


© 2010 Rural Industries Research and Development
Corporation.

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ISBN 978 1 74254 049 8


ISSN 1440-6845

Publication No. 10/078

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Researcher Contact Details

Colin Stucley
Enecon Pty Ltd
PO Box 175
SURREY HILLS VIC 3127

Phone: 03 98951250
Fax: 03 98951299
Email: cstucley@eneocn.com.au

RIRDC Contact Details


Rural Industries Research and Development Corporation
Level 2, 15 National Circuit
BARTON ACT 2600

PO Box 4776
KINGSTON ACT 2604

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Web: http://www.rirdc.gov.au

Electronically published by RIRDC in June 2010


Print-on-demand by Union Offset Printing, Canberra at
www.rirdc.gov.au or phone 1300 634 313

Published in June 2010

2
Overview of
Bioenergy in Australia
by Colin Stucley
Enecon Pty Ltd

Publication Number 10/078

3
Foreword Acknowledgements

Australia’s bioenergy industry produces renewable electricity, heat and liquid


This report has benefited from
fuels. With revenues in excess of $400 million per year, bioenergy is already
the involvement of a great many
a valued contributor to businesses in cities and rural locations across the
people during its preparation
country.
and review. Preliminary
Australia is actively seeking ways seek to reduce its greenhouse gas emissions collaborators included Dr
and dependence on fossil fuels, and bioenergy could play a more significant Stephen Schuck and Mr John
role in coming years. Potential exists for greater use of existing and new Simpson. The draft report
feedstocks and technologies, leading to an increased contribution from was reviewed by personnel
bioenergy across industry, transport and domestic energy sectors. Such from a number of government
use will allow bioenergy to make a valuable contribution to Australia’s low organisations at state and federal
carbon future. levels, as well as individuals in
academia and industry. The
Research, Development & Extension (RD&E) is a key factor for increasing input of all these reviewers is
the use of bioenergy, by ensuring that it is competitive, sustainable, and fully gratefully acknowledged, as is
understood and appreciated. the coordination and inputs
provided by Dr Roslyn Prinsley
This report provides an overview of the Biofuels and Bioenergy industry.
and Ms Julie Bird at RIRDC.
This overview includes basic statistical information for the biofuels and
bioenergy industries. It will also be a useful basis for those contemplating
investment or formulating policy and will help to inform RIRDC as it plans
its research and development priorities into the future. The report was co-funded by
Bioenergy Australia, an alliance
This report is an addition to RIRDC’s diverse range of over 2000 research of 86 member organisations
publications and forms part of our Bioenergy, Bioproducts and Energy fostering the development
R&D program, which aims to meet Australia’s research and development of biomass for heat, power,
needs for the development of sustainable and profitable bionergy and transportation fuels and other
bioproducts industries, and to develop an energy cross sectoral R&D plan. value-added biobased products. 
RIRDC is Bioenergy Australia’s
Most of RIRDC’s publications are available for viewing, free downloading
lead organisation. 
or purchasing online at www.rirdc.gov.au. Purchases can also be made by
phoning 1300 634 313. See www.bioenergyaustralia.org

Tony Byrne
Acting Managing Director
Rural Industries Research and Development Corporation

4
Contents

Foreword....................................................................................................................................................................4
1. Executive Summary.............................................................................................................................................6
1.1 Background and purpose..............................................................................................................................6
1.2 The industry today.......................................................................................................................................7
1.3 The potential of the industry........................................................................................................................7
1.4 What will help bioenergy reach its potential? . .............................................................................................8
1.5 How can RD&E assist?.................................................................................................................................8
2. Current Australian Bioenergy............................................................................................................................9
2.1 Markets . ......................................................................................................................................................9
2.2 Feedstocks...................................................................................................................................................11
3. Industry Structure in Australia....................................................................................................................... 13
3.1 Feedstock....................................................................................................................................................13
3.2 Processors....................................................................................................................................................14
3.3 Industry and related bodies.........................................................................................................................15
4. Status of Technologies..................................................................................................................................... 16
4.1 Mature........................................................................................................................................................16
4.2 New............................................................................................................................................................16
4.3 Biorefineries................................................................................................................................................17
4.4 Scale . .........................................................................................................................................................17
5. Research, Development and Extension Activities...................................................................................... 19
5.1 Australia......................................................................................................................................................19
5.2 Overseas......................................................................................................................................................20
6. Sustainability and Life Cycle Assessment..................................................................................................... 22
6.1 Sustainability...............................................................................................................................................22
6.2 Life cycle assessments for bioenergy ...........................................................................................................23
7. Discussion – Risks and Challenges................................................................................................................. 25
7.1 The “food versus fuel” debate.....................................................................................................................25
7.2 Competition...............................................................................................................................................25
7.3 Liquid fuels.................................................................................................................................................26
8. Potential Scale of Industry.............................................................................................................................. 28
8.1 Future Markets...........................................................................................................................................28
8.2 Future feedstocks .......................................................................................................................................29
8.3 Scope for investment...................................................................................................................................30
9. Discussion........................................................................................................................................................... 31
9.1 Timeline for change....................................................................................................................................31
9.2 RD&E over next five years.........................................................................................................................32
9.3 “From planting to power” – recognising the full supply chain....................................................................34
Endnotes................................................................................................................................................................. 35

5
Bioenergy is a complex topic, it encompasses multiple feedstocks from agriculture, forestry, and urban sources

1. Executive Summary
1.1 Background and purpose of Technological Sciences and Engineering (ATSE)
stated: “The key finding of this report .. is that
Bioenergy – for heat, power and liquid fuels – is the biofuels…have useful roles to play as Australian
subject of considerable interest and activity world-wide. transport fuels and can contribute to greenhouse gas
Drivers for bioenergy include: mitigation and energy security.”3
• The reduction of CO2 emissions via the substitution • Overseas, the US Government’s Roadmap for
of bioenergy for fossil fuels. Bioenergy and Biobased Products4 states: “Biomass
• Security of energy supplies. resources are a sustainable and environmentally friendly
• Regional development, especially through new rural feedstock that can contribute significantly to a diverse
industries. energy portfolio.”
• Potential health benefits such as reduced particulate • The European Union’s position is similar: “In the face
emissions. of Europe's increasing dependency on fossil fuels, using
biomass is one of the key ways of ensuring the security of
Bioenergy may potentially have a significant role in a
supply and sustainable energy in Europe.”5
low-carbon energy future:
• Biofuels feature as a source of both electricity and But bioenergy is a complex topic:
liquid fuels in carbon reduction scenarios modelled • It encompasses multiple feedstocks from agriculture,
in 2008 by the CSIRO1. forestry, and urban sources.
• Referring to electricity production to 2020 and • It includes many different technologies: some widely
beyond, the Clean Energy Council of Australia used for decades, others only recently or yet to be
states: “Bioenergy has a vital role to play as part of commercialised.
Australia’s clean energy future”2. • Energy products include electricity, heat and liquid
• After studying the role for biofuels as a future fuels. In the future it is possible that co-products will
transport fuel in Australia, the Australian Academy also feature in many bioenergy projects.

6
• As with most other forms of renewable energy, 1.3 The potential of the industry
it often involves the use of fossil fuels for its The bioenergy industry in Australia has the potential to
production, however the emissions resulting are often grow significantly2,9. This may be driven by:
minor compared to the net GHG benefits derived • Increased demand for renewable energy for
over the entire lifecycle of bioenergy. stationary power and transport fuels, as Australia
• It is the subject of active R&D world-wide, with a seeks to reduce its CO2 emissions.
number of new technologies and feedstocks expected • A market response to a sustained increase in oil prices
to be commercialised over the next decade. in the longer term, as demand increases and supply is
• In some situations bioenergy may compete for constrained.
feedstocks and land that would otherwise be used for • The development of a variety of new and existing
food production. feedstocks that optimise sustainable use of existing
• In other situations, new tree crops for bioenergy may farmland and create new opportunities for marginal
enhance agricultural activities, and the environment lands.
through salinity mitigation, soil protection and • A variety of new technologies, principally those
increased biodiversity. for production of liquid fuels from woody biomass
• There are high associated costs to commercialise new (currently being commercialised overseas) and also
technologies and market barriers to the introduction from algae.
and use of new fuels.
Power and heat – The Australian Bioenergy Roadmap2
notes that bioenergy currently provides some 0.9% of
1.2 The industry today Australia’s electricity generation. The Roadmap reports
Bioenergy contributes approximately one quarter that bioenergy could potentially provide from 19.8% to
(approximately 1800 GWh per annum) of the new as much as 30.7% of Australia’s electricity requirements
renewable electricity generated in Australia under the by 2050.
Mandatory Renewable Energy Target (MRET)6, which
Biofuels - As a variety of new biofuel technologies are
was in force from 2001 until 2010, and was designed
commercialised, biofuels could potentially make up an
to provide 2% of Australia’s total electricity generation
important part of Australia’s future fuels for road, sea
in 2010. An average selling price of 8 cents per kWh
and air transport. This could include ethanol, biodiesel
(allowing for the value of the electricity and a typical
and synthetic diesel for use in blends and as fuels in
value for a REC) corresponds to $80,000/GWh. The
their own right. In addition to current production via
value for electricity from bioenergy under MRET in
sugar, grains, tallow, used cooking oil and vegetable oils,
2007 was therefore approximately $144 million per year.
additional fuel production could come from woody
Bioenergy generation under MRET was primarily from
residues, new tree crops (for oil and for biomass) and
land fill gas and bagasse-fired power stations at sugar
algae. New tree crops could be integrated with current
mills. The expanded Renewable Energy Target (RET)
agricultural systems and/or be developed as separate
came into force on 1 January 2010 and mandates that
crops. CSIRO has reported that there is potential for
20% of Australia’s projected electricity supply is to come
second generation biofuels to replace between 10%
from renewable sources by 2020. Modelling of the RET
and 140% of current petrol only usage over time10. The
scheme suggests that bioenergy technologies are likely to
variability in this prediction is attributed to the lack of
benefit from the scheme, particularly bagasse, municipal
knowledge on ecological sustainability and economic
solid waste, and wood/wood waste7.
feasibility of products from the range of lignocellulosic
Ethanol and biodiesel are both produced commercially feedstocks.
in Australia. According to figures compiled by the
The potential for production of biofuels from algae
Department of Resources, Energy and Tourism,
could also be considered. Algae production has the
production in 2009 was estimated to be in excess of
potential to be linked to broader rural aquaculture
330 ML. Assuming an average selling price of 80 cents
initiatives. It should also be noted that biofuels are just
per litre, revenues from Australian biofuel production
one of the options available in Australia for alternative
are currently valued at some $260 M per year. This
future fuels11. Future energy for transport may also see
production represents less than 1% of the estimated
the increased use of natural gas and the development
37 billion litres of petrol and diesel used in Australia in
of liquid fuels from coal and gas, as well as movement
20098.
towards electrical modes of transport.
The longer term opportunities for bioenergy production
will in part be determined by future policy direction

