Transitioning Australia's Liquid Fuel Sector: The Role of Renewable Fuels

May 23, 2023

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(Bioenergy Australia) Australia will be exposed to environmental, economic and energy security risks if governments fail to foster a domestic renewable fuels sector.

That is the alarming assessment of a new report commissioned by Bioenergy Australia - Transitioning Australia’s Liquid Fuel Sector: The Role of Renewable Fuels - which addresses the elephant in the room on decarbonising the economy: How we reduce emissions in the liquid fuel space, where electrification is impractical.

The report says the immense task of decarbonising Australia’s economy will be made even more difficult without the urgent development and deployment of the liquid renewable fuels that the nation’s transport, mining, agriculture and construction sectors require to lower emissions - sectors that contribute close to half of Australia’s energy consumption in liquid fuels.

For these sectors, electrification is not the easy answer.

The report also warns of a missed economic opportunity that is well and truly being grasped by other nations, with Australia’s bioenergy roadmap claiming that $10 billion in GDP per annum could be added over the next decade with the development of a mature bioenergy sector, along with 26,200 new jobs.

And given the energy crisis that is currently gripping nations like Australia, the report shines the light on an emerging threat: The next energy security battle, as nations fight for feedstock, and refined renewable fuels to aid decarbonisation.

The report shows 45% of Australia’s total energy use comes from liquid fuels, providing the following opportunities:

Replacing just 6% of petrol with bioethanol, based on targets, would be the equivalent of taking 730,000 vehicles off the road.
Replacing 2% of diesel with biodiesel or renewable diesel, based on current targets, would be the equivalent of taking 29,000 rigid trucks off the road.
Replacing 10% of jet fuel with Sustainable Aviation Fuel, based on airline targets, would be the equivalent of around 220 million less kms flown annually by a Boeing 747.
Bioenergy Australia CEO Shahana McKenzie says renewable fuels are the missing piece of the puzzle when it comes to emissions reduction in Australia.

“While electrification is essential for significant pillars of the energy system it is only part of the answer to reducing emissions. Australia’s economy is reliant on liquid fuels, our heavy industries, aviation, marine, agriculture, and mining need affordable and immediate decarbonisation options.

Touting electrification as the only solution is naïve and delaying a robust discussion about how we achieve decarbonisation of these hard-to-abate sectors,” Ms McKenzie said.

“The full-throttled pursuit of electrification is going to be a handbrake on Australia’s pursuit of its emissions reduction targets, leaving significant sectors in our economy unable to decarbonise in an affordable, reliable way.”

“We must give businesses in these critical sectors the unimpeded ability to reduce their emissions and not simply leave them to their own devices, or their own demise.”

“Renewable fuel is their answer. We just need to provide it, affordably and at scale.”

The report says global investment in liquid renewable fuels more than double in 2021, reaching approximately US$8 billion. But it remains clear that Australia is lagging behind countries like the US, UK, Canada, Brazil, Germany, Sweden and New Zealand.

“Every day we fall further behind in the race for renewable fuels. We are being beaten to the punch on what looms as an incredible economic and environmental opportunity”

“Many other nations are embracing fuel carbon intensity standards, concessional loans, tax treatments, waste levies and grants, but we are yet to see a strategic approach to the decarbonisation of liquid fuel reliant sectors in recent policy announcements.”

“The market is looking for a strong regulatory signal from Australian governments; the necessary green light for investors, producers and refiners,” said Ms McKenzie.

The report showcases how a thriving renewable fuel industry would turbocharge regional development, improve waste management, boost export growth and promote domestic fuel security.

And alarmingly, it suggests the world’s rapidly increasing appetite for renewable fuels could lead to a future energy shock that Australia simply isn’t prepared for.

“Without a domestic renewable fuels sector, Australia is exposing itself to the world’s next energy supply shock and the higher prices that would accompany such a crisis,’’ Ms McKenzie said.

The report lands at an opportune moment, with the Federal Government set to launch its Jet Council that will oversee the aviation sector’s transition to Sustainable Aviation Fuel, working with all levels of government and industry.

Without adequate government support, the report concludes, an Australian renewable fuels industry may fail to materialise, ensuring Australia’s transport, mining, agriculture and construction sectors will continue to depend on incumbent fossil fuels, leading to continued greenhouse gas emissions.

About Bioenergy Australia

Bioenergy Australia (BA) is the national industry association, with over 150 members, committed to accelerating Australia’s bio economy. Our mission is to foster the bioenergy sector to generate jobs, secure investment, maximise the value of local resources, minimise waste and environmental impact, and develop and promote national bioenergy expertise into international markets.