7
and the best use of land resource for energy production. 1.5 How can RD&E assist?
Bioenergy will also need to compete with other forms of
renewable energy such as wind and solar, as well as other Technology – With strong worldwide interest in
new sources of transport fuels such as coal and natural gas. bioenergy, a variety of new technologies for electricity
generation and biofuel production are already being
developed and commercialised overseas, with significant
1.4 What will help bioenergy reach its industry investment and government support. Most
potential? of these technologies could be utilised in Australian
conditions. Australian RD&E could adapt these
A number of factors could be considered to help
technologies to suit local conditions and feedstocks,
bioenergy meet its potential. These include:
and assist with pilot, demonstration and commercial
• A secure demand for bioenergy products, which will
prototypes.
underpin investment for feed supply and bioenergy
processing. In situations where Australian researchers can
• A regime that places costs on carbon emissions across demonstrate a strong competitive business case based
each of the areas in which bioenergy can contribute on unique Intellectual Property or world leading
(e.g. heat, power, transport fuels, chemicals). capabilities, RD&E support has been shown to enhance
• Further understanding of the environmental and the opportunities to create new local industries and
social costs and benefits of using different types of technologies that complement developments made
bioenergy in Australia. overseas and can reach international markets.
• Local feedstocks with technical characteristics and
costs that are well understood. Feedstock – Whereas bioenergy technologies
• Mapping of potential feedstock volumes and thus developed overseas may be utilised in Australia, local
actual supply (fuel and electricity) that Australia can RD&E may result in a greater understanding of the
expect from biomass. optimal production, harvest, delivery and processing
• Mapping of current industry and technologies being characteristics of Australian feedstocks. Such work
utilised, to provide a baseline against which growth will help to provide prospective businesses with a clear
may be measured. understanding of the cost, availability, benefits and
• ‘Buy in’ from market drivers such as oil majors and limitations of feedstocks for heat and power and liquid
car manufacturers. fuels, as well as opportunities for integration with
• Greater understanding that some new tree crops can existing industry.
be integrated into current agricultural production
Sustainability – Local feedstocks will ideally be
systems to maintain or increase agricultural
produced in ways that enhance the sustainability of rural
production, produce biomass and provide benefits
enterprises and maximise the reduction of greenhouse
such as soil protection.
gases. RD&E could be of benefit to both these areas.
• Integration of bioenergy production with production
Where Australian conditions are different to those
of co-products such as foodstuffs, chemicals and
experienced overseas, local RD&E will assist with a
biochar.
thorough and balanced evaluation of these feedstocks.

8
Prototype oil mallee harvester

2. Current Australian Bioenergy


Bioenergy is the term used to describe the recovery of 2.1 Markets
useful energy from biomass feedstocks. Thus electricity,
heat or liquid fuels for transport can be derived from: 2.1.1. Electricity
• Wood and wood waste, including:
–– Plantations and plantation residues. Renewable electricity from bioenergy in Australia is
–– Other forestry residues. supported under the expanded national Renewable
–– Residual wood from processing activities such as Energy Target (RET), designed to ensure that 20 per
saw mills. cent of Australia’s electricity supply is from renewable
–– New, dedicated energy crops (such as short sources by 2020. Legislation to implement the expanded
rotation mallees or purpose-grown grasses). national RET scheme was passed by the Commonwealth
–– Biomass from weed species and regenerative Parliament on 20 August 2009, and the new target
vegetation. commenced on 1 January 2010. The RET increases
• Agricultural products and their wastes, including: the previous Mandatory Renewable Energy Target
–– Sugar cane and bagasse. (MRET) by over four times, from 9,500 gigawatt-hours
–– Grains, waste starch and crop stubble. in 2010 to 45,000 gigawatt-hours in 2020. A range of
–– Oil seeds and tallow. biomass sources have been eligible under the MRET
–– Other organic wastes suitable for anaerobic and will continue to be eligible under the RET scheme.
digestion to produce methane. These include biomass-based components of municipal
• Post consumer waste, including: soil waste (MSW), plantation wood, a range of food,
–– Municipal Solid Waste (MSW) - directly as agricultural and wood processing wastes, landfill gas and
collected or indirectly via land fill gas. sewage gas, and some native forest harvesting wastes.
–– Sewage. Data regarding the energy produced under the RET
–– Wood waste from industry, and from are available from the Office of Renewable Energy
construction and demolition activities. Regulator (ORER).
–– Used cooking oil.
• Algae.
9
Renewable Energy Number of Feed supply ones were in operation, producing an estimated 100
Source accredited as % of total ML of biodiesel principally from tallow and used
power stations MRET cooking oil14, 8.
(at Oct 2007) (at Jan 2007)
Landfill gas 46 7.8 Some state governments have recently developed, or are
Bagasse & bagasse /wood 27 9.1 considering, policies to promote the use of biofuels:
Wood waste & wood 13 3.2 • The NSW government already has a mandate for
waste/MSW 4% of ethanol in unleaded petrol in NSW which
Sewage gas 10 1.0 came into place on 1 January 2010 and was an
Food and Ag wet waste 6 0.3 increase from the previous 2% mandate. Further
Black liquor and BL/wood 2 2.9 increases in the mandates have been legislated, with
waste an increase in the percentage of ethanol to 6% in
MSW 1 0.0 January 2011. All regular grade unleaded petrol sold
Crop waste 1 0.0 in the state must be E10 from July 2011 (a total of
Total 106 24.3 up to 500 ML of ethanol per year).
• The NSW Government also has a Biodiesel mandate
of 2% introduced in January 2010 and rising to
In 2007, Australia’s total ORER-accredited renewable
5% from January 2012, subject to the availability of
generation capacity was capable of producing
feedstocks.
approximately 7,400 GWh per year. As shown in the
• Queensland has indicated that it will introduce
above table12, bioenergy contributed a total of 24% of
a mandated target of 5% ethanol in petrol from
this capacity, suggesting that bioenergy contributed
December 201015.
approximately 1,800 GWh per year in 2007. This is
• Victoria has developed a Biofuels Road Map and
equivalent to continuous generation at approximately
Action Plan16. No mandate is currently planned
200 MW.
however this is scheduled for review before 2013.
Renewable energy generation capacity via MRET is • Western Australia has also examined the biofuels
in addition to the generating capacity that pre-dated industry and a 2007 Biofuels Taskforce report17 is
MRET. Such previous capacity is largely based on under consideration. In 2008 a life cycle assessment
hydro-electricity such as the schemes in the Snowy (LCA) report was prepared by CSIRO18 to consider
mountains and Tasmania. biofuels production and use in WA.

2.1.2 Heat Excise rates for alternative fuels were considered as part
of the review of Australia’s Future Tax System Review,
Whereas electricity generation in Australia is well which was submitted to the Australian Government in
documented under RET there is no equivalent program late 2009.
in place to monitor the generation of renewable heat
from biomass. Current uses of biomass for heat include: 2.1.4 Co-products
• steam in sugar mills.
A number of industries around the country produce
• kiln drying at saw mills.
bioenergy and co-products. At present most of the
• steam and drying at pulp and paper facilities.
operational plant is based on industries that have waste
• steam at food processors.
fibre and a need for heat or power:
• fires for domestic heating.
• Most sugar mills burn waste bagasse to produce
2.1.3 Biofuels bioenergy as heat for their own use. An increasing
number also generate electricity for internal use and
The Department of Resources, Energy and Tourism for export to the grid.
and the Biofuels Association of Australia estimate the • Many saw mills and wood processors produce
installed annual capacity for biofuels in Australia as bioenergy as heat for their own use, however very few
follows: produce electricity.
• At the end of 2009 ethanol capacity was 400 ML
nationally, from two plants in Queensland and one Recent initiatives for bioenergy and co-products include:
in NSW (reflecting an increase over the figure of 280 • A facility in Sydney that treats urban organic wastes
ML for January 2009)13. to make methane for electricity generation, plus
• At the start of 2010 biodiesel capacity was at 273 fertilisers as co-products.
ML nationally, based on seven plants around the • The Integrated Wood Processing (IWP) Plant
country and designed to process a variety of feeds. At near Narrogin in Western Australia. In 2006 this
that time only three large facilities and some smaller demonstration facility successfully trialled integrated

10
technology to make electricity, activated carbon kilns and power stations. Small, dedicated power plants
and eucalyptus oil from whole mallee trees. These are under consideration (and in one case construction)
coppicing trees were harvested from alleys grown in Melbourne and Sydney.
across a number of wheat belt farms.
Landfill – The breakdown of organic matter in landfills
generates methane gas. This may be collected and used
2.2 Feedstocks as fuel for engines and generators. There are many
examples of this at landfill sites around the country.
2.2.1 Heat and Power
Agricultural wastes - Australia has examples of
Current biomass feedstocks for heat and power agricultural residues used as fuel. These include:
generation in Australia are, without exception, by- • Gasification of rice hulls for heat in NSW.
products or residues. These come from a diverse range • Combustion of macadamia nut shells for electricity
of industries around the country. Feedstocks include the in NSW and possibly soon in Queensland.
following:
While there is use of straw and crop stubble as fuel
Sugar cane bagasse – the cane fibre left over from overseas, there are no examples of this in Australia to our
sugar extraction is known as bagasse and is used knowledge.
throughout the sugar industry as a source of fuel for
heat or combined heat and power (co-generation). Wet organics – Some organic material that is too wet
Recent projects have added new cogeneration facilities to use via combustion can still produce energy via
to a number of mills, both to upgrade old plant and to anaerobic digestion. This process produces a methane
provide capacity for export of electricity to the grid. gas similar to that produced from landfills, which may
be used to generate heat and power. A variety of plants
Forestry wastes – during harvest of trees from are already in operation around Australia using feed such
plantations and native forests a considerable amount of as:
residual woody material is generated. This is mainly the • Human effluent at sewage treatment works.
tops of the trees and large branches and it is generally • Piggery wastes.
burnt or left to rot. Several groups are looking at • Food processing wastes.
recovery of this material for power generation, most • Organic material collected in Sydney.
notably in Western Australia where two projects for large
power plants (each approximately 30 - 40 MW electrical At present there are no dedicated biomass feedstocks
output) are at advanced planning stages19. These plants used commercially in Australia, although considerable
will mainly utilise residues from softwood and hardwood R&D has been completed to examine a number of
plantations. possible materials. Mallee eucalypts have received
particular attention, and specific programs (including
Another group in Western Australia is collecting “Search” and “Florasearch”) have assessed a variety of
plantation residues and has recently started native species for different agricultural and climatic
manufacturing wood pellets, which will be used in regions.
power stations in Europe20.
Wood processing wastes – saw mills and plants 2.2.2 Biofuels
for engineered wood products and pulp and paper (a) Biodiesel
manufacture all generate residues. Some of these residues
are used for heat (and occasionally power) generation Biodiesel can be manufactured from a wide variety of
on site. In other cases the residues may be sold to third existing feedstocks, including the following:
parties, for example kilns or coal-fired power stations • Oilseeds (such as canola, soy, sunflower) - This feed
that will use them for co-firing. offers the benefits of using existing commodity crops
and commercially demonstrated technology. As such
Urban green waste – There is limited use of green it is an important entry option for a new industry.
waste for heat and power. A notable example is the • Waste Oils & Grease – Supply is constrained by the
cogeneration plant at the Rocky Point Sugar Mill in availability of used cooking oil. Prices for this feed
southern Queensland, which uses green waste as part of have increased in recent years, and this material often
its feed at times when bagasse is not available. requires more expensive processing.
Urban wood waste – This material ranges from wooden • Tallow – This is subject to significant price variations
packaging and broken pallets from industry through as it is an international traded commodity. As a by-
to construction and demolition wood waste. Limited product of another industry it will ultimately have
quantities of this material are being used for co-firing in limitations on supply.

11
• Palm Oil – This feedstock is produced from oil A number of pilot scale plants for second generation
palm plantations in Asia, particularly Indonesia ethanol have been built and operated in the USA,
& Malaysia. It can be sourced in large quantities Europe and Japan over the past ten years. In Australia,
however its price can fluctuate, which affects pilot scale work is currently being conducted by Ethtec
its commercial suitability for use as a biodiesel Pty Ltd23.
feedstock. Currently, palm oil is not used as a
biofuels feedstock in Australia. (d) DiMethyl Ether

Algae is a possible feedstock for biodiesel, however it is DiMethyl Ether (DME) is currently made from
not currently used commercially in this way anywhere hydrocarbon feedstocks for the chemicals industry. It
in the world. Its potential is discussed in section 8.1.2 has been recognised as a viable additive to transport fuels
below. Other potential feedstocks include pongamia and and technology has been identified that can produce
other woody perennial oil seed crops. DME from biomass feedstocks. There currently are no
commercial operations making DME from biomass.
(b) Ethanol from sugar and grains
(e) Syn-Diesel
Current ethanol production is from first generation • It is feasible to produce biofuels via the
feedstocks, comprising grains, cereals and sugar cane: hydrogenation of fats and vegetable oils, followed
• Sugar cane – Some ethanol in Australia is currently by blending with fossil fuel feedstock at existing oil
made from C-molasses, which is the final molasses refineries. This is a variation on setting up dedicated
left after all commercially viable sugar has been biodiesel production facilities as described above. BP
extracted from the cane juice at a sugar mill. The has built a facility at its oil refinery at Bulwer Island
C-molasses still contains sugar, which may be in Queensland.
fermented to produce ethanol. In addition to its use • A second route to synthetic diesel from biomass is
for ethanol manufacture, molasses can be utilised as a gasification followed by conversion to liquid fuels via
feed supplement for cattle. the Fischer Tropsch process (originally developed in
• Some existing ethanol production in Australia Germany in the 1920s and used in several countries
uses waste starch from grain processing. The starch during WW2 for the production of transport fuels
is broken down into its component sugars with from coal). As yet there are no commercial facilities
enzymes (a process known as “hydrolysis”). The to process biomass with this technology anywhere
sugars may then be fermented to produce ethanol. in the world. Demonstration scale plants have been
• Wheat and grain sorghum are also used as feed built recently24 or are under construction25, and there
for ethanol production. Starch is extracted from the is also interest in using Fischer Tropsch technology
grain or cereal, hydrolysed to sugars and fermented. with other feedstocks such as natural gas26.
• Fast pyrolysis also offers a route to renewable
(c) Ethanol from cellulosic feedstocks hydrocarbon fuels. Crude pyrolysis oil is not
Cellulosic feedstocks are the source of feed for “second generally suitable for use with existing transport
generation” ethanol production. These feedstocks are fuels, however a number of groups around the world
also termed “biomass” and may include: are investigating the upgrading of pyrolysis oil into
• Wood wastes from forestry and wood processing hydrocarbon liquids. Dynamotive has recently
activities. announced successful upgrading at the laboratory
• Sugar cane bagasse. scale, and independent testing of the upgraded oil
• Dedicated tree crops such as mallees. has shown it to contain a mix of transport fuels and
• Agricultural residues and dedicated crops such as gas oil27.
grasses (e.g. miscanthus and switchgrass). (f) Biocrude and refinery feedstocks
• Post consumer wood waste.
There is work underway in Australia and overseas to
Second generation ethanol production has been the develop refinery feedstocks from the processing of
subject of extensive research and demonstration in biomass with water:
Australia and overseas for many years. As yet there are • In a supercritical state28.
no commercial scale facilities anywhere in the world, • Via aqueous phase reforming29, 30
however a number of commercial prototypes are under
construction in the USA, with major funding support
from the US government in 200721 and 200922.

12
The forestry, sugar and grains industries are all capable of providing cellulosic feedstock for production of electricity

3. Industry Structure in Australia


3.1 Feedstock cane railway and road systems.  Millers, growers and
harvesters determine harvesting and transport schedules
Australia has a number of well established industries that ensure cane is crushed as soon as possible after
capable of providing feedstock for bioenergy: harvest.  Average cut to crush time is less than 12 hours.
• Sugar and grains already provide feedstock for the
production of ethanol and biodiesel. Most Australian sugar mills have been established for
• The forestry, sugar and grains industries are all more than 100 years. The total value of sugar produced
capable of providing cellulosic feedstock for by these mills for domestic use and export is $1.5-2.5
production of electricity. They can also provide billion per year34.
feedstock for production of second generation
Raw sugar is extracted from the cane in a series of
biofuels once processing technologies are
processing steps. The residual product is known as
commercially available.
C-molasses, which is the final components of the cane
• Australia is one of the few countries in the world
sugar juice once all of the commercially extractable sugar
that already has commercial production of algae
has been removed. C-molasses still contains sugar and
(currently used for chemicals, not for fuels)31, 32.
is a low cost feedstock for the production of ethanol.
In the Australian sugar industry C-molasses is currently
3.1.1 Sugar cane
the only material used for ethanol production. All raw
Around 4,000 business enterprises around Australia sugar produced by the industry is used for food, either
supply more than 35 million tonne of cane each year domestically or via export.
to 25 sugar mills33.  Most mills can crush on average
10,000 tonnes of cane daily and employ around 150
people during the season, which may run for 20-25
weeks each year. Cane is transported to the mills on

13
3.1.2 Grains 3.1.4 Algae
Average production over the past five years for major Australia is one of the few countries in the world that
grains may be summarised in the table below35: currently produces algae commercially. Production
Crop type Five year Average Production (000 tonne) facilities in Western Australia and South Australia grow
Wheat 18,828 algae for the high value chemical beta-carotene31, 40.
Barley 7,145 A separate facility operates in the Northern Territory
Oats 1,339 to grow spirulina (a type of algae)32. None of these
Sorghum 1,739 facilities have been set up to grow algae for biofuels.
Maize 345 However, research to develop algae as a biofuel is
Canola 1,222 underway at a number of institutes around Australia and
Lupins 920 demonstration plants are planned for construction and
commissioning during 201041, 42.
The bulk of these grains are grown on approximately
28,500 farms across the country that planted 100 Interest in microalgae is in part due to the potential
hectares or more to grains during the previous decade36. yields of biofuels per unit of land, which may, in theory,
At present up to 200,000 tonnes per year of sorghum is be significantly greater than for equivalent land areas
used for ethanol production in Queensland37. Ethanol is used for crops to produce other biofuels43.. Algal ponds
also manufactured on the south coast of NSW, utilising may utilise saline water and be located on marginal
the by-products of a starch processing plant that uses land that is unsuitable for food production. However
grain as its feedstock. it should also be noted that analysis of overall costs for
algal biofuel production point to capital and operating
3.1.3 Woody biomass (also see table below) costs being the major cost factors, not land43.
Bioenergy production currently utilises waste wood from
the forestry industry in a variety of ways: 3.2 Processors
• Individual processing sites (saw and pulp mills, wood
products factories) use residues for generation of heat 3.2.1 Heat and power
and power.
In Australia most electricity from bioenergy is generated
• A number of coal-fired power stations in NSW and
at large-scale facilities; particularly sugar mills and coal-
WA have used forestry and saw mill residues as fuel
fired power stations using wood as a co-fuel. In these
to be “co-fired” alongside coal.
cases the bioenergy is produced either at the location of
• Some cogeneration plants at sugar mills can use
the feed or the location of existing capital equipment for
wood wastes as feed when bagasse is not available.
power generation.

The following table summarises the Australian forestry industry for the year 2008–0938, 39.

Parameter Unit 2008-0­9 % change in past 10 years


Plantation area
Broadleaved 000 ha 991 155
Coniferous 000 ha 1,020 8
Total 000 ha 2,020 51
Log production
Total harvested 000 m3 26,480 27
Gross Value $ million 1,747 55
Volume of production
Sawn wood [2007-08] 000 m3 5,371 39
Wood based panels 000 m3 1,778 14
Paper and cardboard 000 tonne 3,312 29
Total value of forest industry
exports $ million 2,343 74
imports $ million 4,459 37

14
There are also many sites around the country that use
methane (from landfills or organic waste processing) as
a fuel to drive engines and generators. Such plants are
typically much smaller than sugar mill bioenergy plants
due to relative quantities of feed available.

3.2.2 Liquid fuels


The majority of biofuels in Australia are also produced
in large-scale, centralised facilities, which may offer:
• Proximity to feedstock if it is a waste from a
processing plant.
• Economy of scale.
• The ability to control product quality.

3.3 Industry and related bodies


Bioenergy Australia44 is a bioenergy forum made up of
86 member organisations from government, industry
and academia around the country. Its interests include
R&D and commercial projects for electricity, heat and
biofuels. Bioenergy Australia is the vehicle for Australia’s
participation in a number of Tasks of the International
Energy gency’s Bioenergy program.
The Biofuels Association of Australia45 is the main
industry body that represents ethanol and biodiesel
producers.
The Clean Energy Council46 (CEC) is an industry
body with more than 400 members. It focuses on low
emission generation and energy efficiency within the
Australian electricity industry. This includes an interest
in electricity generation via bioenergy, and also via wind,
solar, hydro and natural gas-based sources.

15
Biogas engine and generator at A.J. Bush and Sons, Bromelton, Queensland

4. Status of Technologies
4.1 Mature there are several gasifiers that are used to produce heat
from agricultural or woody wastes and several others that
4.1.1 Heat and power are coupled to engines and generators to demonstrate
small scale power generation (under 100kWe).
A number of bioenergy technologies for heat and power
generation have been used commercially for decades. In 4.1.2 Liquid fuels
particular, plants to generate heat via combustion, and
power via steam raising and steam turbines, have been in Ethanol – technology to manufacture ethanol from
widespread use around the world for many decades. The grains and sugar is mature, and is fundamentally
fundamentals of this technology are well understood, the same as the processes for production of potable
however significant improvements are still possible, alcohol that have been in use for thousands of years.
such as the development over the past 15 years or so Improvements are still occurring however, such as
of fluidised beds for combustion that increase overall continuous fermentation and the use of molecular sieves
efficiency by as much as 30%. for ethanol concentration following fermentation.

The vast majority of heat and power generation from Biodiesel – technology is in common use world-wide to
biomass fuels uses combustion processes. Equipment for convert a variety of fats and oils into fatty acid methyl
combustion of biomass is very similar to the equipment esters that can be used on their own or in blends with
used worldwide for coal-fired power stations, simply at a diesel as transport fuel.
different scale due to the relative quantities of feedstock
available at a given site. 4.2 New
Gasification has long been considered for production Most activity to develop new bioenergy technologies
of heat and power from biomass, however it has never is focused on the production of liquid fuels from
reached the same level of use as combustion. In Australia biomass derived from forestry, perennial grasses and

16
crop residues. The main technologies being developed quality packaging of food.In Australia the Integrated
internationally are: Wood Processing plant at Narrogin in WA is another
• Hydrolysis of biomass to release sugars, followed by example of a biorefinery. In this demonstration
fermentation of the sugars to produce ethanol. plant energy is produced in parallel with activated
• Gasification of biomass to produce “synthesis gas” carbon and eucalyptus oil and the combined product
followed by reforming to produce ethanol, syn-diesel revenues are estimated to be several times the revenue
or other liquid fuels24, 47. from energy alone55.
• Pyrolysis of biomass to break it down into gaseous,
liquid and solid streams. 4.4 Scale
A number of research programs are underway in
Australia to examine aspects of new biofuels, including: 4.4.1 Power generation
• A photobioreactor facility for algae production, The scale of a bioenergy plant is extremely important
operated by the South Australian Research and to its viability, with small plants and large plants both
Development Institute (SARDI) and supported by presenting strengths and weaknesses to developers and
the National Collaborative Research Infrastructure operators:
Strategy (NCRIS)48. • Capital costs and operating costs for conventional
• Other NCRIS-funded biofuels facilities for combustion plants vary significantly with plant size.
lignocellulosic research or small scale production49. A large (40 Megawatt gross) biomass power station
• Research to examine the use of bagasse as a feedstock may have a capital cost equivalent to A$2.5 million
for ethanol production50. per megawatt of installed capacity56. A biomass
• A second generation biofuels research power plant of less than 1 MW may cost A$8
and development program funded by the million or more per MW. Thus the capital recovery
Commonwealth Government51. Under this program, costs for a large plant may be less than one third of
funding totalling $14 million has been announced the small plant.
for seven projects across Australia in areas including • Operating costs also favour the larger plants.
development of algae for fuel, the development • However, feedstock collection and supply favours
of suitable yeast and sugar strains and pyrolysis small plants:
processes. –– A 1MW biomass power plant will typically
• A pilot scale facility for examination of various require less than 15,000 tonnes of wood feed per
aspects of ethanol production from cellulosic feeds52. year. A 40 MW power plant may require as much
• Pilot scale work to investigate open ponds with saline as 400,000 tonnes per year. Feed supplies must
water for large scale algae production42. be reliable for many years to allow the plant to
operate profitably.
4.3 Biorefineries –– The larger feed supply may involve greater risk
of supply. Also, greater transport distances are
A biorefinery is a processing plant that manufactures required for large quantities of feed, adding to
products in addition to renewable energy. Feed to the average cost of biomass supply at the power
the biorefinery may be from agriculture or forestry; plant. A large power plant may require a variety
alternatively it may be a waste stream from food or of different biomass feeds, which can affect
wood processing. Normally some energy is produced the design and operation of feed handling and
and normally the non-energy products have greater unit combustion equipment.
value than the energy products. –– In some situations additional feed (at greater
• Sugar mills are an example of a biorefinery, with food delivery cost) will be available to build a larger
(sugar) as the main product and energy from bagasse power plant (that will offer cost efficiencies due
as a major co-product. to scale). It is important to examine both these
• In the USA corn is used extensively for co- factors in any exercise to optimise project size.
production of food and energy, with the energy in • Power generation from methane uses different
this case being fuel ethanol. technology to combustion systems. Capital cost for
• Also in the USA, two large-scale biorefineries methane generation and capture may be significant,
have been developed recently by joint ventures and these costs may vary from project to project
between large agricultural companies and large according to the nature of the feed material. Once
chemical companies. (Cargill/Dow and Tate & Lyle/ the methane is captured and cleaned (if required),
DuPont)53, 54. These two plants use corn as feed to power generation is often based on relatively low cost
make biodegradable plastics, typically used for high engines.

17
4.4.2 Biofuels There is interest from Australian researchers and rural
groups in farm or town-based plants that offer direct
Large scale: fuel supply to local users. Such an approach may provide
• Suited to mature markets with single feedstock type cost savings via reduced transport of feedstock and
– plant stoppages to switch feedstocks can be a major product. There is the potential for more effective plant
cause of production loss. operation through reduced down time, and reduced
• Beyond a certain size, additional scale ups can be exposure to commodity price and logistics risk. Negative
completed at a lower incremental cost due to the factors include:
ability to take advantage of required redundancies • Higher unit capital and operating costs.
built into the smaller plant. • Product quality issues and thus consumer risk
• Some challenges are logistical and include the cost of – Product certification will assist in addressing this –
handling large volumes of feedstock remote from the Australia has had a standard on biodiesel since 2003,
processing plants. the Fuel Standard (Biodiesel) Determination 2003.
Small scale: Blends of up to 5% biodiesel are covered in this
• Suited to emerging markets – feedstock flexibility determination. There is also a standard specifically
may provide a cost advantage over large plants for ethanol which may be blended up to 10% with
(production down time due to feedstock change has petrol, the Fuel Standard (Petrol) Determination
lower tonnage loss). 200157.
• Challenges are related to product quality and security • Reliance on a significant penetration of the local
of feedstock supply. fuels market and meeting the long-term expectations
• Economies of scale may be offset by lower feedstock of that market for quality, reliability and pricing.
price and potential for production flexibility. The US biofuel industry developed in part on this small
scale model but had quality control issues and failed to
achieve mainstream retail status. Significant investment
is now underway in the USA to provide blending and
terminal facilities that allow supply into the retail market
– this may be adequate for B2 (2% biodiesel in diesel)
market participation but uptake by the major retailers
will be required to achieve 5% and above market share.

18
Several groups are investigating the potential for pongamia trees as a source of oil for biofuels. Researchers include the University of Queensland
and the Queensland-based private company Phytofuel

5. Research, Development and Extension Activities


5.1 Australia CSIRO – CSIRO’s bioenergy activities have included
technology development (controlled carbonisation,
A number of initiatives and programs are underway small scale gasifiers), sustainability investigations, plant
to conduct Australian R&D into various aspects of and microbial genetics, and appraisals of biomass for use
bioenergy. The following examples are by no means all as bioenergy feedstocks.
of the R&D underway, however they do indicate the
diverse nature of work in progress. Commonwealth Government funding – In
recognition of the need to develop a sustainable biofuels
NCRIS - The National Collaborative Research industry and to move away from any impacts on food
Infrastructure Strategy (NCRIS) has established strategic supply and prices, the Government has established
research and pilot scale manufacturing facilities that are the $15 million Second Generation Biofuels Research
available to researchers58. These facilities focus on R&D and Development Program (Gen 2) which supports
for second generation ethanol and biofuels from algae. the research, development and demonstration of new
biofuel technologies60. On 5 August 2009, the Minister
RIRDC – The Rural Industries R&D Corporation59
for Energy, Resources and Tourism announced funding
has, for the past ten years, initiated and co-sponsored a
for seven projects.
wide variety of research into various aspects of bioenergy.
Numerous reports are available at the RIRDC website. Bioenergy projects are also being considered under the
RIRDC has a research and development program – $5 million Forest Industries Climate Change Research
Bioenergy, Bioproducts and Energy, within which Fund, which will be administered by the Department of
it manages Bioenergy Australia and also Methane to Agriculture, Fisheries and Forestry (DAFF). This fund
Markets. aims to address major knowledge gaps about the impact
of climate change on forestry and Australian forest
industries.

19
WA State Government – The state government in Pongamia – Several groups are investigating the
WA has supported bioenergy as part of its long-term potential for pongamia trees as a source of oil for
initiative to establish commercially viable tree crops in biofuels. Researchers include the University of
wheat belt areas prone to salinity. Additional support Queensland and the Queensland-based private company
for bioenergy comes from state-based targets for Phytofuel.
renewable electricity that are likely to provide a base
for several large-scale bioenergy plants in coming years Integrated Wood Processing (IWP) – The IWP
that will utilise either mallees or residues from the state’s demonstration plant built recently by Verve Energy
softwood and hardwood plantation industries. at Narrogin in WA represents the combination of
R&D from a variety of sources. It was a full scale
NSW Department of Industry and Investment (DII) demonstration of the integrated production of
– NSW DII has developed carbon accounting tools for electricity, activated carbon and eucalyptus oil, to create
forestry, that it uses under the NSW Greenhouse Gas a commercially attractive use for coppicing mallee
Reduction Scheme, through which carbon sequestered eucalypts grown for salinity control in the WA wheat
in eligible plantations earns NSW Greenhouse Gas belt. Work is now underway to interpret the operating
Abatement Certificates. data from the demonstration plant as part of detailed
feasibility assessments for larger, fully commercial plants.
One of the principal researchers at NSW DII is co-
task leader of the IEA Bioenergy collaborative research Slow Pyrolysis – A large-scale demonstration plant for
group on greenhouse gas balances of biomass and slow pyrolysis has been built and operated in NSW. This
bioenergy systems. This group has developed standard plant can process a variety of biomass, producing mainly
methodology for the calculation of life-cycle climate charcoal and gas. The gas can be used in the process and
change impacts of bioenergy projects. NSW DII has potentially for generation of electricity. The charcoal can
undertaken studies on the mitigation benefit of utilising be used as a fuel or as a soil amendment.
forest residues for electricity generation, the impact
of soil carbon stock change on mitigation benefits of Biochar - The NSW DII has a number of trials
bioenergy, and mitigation through utilisation of biochar underway to asses the benefits of charcoal (“biochar”)
as a soil amendment. as a soil additive. Charcoal or biochar can be produced
from a wide range of bioenergy processes including
NSW DII, through the Primary Industries Innovation combustion, gasification and slow or fast pyrolysis. Its
Centre (PIIC) with the University of New England addition to soil is seen as a potential double benefit;
(UNE) is completing a Climate Action Grant project. combining carbon sequestration with soil improvement.
This project investigates some of the key characteristics Similar trials are underway in many other countries.
of lignocellulosic feedstocks for second generation
production of biofuels. DAFF is also investing $1.4 million into biochar
research under the Climate Change Research Program
NCAS – The federal government has developed (which is a part of Australia’s Farming Future, the
Australia’s National Carbon Accounting System Australian Government’s major climate change research
(NCAS), a world-leading system that accounts for program for Australia’s primary industries). This research
greenhouse gas emissions and removals (sequestration) project will help understand this emerging technology
from land-based sectors61. The NCAS accounts for land and address uncertainties about its use. It will draw
sector emissions and removals through an integrated, together Australian and international experts in areas
spatially explicit system that combines satellite imagery of biochar, soil science and emissions management
to monitor land use and land use change, climate and and complement research already done by partner
site information, species information, land management organisations.
regimes and spatial and temporal ecosystem modelling.
A derivative of the NCAS - the National Carbon 5.2 Overseas
Accounting Toolbox (NCAT) – allows carbon
accounting from land based activities at the project level. Most of the Australian R&D described above has
parallels overseas, in particular, work in North
Ethtec – Ethtec is a private company that combines America and Europe, albeit with the emphasis on local
long-term research by the Apace group with funding feedstocks. Bioenergy R&D is also underway in South
support from Willmott Forests. It has commenced pilot America and Asia.
plant work that will seek to demonstrate a variety of
technologies pertinent to cost effective production of
ethanol from woody feedstocks.

20
5.2.1 North America IEA Bioenergy has participants from around the world,
including Australia, but generally the majority of its
Of particular interest and importance in the United active personnel are in Europe. A number of R&D
States of America is recent support for scale up of topics have already been investigated; grouped into tasks
technologies for production of ethanol and chemicals as follows:
from woody biomass. Recent US Government Task 29: Socio-Economic Drivers in Implementing
funding initiatives combined with matching funds Bioenergy Projects
from industry are expected to result in well over US$
1 billion in expenditure on commercial prototypes Task 32: Biomass Combustion and Co-firing
for several different second generation ethanol Task 33: Thermal Gasification of Biomass
technologies over the next few years. There is also Task 34: Pyrolysis of Biomass
considerable government funding support for R&D Task 36: Integrating Energy Recovery into Solid Waste
into biorefineries that can produce plastics and other Management
value added chemicals, often in parallel with energy Task 37: Energy from Biogas and Landfill Gas
production. Biomass R&D is jointly co-ordinated by Task 38: Greenhouse Gas Balances of Biomass and
the US Department of Energy (DOE) and Department Bioenergy Systems
of Agriculture (USDA)62. The following examples are Task 39: Commercialising Liquid Biofuels from
indicative of work that receives government financial Biomass
support: Task 40: Sustainable International Bioenergy Trade -
• Funding of up to US$6.3 million towards Securing Supply and Demand
fundamental genomics-enabled research leading Task 41: Bioenergy Systems Analysis
to the improved use of plant feedstocks for biofuel Task 42: Biorefineries: Co-production of Fuels,
production63. Chemicals, Power and Materials from Biomass
• Funding of up to US$85 million from the American Task 43: Biomass Feedstocks for Energy Markets
Recovery and Reinvestment Act for the development
of algae-based biofuels and advanced, infrastructure- The European Biofuels Technology Platform70. is
compatible biofuels64. another significant non-government organisation
• Funding of up to US$480 million for pilot and within Europe steering research and development into
demonstration-scale “integrated” biorefineries, which biofuels. It is developing a Strategic Research Agenda to
produce advanced biofuels, biobased products, and identify key research elements for the next decades. Its
heat and power in a single integrated system. DOE membership is heavily research focused and university
anticipates making 10 to 20 awards for refineries at based.
various scales and designs, all to be operational in the
A variety of industrial developments are underway in
next three years65.
Europe to examine new processes for electricity and
In 200721 and 200922 the US Government offered liquid fuels. Examples include:
some hundreds of $million in support of commercial • Choren – a German company that uses gasification
demonstration plants for lignocellulosic ethanol and Fischer Tropsch synthesis to convert cellulosic
production. Grants will cover fermentation and thermo- material into a diesel type fuel. Choren has
chemical pathways. recently built a production facility in Germany
that is expected to produce 18 million litres of 2nd
In addition to funding support as per the examples generation biofuel per year starting in 2010. Choren
above, the US Government has prepared: hopes to build a larger scale plant (fifteen times the
• a road map for bioenergy and biobased products66. size of the current plant71) in several years.
• a national biofuels action plan67. • BTG – a European company that has developed
• a draft algal biofuels technology roadmap68. fast pyrolysis technology to manufacture liquid fuels
from cellulosic material. BTG built a commercial
5.2.2 Europe scale prototype several years ago.
Use of bioenergy in many European countries is already • Norwegian paper manufacturer Norske Skog is
far greater than its use in Australia and is expected to majority owner of Xynergo, a company established
grow further with strong government support5. R&D to trial pyrolysis and gasification technologies for
initiatives support the proposed expansion. The work of production of liquid fuels from wood.
the International Energy Agency under IEA Bioenergy69. • Several companies are testing commercial prototypes
indicates the range of R&D underway. for electricity generation via gasification, gas cleaning
and engines/generators.

21
Covered lagoon capturing biogas at the AJ Bush rendering plant, Bromelton, Queensland

6. Sustainability and Life Cycle Assessment


6.1 Sustainability the production of feedstock and the manufacture of
biofuels, leading to renewable fuels that generate less
Discussions of sustainability generally consider three greenhouse gas emissions than fossil fuels but are not
separate and important elements: fully greenhouse neutral (an issue common to most
• Environmental forms of renewable energy, see section 6.2.2 below).
• Social • The destruction of old growth forest and non-forest
• Economic native vegetation such as grasslands, (and resultant
loss of native habitat and biodiversity) to allow the
A fully sustainable industry must accommodate
planting of new crops and trees for bioenergy use.
prerequisites in each of these areas.
(While this may occur overseas and be a factor to
consider for some imported biofuels, Australia’s
6.1.1 Environmental sustainability
Regional Forest Agreements and Renewable
In theory it could be argued that bioenergy, as a Energy Target, in conjunction with state-based
renewable alternative to fossil fuels, achieves improved native vegetation legislation, provide guidance and
environmental sustainability by replacing a non- regulation on sustainable use of forest materials.)
renewable resource with one that comes from renewable • The potential for biomass feedstocks to compete for
materials. natural resources including land and water that may
be in limited supply. (Conversely, in some parts of
In practice, some forms of bioenergy also have Australia bioenergy could catalyse tree planting that
environmental weaknesses. These will vary by country, would reduce salinity problems caused by excess
feedstock and technology. Legitimate concerns for some water72 and soil loss caused by erosion).
forms of bioenergy include: • The potential for impacts on long-term sustainable
The recognition that fossil fuels are currently used in production due to progressive reduction of carbon,
moisture and nutrient levels in soils (although the

22
bioenergy co-product biochar offers the potential a major factor in rising food costs over the past few
to improve soil carbon levels when used as a soil years. In contrast, the US government has reported that
additive). the impact of rapid growth in US ethanol production
contributed only 3% to the increase in world food prices
Fortunately many environmental aspects of bioenergy during 2007–0874.
feedstock preparation and plant operation are covered by
existing legislation and procedures around Australia. For 6.1.3 Economic sustainability
example:
• The Regional Forest Agreements in place around The construction and operation of multiple new
Australia provide for the conservation and sustainable bioenergy plants will be driven by private industry,
management of Australia’s native forests. with funding raised under commercial conditions.
• Environmental Impact Statements or Plans can be Bioenergy plants are capital intensive and have long
sought for particular projects within well established payback periods (as with fossil fuel based production
planning frameworks. of electricity and liquid fuels). The industry will be
economically sustainable if it is cost competitive with
6.1.2 Social sustainability other forms of energy. The ability of bioenergy to
compete may be assisted by clear, stable policies to
Construction and operation of a bioenergy plant will reduce carbon pollution such as the expanded national
include: Renewable Energy Target (RET) and the proposed
• Design, fabrication and erection of plant and Carbon Pollution Reduction Scheme (CPRS) or a
equipment, with the majority of equipment supply similar scheme.
and labour requirements being sourced within
Australia. Consideration of economic sustainability may also
• Provision of biomass feedstock on a continuous include review and analysis of industry development,
basis, potentially involving nurseries, planting, crop diversification of the local economy and resource
management, harvest and transport. availability.
• Plant operation on a continuous basis with
professional, skilled and unskilled personnel. 6.2 Life cycle assessments for
• Plant maintenance activities, with direct labour and
indirect employment for provision of new equipment bioenergy
and consumables as required. As with all forms of renewable energy, bioenergy can
In an Australian study that examined employment in the replace fossil fuels and thereby potentially reduce carbon
energy industry73 it was found that across six case studies emissions associated with electricity generation and
renewable energy generally provided more employment transport. The reduction of carbon emissions is not
per unit of energy than coal and gas-fired power 100% however, because the production of bioenergy
generation, and bioenergy generally provided more also requires the consumption of energy and that energy
employment than wind energy. (Solar energy and hydro generally comes from fossil fuels or involves fossil fuels
case studies did not form part of the study.) in its production.

New bioenergy industries will focus on rural sites, Analysis of the relative benefits of renewable energy over
for proximity to feedstock. Most of the long-term energy from fossil fuels is generally achieved via Life
employment for each plant will occur in and around Cycle Assessments (LCA).
country towns. Bioenergy thus offers the potential for
social sustainability in parts of country Australia.
6.2.1 Biofuels
The most common form of LCA for fuels is on an
As with all industries that rely on agriculture and
energy basis, where all energy inputs to produce the fuel
forestry for feedstock, determination of the overall
are compared with the energy value of the fuel and any
social sustainability of bioenergy businesses will include
co-products. As an example, to assess wheat for biofuel
consideration of their impact on land ownership and
in Australia, the following could be included75:
rights, labour conditions and equitable access to food,
• Fossil fuels used by the farmer for land preparation,
land and energy.
crop maintenance and harvest.
Bioenergy has attracted some criticism for negative • Fossil fuel used in manufacture and transport of
social impacts. Competition for crops traditionally used fertilisers and herbicides used for the wheat.
for food, and the adverse impact of some government • Grain transport to the fuel facility.
polices, has led to the belief that bioenergy has been • Energy used at the ethanol facility and for other

23
inputs such as enzymes and chemicals. Technology g/kWh CO2
• Energy used in distribution of the ethanol. Brown Coal: Current Practice 1100-1300
• Emissions created when the ethanol releases its Bituminous Coal: Best Practice 955
energy in a vehicle engine. Gas: Combined cycle 446
Diesel: Embedded 772
An LCA can also consider impacts that are not related
Onshore wind 9
directly or indirectly to fossil fuel energy use, such as the Hydro - existing large 32
potential impact of land use change. Hydro - small-scale 5
The LCA would also quantify avoided emissions, Decentralised photovoltaic (PV)- retrofit 160
when the biofuel is used instead of fossil fuel in vehicle Decentralised PV - new houses 178
engines, as well as the avoided emissions produced Decentralised PV - new commercial 154
during recovery of crude oil (including any CO2 venting Bioenergy Technologies
and gas flaring), processing to make the fuel, and Bioenergy - poultry litter - gasification 8
transport of that fuel to the user. In this way the LCA Bioenergy - poultry litter - steam cycle 10
Bioenergy - straw - steam cycle 13
may demonstrate any net GHG emission reductions
Bioenergy - straw - pyrolysis 11
achieved by using biofuels instead of fossil fuels.
Bioenergy - energy crops - gasification 14
It can be seen from the list above that the LCAs for Bioenergy - Forestry residues - steam cycle 29
projects may vary considerably depending on the Bioenergy - Forestry residues - gasification 24
interpretation of the respective boundary conditions Bioenergy - animal slurry - anaerobic digestion 31
and according to agricultural practices and the relative Landfill gas 49
locations of feedstocks, processing facilities and markets. Sewage gas 4
It is important to be careful in any use of an LCA
developed for one project to make a truly equivalent 6.2.3 Relative energy balances for annual
comparison with an LCA for a different project. In all crops and perennials
LCAs, the definition of the boundary limits and the
It has been noted above that the life cycle assessment for
factors applied for energy inputs and outputs must be
bioenergy typically includes all of the energy inputs to
carefully correlated to ensure objective and consistent
produce and collect the biomass and all of the outputs
appraisals.
from its utilisation. This figure may be shown as an
The CSIRO, BTRE and ABARE have already energy ratio (total renewable energy outputs divided by
investigated and reported a number of biofuel LCAs76 the total non-renewable energy inputs).
and further work is planned. LCAs are included in
These ratios will be influenced by farming practices and
ongoing work organised by the IEA77. There is an
location factors. For example:
international standard for Life Cycle Assessment (ISO
• USDA energy balances show ethanol from corn
14040).
having an energy ratio of 1.3 and biodiesel from soy
LCAs are a useful tool to compare the energy benefits beans having a ratio of 3.2.
of different biofuels, if the boundaries and assumptions • Mustard use for biodiesel in Europe is reported as
are clearly articulated, but they should not be the sole having a ratio of approximately 7.
parameter for assessment of a fuel’s sustainability. • In contrast to this, preliminary work on mallee
eucalypts as energy crops in Western Australia shows
6.2.2 Electricity an energy ratio of 41.779.

A life cycle assessment for electricity from biomass The high ratio for mallees relative to the annual crops
would generally follow the format described above for highlights the ability of some forms of forestry material
biofuels. to be made available for bioenergy production with
much lower embodied energy per unit of feed than
The table below shows the results from a study by material from agriculture. It suggests that the net
the UK Department of Trade and Industry study78, greenhouse gas reductions to be achieved by substitution
comparing the life cycle emissions of carbon dioxide for of second generation biofuels (made from forestry
various conventional and renewable energy technologies. feedstocks) for fossil fuels may be greater than the
This review focused on electricity generation. On a reductions achieved by first generation biofuels derived
life cycle basis, greenhouse gas emissions of bioenergy from annual crops.
systems are project specific, but typically in the range
4-50 grams CO2 equivalent/kWh, which is greater than
wind and lower than solar PV.

24
Production of first generation biofuels in Australia is at a much smaller scale than in the United States, and there is no evidence to suggest that
biofuels in Australia have contributed to higher feedstock prices

7. Discussion – Risks and Challenges


7.1 The “food versus fuel” debate have contributed to higher feedstock prices. Indeed the
reverse appears to be the case, with recent price increases
At present much of the ethanol and biodiesel around the in grains in Australia contributing to the cancellation of
world is produced from sugar, grains, corn and oilseed proposed grain to ethanol projects.
crops that could also be used for food production.
Over the past few years in particular the popular Increases to pricing for biodiesel feedstocks has
media has linked the increasing production of these contributed to the difficulties and reduced production
first generation fuels to the concurrent increases in in Australia’s fledgling biodiesel industry. It would
food prices around the world. The US Departments of appear that there are arguments in favour of biofuels
Energy and Agriculture80 and others81 have stated that, contributing to increased prices and also arguments that
while renewable fuel production is a contributing factor, increased prices contribute to difficulties in the biofuels
so are: industry.
• Higher fuel and input prices.
• Increased demand. 7.2 Competition
• Adverse climatic conditions, particularly drought.
• Export food restrictions. The search for renewable energies and ways to combat
climate change have created a complex environment
As stated previously in this overview, the US government where multiple solutions seek attention and support.
has reported that the impact of rapid growth in US There is strong competition for a place in the mix of
ethanol production contributed only 3% to the increase technologies and industries that will help Australia to
in world food prices during 2007–0874. address these issues. RD&E for bioenergy should assist
with its fair and full consideration as one of several
Production of first generation biofuels in Australia is
means of reducing the country’s CO2 emissions.
at a much smaller scale than in the United States, and
there is no evidence to suggest that biofuels in Australia

25
7.2.1 Land and water • Risk reduction for growers and processors - if a
potential grower sees only one potential customer
The recent “food versus fuel” debate shows that: for biomass they may be reluctant to plant trees.
• Some bioenergy can use feedstocks that would However, if several alternative processing options
otherwise be used as food or as stock feed. are likely in a five to ten year period, a grower is
• Bioenergy feedstocks that are not suitable for human more likely to commit to planting trees and help to
consumption may still be grown on land that could provide a biomass resource for any processors that set
also be used for food production. up in the region.
A separate issue that has been widely reported in the In contrast to these potential benefits, if a bioenergy
media and also debated in academic circles is the industry grows faster than acceptable for the supply
shortage of water in many parts of rural Australia, of local feedstocks, there may be pressure to import
coupled with the fact that woody perennials typically use feedstocks that are produced with less regard to
more water for growth than annual crops. sustainable agriculture or forestry than occurs in
These issues raise a number of important topics for Australia.
bioenergy R&D, including:
• Understanding the co-production of crops and 7.2.3 Investment
biomass, so that farmers can grow biomass as a Bioenergy projects are capital intensive and must
commercial venture alongside other activities such compete with other renewable energy projects and
as grains and livestock. Much of the mallee eucalypt other business for this capital. As such the risk profile
R&D underway in Western Australia considers this associated with the investment must be quantifiable and
issue. capable of being understood by investors that may not
• Understanding water balances on a regional basis – be familiar with either the technology or the product
some parts of Australia have major water shortages, marketplace.
however other parts have excess water that creates
environmental problems via salinity. Bioenergy through power generation has been supported
• Considering new biomass crops for land that is by two favourable aspects:
unsuitable for other agriculture – for example • The MRET and RET legislation that underpins
the potential for oil-seed producing trees such as renewable energy certificates is long-term and is
pongamia in parts of Queensland. relatively stable.
• Developing policies that encourage the production • The power purchase agreements that can be secured
of biofuels that provide environmental and social are also long-term, and assist with favourable debt
benefits and allow first generation biofuels to utilise raising.
grains and sugars but with care exercised to ensure
Bioenergy in the form of liquid fuels has not had a
that industry support measures (such as mandatory
scheme such as MRET or RET to support industry
targets) do not create undue pricing volatility across
development.
the fuel or food sectors.
• The direct and indirect land use changes associated Technology maturity also impacts on ability to secure
with the growth of the bioenergy industry. investors. New technologies that are either not widely
demonstrated or have not been used with Australian
7.2.2 Feedstock biomass feeds both present a greater risk to investors
than well established technologies with well defined
It is likely that there will be competition for feedstock
feedstocks.
between different bioenergy businesses (heat, power,
liquid fuels), particularly as woody biomass might be
a viable feed for a range of different power and fuel 7.3 Liquid fuels
applications over time. Such competition may have a
Australia’s biofuels industry has experienced considerable
number of benefits, including:
volatility in recent years, and could also change in the
• Development of a healthy feedstock supply coming decade as second and third generation biofuel
industry. Multiple customers will create larger scale technologies become commercially available.
within the feedstock supply industry and potentially
Until recently the production of liquid biofuels
achieve economies for all concerned. It will also help
in Australia was associated with low value sugars
to ensure that growers are paid a competitive price
(particularly C molasses in Qld) and starch (e.g. the
for their biomass.
Manildra plant in NSW).

26
When the previous federal government announced agronomy, harvesting & handling, and by-product
incentives to meet a renewable fuels target of 350ML utilisation.
annual production, there was significant interest in the • New technologies – conversion of wood and crop
industry, but only one additional ethanol facility was feedstocks via hydrolysis, thermo-chemical and
constructed and two existing operators expanded their subcritical or supercritical water technologies.
operations. A number of biodiesel projects were built, • Improved availability of feedstocks that may already
however these proved to be financially unviable for three exist (e.g., lignocellulosics, such as forest residues)
principal reasons: and that can be adapted or specifically grown.
• An underestimation by the industry surrounding the • New cellulosic crops such as mallee eucalypts and
difficulties of moving large amounts of biodiesel into other farm forestry products, native and imported
the market in a relatively short time period. grasses, and woody weeds.
• Reduced incentives due to changes in fuel tax for
biodiesel introduced in the 2006 Fuel Tax Act. Waste materials can offer better economics as feed
• The increases in prices for grain, tallow and other because they are often available at low or even negative
feedstocks. cost. Municipal Solid Waste (MSW) and other urban
wastes may be useful feeds to support prototype
Success factors for a viable bio-fuels industry in Australia commercial facilities that may subsequently be replicated
include: using rural locations and feeds.
• Certainty of returns on investment – largely driven
by certainty of market demand. Existing or new first generation ethanol and biodiesel
• Sustainable feedstock resource with proven growing, facilities may assist in any transition to second
harvesting & storage/handling systems and relatively generation facilities. This may involve adding
stable pricing. equipment to existing ethanol facilities that can break
• Access to commercial technology for conversion down cellulosic material into sugars for fermentation.
of feedstocks to energy (including adaptation to Alternatively it may involve modifications to a biodiesel
Australian feedstocks if required). plant to allow satisfactory processing of oil from tree
• Support from primary industry (Regulators & crops such as pongamia.
Growers) to plant economically viable quantities of Australia’s sugar industry provides many elements that
feedstock within cost effective delivery to efficient could support successful first and second generation
production facilities. fuels:
• Determining the most economic scale to meet • The industry is well established with a high level of
Australian industry objectives, recognising that this infrastructure, participants at all levels of the supply
may change with location and feedstock. chain and considerable R&D experience for feed
• Determining appropriate land use plans & supply and processing.
sustainable crop types to meet Australian industry • Molasses-to-ethanol technology is already mature
and environmental objectives. and in use. In future, bagasse (cane fibre) to ethanol
• Dispelling misconceptions within the Australian technology could be added to molasses-based
market relating to the performance of biofuels in facilities.
current automotive engines. • Sugar provides a useful feedstock for fermentations
Strategic planning for biofuels could consider to new plastics and other chemicals, leading to
technology maturity and pathways to increasing possibilities for biorefineries.
production to grow the industry now, while supporting High fibre cane varieties (grown as much for cellulose
the development and commercialisation of emerging content as sugar content) may provide a useful feed to
feedstocks and technologies that better meet future processing plants.
environmental criteria and industry needs.
The technologies and feedstocks that are already capable
of integration within the existing market are:
• Cereals and sugar cane to ethanol.
• Fats and oils to biodiesel.
The technologies and feedstocks that are potentially
deliverable within a 5 – 10 year window include:
• New biodiesel feedstocks – such as pongamia
and algae, suitable for more marginal lands or
other underutilised areas and requiring R&D on

27
Rows of oil mallee eucalypts within a wheat field

8. Potential Scale of Industry


8.1 Future Markets 8.1.2 Biofuels
(a) First generation fuels
8.1.1. Electricity
Overall potential for ethanol and biodiesel based
The Australian Clean Energy Council has led an on full utilisation of currently available sugar, wheat
appraisal of the potential for bioenergy to contribute to and other grains, and waste oils, is almost 17 GL per
stationary energy generation in 2020 and 20502. This year9. Likely production with current plantings and
appraisal suggests that by 2020 the contribution from crops is expected to be considerably less than this
biomass for electricity generation could be 10,624 GWh however, due to an inability to offer pricing for fuel
per year or some six times the current generation. use that matches pricing for food or chemical use.

It further identifies the long-term potential for electricity Potential may exist for adaptation of current crops
from biomass in 2050 to be as much as 72,629 GWh/ to biofuel production using land not currently used
year, which is 40 times the current levels. Such a for food production – this would achieve lower
generation capacity would require constant industry yields but with lower input costs to compensate.
growth at almost 10% per year for the next four decades. There is need for a variety of trials to better define
farm economics and agronomy. Any proposals for
As another indication of the significant potential for large-scale land use change will need to consider
electricity from bioenergy, the Australian Business environmental and community issues.
Roundtable on Climate Change has stated that
bioenergy could supply between 19.8 and 30.7% of
(b) Second generation (biomass derived fuels)
Australian electricity needs by 205082.
The potential for these fuels is estimated at between
10% and 140% of current petrol usage9. The wide
range reflects a variety of assumptions about use of

28
existing biomass wastes, diversion of existing biomass Other cellulosic liquid fuels (gasification & synthesis,
streams from other end uses (for example export fast pyrolysis):
wood chips) and the planting of new biomass crops • Electricity from synthesis gas.
such as mallee eucalypts in association with wheat • Lignocellulosic monomer compounds for chemical
belt farms in southern Australia. Uptake anywhere industry – plastic feedstock.
within this range will require significant changes to • Carbon char beneficial uses – nutrient carrier into
fuel distribution and retail industry, with possible soils, filter material, industrial use.
changes to fuel specifications in parallel with R&D • Extraction of phenolic material from pyrolysis oil for
efforts into agronomy and forestry. Capacity will be use in industrial resins.
affected by land use and the uptake of biofuels would
benefit from the introduction of a carbon trading Algae:
price which would increase the financial viability of • Feed supplements.
production and increase the competitiveness of the • Biomass for power generation or pyrolysis.
industry. Significant changes in growing practices • Methane, via anaerobic digestion of the algae
and the use of crop residues will both need R&D. following oil extraction.
Large-scale uptake also has a time factor, as growers
will require certainty in long-term offtake before 8.2 Future feedstocks
changing farming practices.
There are several annual and perennial crops that show
(c) Algae promise as large-scale feedstocks for bioenergy in the
Algae also offers potential for replacement of fossil future.
fuels, in stand alone processing ventures or in synergy
with water reclamation and aquaculture projects. 8.2.1 Native trees
Application to rural or primary industry needs to
allow for use of water (for example brackish water). Over the past fifteen years some sixteen million mallee
There is also considerable interest in growing algae trees83 have been planted on farms in WA, largely for
on the CO2 emitted from coal-fired power stations. mitigation and control of dryland salinity but with
Use of exotic (i.e. imported) algae may be restricted additional benefits as windbreaks and for increased
due to issues of biosecurity. biodiversity on farms. Harvest and use of these trees to
date has been limited – primarily for trials of the IWP
8.1.3 Co-products plant at Narrogin and for small scale eucalyptus oil
production around Kalannie in WA.
Increased production and sale of co-products may
enhance the profitability and growth of a biofuels In parallel with the on-farm planting, various research
industry. Current and/or long-term markets for co- groups have conducted detailed examination of all
products may include: aspects of a large-scale mallee industry, from seedling
selection through to harvest and transport to processing
Biodiesel: plants. There is thus a considerable body of information
• Glycerine – industrial chemical for paint, glycol, and research expertise to facilitate any major expansion
reformation into chemical feedstock. to mallee planting over time.
• Meal and soluble proteins from integrated refineries
– animal feed. Some of this research has considered the potential
• Free fatty acid (FFA) and lipid-based nutrients from for large-scale planting of mallees on dryland farms
integrated refineries – human dietary supplements. in parallel with other, pre-existing farming activities.
Particular emphasis has been placed on complementary
Grain based ethanol: water use, so that other crops are not adversely affected
• Meal and soluble proteins from integrated refineries by tree planting. Estimates of sustainable planting with
– animal feed – Wet and dried distillers grains are minimal water competition show potential for as much
being used as animal feed in the United States of as 39 million tonnes of biomass per year (measured on
America and also in Australia. a dry basis) across the southern Australian wheatbelt
zone72.
Cellulosic ethanol (fermentation):
• Lignocellulosic sugar compounds for chemical While mallee eucalypts have received considerable
industry – plastic feedstock. attention, there are hundreds of other Australian
• Non-sugar residues from enzymatic hydrolysis – natives that may also offer opportunities for large-scale
energy conversion. production of biomass for energy and co-products. A
number of species have already been investigated and
these are summarised in a recent RIRDC report84.

29
8.2.2 Oil seed trees Australia has a number of woody weeds (including A.
nilotica in Queensland88 and M. pigra in the Northern
Pongamia is a large deciduous tree that grows well in a Territory89) that could potentially be utilised as feedstock
variety of climatic conditions in Australia and Asia. It is for bioenergy.
able to grow in marginal areas that may be unsuited to
conventional agriculture, thus offering the potential for
large-scale rural enterprise that is additional to and not 8.3 Scope for investment
competitive with food production.
8.3.1 Power plants
Once established, pongamia trees produce seeds that
The figure of 72,629 GWh/year was provided by the
contain significant quantities of oil. The oil is suitable
Australian Bioenergy Roadmap2 as the potential for
for modification and use as biodiesel. Further work is
electricity generation from biomass in 2050. Biomass
required to identify optimal varieties, quantify yield per
power stations will typically operate as continuous base
hectare for a variety of conditions, optimise harvesting
load generators (as compared with wind and solar which
and processing steps and costs, and test processed
are intermittent). This figure represents new capacity
pongamia seed oils as blends and as dedicated fuels.
totalling approximately 9 GW by 2050 to fully realise
Jatropha curcas is another large tree that bears oil seeds. the potential of biomass. For comparison, Australia’s
It has been declared a noxious weed in the Northern current generation capacity totals just over 51 GW90, the
Territory and Western Australia. Legislation prohibits majority of which is fuelled by black and brown coal.
the movement of this species into and within these
The capital cost per MW of generating capacity will
jurisdictions and requires all detections to be eradicated.
vary considerably across these alternatives. This increase
As there is active on-ground eradication/control, this
in biomass-fired generation would be achieved via a
species is deemed to be under ‘official control’ and
mixture of new plant and equipment, including:
therefore importation of this species into Australia is
• Small, standalone power stations.
currently prohibited.
• Large (20 MW and above) standalone power
8.2.3 Algae stations.
• Cogeneration plants, such as those already being
Algae offers a high theoretical yield of oil suitable for installed in sugar mills.
biodiesel, However, as yet there are no commercial • Co-firing facilities, where biomass is fired alongside
facilities in the world producing biofuel from algae. In coal in existing power stations.
the absence of any current commercial use as a source of
fuel, more details of growth, harvesting, processing, and If the current cost of a large, stand alone power
markets for biomass residues need to be determined. plant56 is taken as the average capital cost for this
power generation, it is expected that the total capital
8.2.4 Other investment to 2050 for new capacity of approximately 9
GW could be more than A$20 billion.
Non-food oil seeds such as Dry Land Juncea (mustard)
offer potential for biodiesel production. Co-firing of biomass provides bioenergy at a lower
capital cost than the alternative listed above. In this
High fibre sugar cane is sugar cane bred for a mix case the biomass is used as feed in an existing coal-
of fibre and sugar yield rather than maximum sugar fired power station instead of building a new dedicated
yield only. It may be a suitable biomass feed to biomass power station. However, limits do apply. The
increase cogeneration or provide additional scope for maximum quantity of wood that may be co-fired in pre-
ethanol manufacture when second generation ethanol existing plants is typically 10 % of the total feed, with
technologies become available commercially. the balance of the feed remaining as coal.
A number of grasses are being considered overseas as 8.3.2 Biofuels
crops grown specifically for bioenergy. These include:
• Switchgrass – a perennial grass native to North Market size in Australia for petrol and diesel as transport
America85. fuels in 2007–08 is reported as being 37 billion litres8.
• Miscanthus – a perennial grass native to Asia that is
the subject of considerable research as a bioenergy A 20% biofuels market share of this fuel use represents
crop in Europe86. 7,400 ML per year. Existing capacity for ethanol and
biodiesel is not fully utilised at present and totals
Work is also underway to study the potential for some approximately 500 ML91.
native grasses to act as bioenergy crops in Australia87.

30
Biogas generator sets at Melbourne Water Eastern Treatment Plant, Bangholme, Victoria

9. Discussion
9.1 Timeline for change oils, plus limited use of waste animal fats) are technically
feasible now. They are used widely in many overseas
The data in section 8 highlights the scale that the countries and with commercial success in Australia.
bioenergy industry may achieve as it provides renewable
power and fuels across Australia in coming decades. Two commercial-scale first generation biorefineries are
The preceding sections also show that a number of also in operation in the USA, making a range of plastics
feedstocks and technologies already exist and that from corn feedstock 53,54.
others are under active development in Australia and
A number of demonstration and prototype commercial
overseas. The environment in which bioenergy is being
second generation biofuels plants using cellulosic
considered is also changing, particularly with regard
feedstocks are under construction.
to government initiatives such as the RET legislation
(passed in 2009) and the proposed CPRS, which seek to 9.1.2 Five to ten years
address climate change and industry development issues.
Such developments suggest that the Australian bioenergy Second generation transport fuels:
industry will see gradual but continuous change over an • These will use woody biomass and agricultural
extended period. cellulosic residues as feed.
• Based on work already underway overseas21, the
9.1.1 The current situation commercially demonstrated technologies available
overseas in five years may include:
Combustion plants to generate electricity from wood
–– Ethanol from the fermentation of hydrolysed
and other cellulosic feedstocks are available now and use
wood and crop residues21.
mature technology.
–– Ethanol, syn-diesel and other liquid fuels from
First generation transport fuels (primarily using the gasification of wood and crop residues,
agricultural crops as feed - sugar, starches and vegetable followed by reforming 47.

31
Refinery feedstock from fast pyrolysis of wood (already The price of most interest to any bioenergy plant is not
commercial) and hydro-reforming (successful R&D the cost of feedstock production, but the cost of that
carried out overseas)92, 93. feedstock delivered to the bioenergy plant. Previous
Australian work95 has highlighted uncertainty and
In five to ten years commercial prototypes for second variability for costs associated with different harvest and
generation biorefineries may also be in operation delivery systems, and it is important to consider this
overseas, particularly if success with second generation aspect of biomass supply.
transport fuels establishes the commercial feasibility • In some situations existing delivery systems may be
of technologies to convert wood and other cellulosic adapted for use with bioenergy feedstock.
biomass into biorefinery feedstocks. • In other cases, delivery systems being developed
Relative to technologies for production of ethanol and overseas may be applicable in Australia.
syn-diesel from biomass, feedstocks and technologies • Finally, there are situations where new equipment or
for producing large volumes of transport fuels from systems are necessary and are unique to an Australian
algae have received significant attention only recently. It opportunity (such as the harvest of mallee eucalypts
is therefore difficult to determine whether commercial proposed for dryland regions).
scale production of fuels from algae will be achieved in Some feedstocks that could be used in Australia are also
the next five to ten years. the subject of use or research overseas, and negotiation
for use of overseas intellectual property may be a
9.1.3 Beyond ten years part of their use here. Other feedstocks are unique to
Once commercial prototypes are in operation the Australia. In all cases however the conditions specific to
various elements of the bioenergy industry may enter a various parts of Australia may warrant local research to
series of rapid growth phases94. This can be expected to clearly establish preferred species or cultivars and likely
include: yield and delivery costs now and into the future. Such
• Progressive cost reductions through the learning research may include review of:
curves on commercial plants. • Climate and climate change.
• A better understanding of economies of scale • Soil conditions.
through plant operation and feedstock development. • Water use.
• Integration of activities, particularly the addition • Farming techniques.
of biorefining capability to fuel plants and the • Roads and other infrastructure.
construction of national, supporting infrastructure. • Compatibility with existing practices and potential
• Algae-based biofuel production. for appropriate levels of grower uptake.
• Effects of government policies such as the proposed
CPRS. 9.2.2 New technology
The funds being put toward technology R&D and
9.2 RD&E over next five years commercial prototypes in North America and Europe
in particular are many times greater than funds available
This report is a preliminary stage in the development for equivalent work in Australia. It is to be expected
of a National Research, Development and Extension that a variety of second and third generation bioenergy
Strategy for Bioenergy. As this strategy is developed, technologies will become available commercially
topics for further discussion could include the following: overseas in the next five to ten years. Importantly they
could become available to Australian businesses having
9.2.1 Feedstock – supply and delivery already been proven overseas, a valuable prerequisite
Fundamental to any new bioenergy plant is access to for successful project funding from Australian banks
suitable biomass feed with consistent and appropriate: and investors. It is generally quite feasible to use
• Quality. bioenergy technology developed overseas in Australian
• Quantity. applications, subject perhaps to any modifications that
• Delivery schedule or seasonality (bioenergy plants will optimise operation on local sources of biomass.
typically operate continuously year round). Australia will need suitably trained personnel to
• Price. build and operate plants built with local or overseas
technology. Construction and operation will require an
These variables must all be understood with some engineering resource and also personnel with relevant
certainty over the life of the bioenergy plant (typically scientific skills. It may be possible to include specific
15 years for initial financial modelling, and as much as training of operators and professional staff via placement
double or triple this in practice). in similar overseas plants prior to operation of new
Australian facilities.

32
Technology transfer works both ways, and any bioenergy The markets for bio-based products (such as renewable
technology developed in Australia will be able to seek plastics) are generally industrial, international and at
potentially huge markets around the world. However: an early stage of development. These are expected to
• It may also be competing with other work underway be the subject of market-specific research during the
overseas. development of business cases for the implementation
• Even after successful R&D, such work needs to be of new technologies. For such materials it is worth
sufficiently attractive to achieve funding needed for remembering Australia’s proximity to large potential
commercial prototypes and trials that then allow markets in Japan and other Asian countries.
warranties to be offered to subsequent users.
The sale of bio-based transport fuels (such as ethanol,
A strong business case is therefore important to justify biodiesel, synthetic diesel) in Australia requires RD&E.
any major R&D funding for technology development. Marketing includes direct and indirect interaction with
The business case should address markets, competitive the following customers in Australia (and potentially in
advantage and commercialisation pathways. However Asia):
such RD&D may also be considered from the • International oil companies.
perspective of general industry development in Australia. • Independent fuel distributors.
• Major industrial fuel users.
9.2.3 Technology scale up and demonstration • Individual consumers.
Once technology has been demonstrated successfully at Each biofuel purchase decision is based on a complex
the laboratory stage it must be scaled up progressively mix of cost, quality, availability and convenience, and
and carefully to full (commercial) scale. This generally environmental benefits (real and perceived). Until such
includes a pilot plant, a demonstration plant and a fuels are well established, each purchase decision is also a
commercial-scale prototype. conscious step by the customer away from a routine, low
• For the pilot and demonstration scale, issues may risk buying pattern.
include:
–– Significant financial commitment for capital and 9.2.5 Environmental and social benefits
operating costs.
–– No short term commercial return. In almost all situations where bioenergy is utilised
–– Considerable technical risk. to replace a fossil fuel it is expected to provide an
• For the commercial prototype, issues may include: environmental benefit via reduced CO2 emissions. In
–– Much greater financial commitment than for many situations, particularly in the formative years of
pilot and demonstration plants. a new industry, the bioenergy comes at a higher cost ($
–– Risks associated with final scale up, and per unit of energy) than the fossil fuel based energy it
potentially with feed supply and characteristics, seeks to replace.
and product offtake. For industry investment in bioenergy (particularly at
–– A major investment that may take one or two the scale that is possible and desirable for significant
decades to pay off, once it is operational and greenhouse gas mitigation) the environmental benefits
selling product. should be valued in the overall commercial transactions
This is a new industry, as opposed to one that is well that accompany energy sales to a variety of customers.
established. Support for showcase projects and other Government policy (such as the proposed CPRS) that
actions could facilitate capital raising, particularly given allows incorporation of environmental costs and benefits
the recent difficulties in the Australian biofuels industry into commercial transactions may encourage investment
and current financial liquidity problems around the in the bioenergy sector.
world. These issues may apply to Australian plants
regardless of the source of technology (local or overseas). R&D to understand the environmental and social
benefits of bioenergy may assist government in the
9.2.4 Markets establishment of practical, long-term policies. Policy
stability will have flow on benefits to industry.
The market for renewable electricity from bioenergy
in Australia is already well established, with more than Production of many bioenergy feedstocks is intimately
100 accredited bioenergy plants supplying 24% of the linked to agriculture and forestry. Some knowledge of
renewable electricity under MRET in 200712. environmental and social issues can be gained from
overseas experience but most of these issues may benefit
from consideration in an Australian context and in
relation to Australian farming and forestry practices:

33
• A good example of this is the relative water and the markets for these products. In some cases the
consumption of annual crops and perennials. While proposed production quantities may far exceed the
it is generally understood that perennial crops available markets and depress prices.
typically use more water than annual crops and
that this may be inappropriate in some regions, In order to best determine whether or not a particular
other parts of the Australian farming landscape are bioenergy R&D project is of value it may be reviewed
suffering from excess water that manifests as dryland in the context of an overall SWOT analysis (Strengths,
salinity. Weaknesses, Opportunities, Threats) for the proposed
• A second example is the jatropha tree, which offers bioenergy business. It is suggested that for each major
the potential for large-scale biodiesel production in bioenergy opportunity for Australia, a SWOT analysis
marginal areas but grows so prolifically that in some is undertaken to help set priorities for R&D that will
parts of Australia it is classified as a noxious weed. maximise the chance of a successful industry being
developed.
Both examples relate to areas of significant potential
for bioenergy and environmental and social benefits, Also, when selecting bioenergy R&D for funding in
if managed properly on a regional basis and with a Australia, it should be remembered that:
national consensus. • The budget for bioenergy R&D in Australia is quite
limited in comparison to the budgets in Europe and
the USA.
9.3 “From planting to power” – • Much of the technology R&D already underway
recognising the full supply chain overseas is relevant to Australian opportunities.
• If commercially-tested technology is being brought
The overall success of any bioenergy business requires in from overseas it may not need an Australian R&D
success with each of the components that make up that resource for its local introduction.
business. These components may be summarised as • An Australian bioenergy R&D community is
follows: a resource to be developed over years and even
• Feedstock supply. decades. A proactive approach may be of benefit to
• Feedstock delivery to the bioenergy facility. identify areas of particular relevance to the long-term
• The bioenergy process. bioenergy industry in Australia, and then seek and
• Bioenergy distribution networks. develop skills and R&D resources in these areas.
• Customers for the bioenergy.
• Co-products, including carbon credits.
Success for bioenergy is also dependent on its ability
to compete within a well established market place (e.g.
biofuels need to compete within a fossil fuel dominated
market)
Progress with any single component should be viewed
in the context of whether such progress will make
a significant difference to the overall viability of a
bioenergy business.
R&D to help establish a new bioenergy business
may therefore be quite different to R&D for an
established, operating agricultural enterprise. For the
latter, the R&D may improve one component with the
understanding that the other components in place will
accommodate the improvement. For a new bioenergy
industry the situation is not as secure. For example:
• R&D to improve the cost of production of a
certain feedstock may not be of benefit if there is no
economically viable harvest and transport chain for
that feedstock because of its physical characteristics
or location.
• R&D to develop high value co-products should take
into account the quantities that may be produced

34
Endnotes

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4. Executive Summary of Roadmap for Bioenergy and Biobased Products in the United States, by Biomass
Research and Development Technical Advisory Committee, October 2007
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7. MMA, Benefits and Costs of the Expanded Renewable Energy Target, January 2009.
8. Department of Resources, Energy and Tourism, Australian Petroleum Statistics, Issue No. 158, September 2009
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10. Biofuels in Australia – Issues and Prospects, RIRDC Publication 07/071, May 2007
11. Fuel for Thought - The Future of Transport Fuels: Challenges and Opportunities. CSIRO, 2008
12. Adapted from “MRET – Review of Contribution from Bioenergy” by David Rossiter. Paper presented at
Bioenergy Australia 2007 National Conference
13. http://www.biofuelsassociation.com.au/images/stories/pdf/ethanolmap.pdf
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16. http://www.business.vic.gov.au/BUSVIC/STANDARD//pc=pc=pc=PC_63205.html
17. http://wasea.com.au/files/reports/biofuelsinterim_reportfeb07.pdf
18. http://www.cmar.csiro.au/e-print/open/2008/beert_b.pdf
19. http://www.pacificenergy.com.au/
20. http://www.tradewesternaustralia.com/?q=node/337
21. http://www.energy.gov/news/4827.htm and http://www.energy.gov/news/5340.htm
22. http://www.energy.gov/news2009/8352.htm
23. http://www.ethtec.com.au/downloads/Latest_News/Pilot_Plant_Progress.pdf
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and-vacuum-gasoil-fractions-proprietary-two-stage-upgrading-process-provides-path-to-mobile-fuels-from-
biomass/

35
28. http://www.ret.gov.au/resources/resources_programs/alternative_fuels_programs/second_generation_biofuels_
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35. http://www.grainscouncil.com/aboutus/fastfacts.php
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37. http://www.dbrl.com.au/contracts.htm
38. http://adl.brs.gov.au/anrdl/metadata_files/pe_brs90000004181.xml
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42. http://www.murdoch.edu.au/News/%242-million-to-turn-algae-into-clean%2C-affordable-fuel/
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46. www.cleanenergycouncil.org.au/
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48. http://www.sardi.sa.gov.au/aquaculture/aquaculture/ncris_photobioreactor_facility
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Australia_.pdf
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research_and_development_program/Pages/SecondGenerationBiofuelsResearchandDevelopmentProgram.aspx
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54. http://duponttateandlyle.com/
55. http://www.rirdc.gov.au/reports/AFT/01-160.pdf
56. http://www.sedo.wa.gov.au/pages/renew_development_activ.asp
57. http://www.environment.gov.au/atmosphere/fuelquality/standards/index.html
58. http://www.ncrisbiofuels.org/facilities

36
59. http://www.rirdc.gov.au
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66. http://www1.eere.energy.gov/biomass/pdfs/obp_roadmapv2_web.pdf
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January 2009
85. http://bioenergy.ornl.gov/papers/misc/switchgrass-profile.html
86. http://bioenergy.ornl.gov/papers/miscanthus/miscanthus.html

37
87. http://www.rirdc.gov.au/programs/new-rural-industries/bioenergy-bioproducts-and-energy/rirdc-projects-and-
results/project-details.cfm?project_id=PRJ-004679
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Publication no. 04/031

38
39
Overview of Bioenergy in Australia
by Colin Stucley
Pub. No. 10/078

Australia’s bioenergy industry produces renewable electricity, This report provides an overview of the Biofuels and Bioenergy
heat and liquid fuels. With revenues in excess of $400 million industry. This overview includes basic statistical information
per year, bioenergy is already a valued contributor to businesses for the biofuels and bioenergy industries. It will also be a
in cities and rural locations across the country. useful basis for those contemplating investment or formulating
policy and will help to inform RIRDC as it plans its research
Australia is actively seeking ways seek to reduce its greenhouse and development priorities into the future.
gas emissions and dependence on fossil fuels, and bioenergy
could play a more significant role in coming years. Potential This report is an addition to RIRDC’s diverse range of over
exists for greater use of existing and new feedstocks and 2000 research publications and forms part of our Bioenergy,
technologies, leading to an increased contribution from Bioproducts and Energy R&D program, which aims to
bioenergy across industry, transport and domestic energy meet Australia’s research and development needs for the
sectors. Such use will allow bioenergy to make a valuable development of sustainable and profitable bionergy and
contribution to Australia’s low carbon future. bioproducts industries, and to develop an energy cross sectoral
R&D plan.
Research, Development & Extension (RD&E) is a key
factor for increasing the use of bioenergy, by ensuring that Most of RIRDC’s publications are available for viewing,
it is competitive, sustainable, and fully understood and free downloading or purchasing online at www.rirdc.gov.au.
appreciated. Purchases can also be made by phoning 1300 634 313.

Rural Industries Research & Level 2,


Development Corporation 15 National Circuit
PO Box 4776 BARTON ACT 2600
KINGSTON ACT 2600
Phone: 02 6271 4100
Fax: 02 6271 4199

rirdc.gov.au
Email: rirdc@rirdc.gov.au
Web: www.rirdc.gov.au
Bookshop: www.rirdc.gov.au
or phone 1300 634 313