Bioenergy Australia works with the Renewable Gas Alliance (RGA), Sustainable Aviation Fuel Alliance of Australia and New Zealand (SAFAANZ) and the Cleaner Fuels Alliance (CFA). These alliances were founded to accelerate the development and deployment of Renewable Liquid Fuels and Biomethane for deployment in Australia.

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Bio-based renewable fuels are:

Technically ready, capable of complimenting electrification and hydrogen initiatives
Have potential for significantly low cost of production
Are compatible with existing infrastructure
A bridging fuel to alternative technologies in the short term, and long term for heavy transport and aviation READ MORE

Australia could miss climate goal if it ignores biofuel (Shepparton News/Australian Associated Press Newswire)

Australia on the Brink: will “electrify everything” doom the Lucky Country? (Biofuels Digest)

Excerpt from Shepparton News/Australian Associated Press Newswire: Australia is at risk of missing its 2030 climate target by a significant margin but can bridge the gap by using biofuels made from cooking oils and sugar cane.

Groups including the CSIRO and Ampol said Australia had a unique opportunity to lead the world in the eco-friendly fuels and could produce as much as 90 per cent of the green jet fuel needed for domestic flights by 2050.

The forecasts, made on the first day of the Australian Renewable Fuels Week conference in Brisbane, came as the Queensland Government signed an agreement with Qantas to create a sustainable aviation fuel industry in the state.

The memorandum of understanding followed the pair's $2.7 million investment in a future North Queensland biofuel refinery in March.

Steven Bartholomeusz, from energy firm Neste said Australia had a tremendous opportunity to become a world leader in biofuels thanks to its natural resources and large agricultural industry.

He said greater government support and investments were needed to accelerate biofuel production and use in the country.

Without them Australia would remain on track to miss its goal of cutting carbon emissions by 43 per cent in 2030.

"If biofuels get a mandate for carbon reduction program, it could provide a way to reduce that gap of 14 per cent," Mr Bartholomeusz said.

"One option is an 18 per cent biofuel blend – an 18 per cent blend would help Australia reach its greenhouse gas emissions reduction target."

Biofuels, including biodiesel for use in vehicles and sustainable aviation fuel (SAF) for planes, are made from materials such as cooking oils, sugar cane, and animals fats.

CSIRO Futures senior manager Max Temminghoff said Australia could potentially produce huge stores of biofuels and SAF that was currently in high demand worldwide.

The aviation industry has committed to delivering net-zero air travel by 2050, mostly through the use of biofuel.

"Our analysis projects that in 2025 Australia will have enough feedstock to produce 16 per cent of local jet fuel demand using biogenic feedstocks, growing to 90 per cent by 2050 as biogenic feedstocks continue to grow and hydrogen production scales," he said.

"SAF will allow domestic airlines to… contribute to decarbonising Australia."

Qantas sustainable aviation head Graeme Potger said the biofuel had become the only answer to reducing emissions from long-haul flights, as electric and hydrogen-fuelled planes were only expected to become viable for regional flights by 2030.

But Dr Adriana Downie, from advanced recycling firm Licella, said Australia could do more than cut carbon emissions by embracing the use of biofuels, as its production could create thousands of jobs.

The country's sugar cane industry was currently wasting tonnes of materials that could be used to create biofuel and the new trade could double its existing workforce, Ms Downie said.

"We could create a new industry for Queensland.

"We really can create jobs on the scale of the sugar-milling industry and even over that." READ MORE

Excerpt from Biofuels Digest: One of the preeminent US scientists, Dr. George Huber, has been openly skeptical about the broad application of electrification for heavy-duty transport and also for chemical production. Some of his skepticism relates back to the lack of production systems (such as electrolyzers) that respond to electricity market conditions.

Huber writes here:

“Specifically, we find that, when the electrolysis system is operated in flexible mode (and can respond to dynamics of electricity markets), the associated electricity cost nearly collapses to zero. Conversely, when the unit is not flexible (and cannot respond to markets), the electricity cost comprises 60% of the total cost.”

Big difference. Since electricity market dynamics and chemicals production requirements — and heavy-duty transport — are not generally synchronized, there’s the potential for the kind of spiky prices that disrupt markets. If you lived through California’s brief experiment with market-priced retail power and its horrific collapse, you’ll not want to re-live the experience. You want to have a resilient side system that can supply markets when electricity markets are unaffordable. Just as power markets draw from multiple feedstocks in order to levelize prices as best they can.

The report warns of a “missed economic opportunity that is well and truly being grasped by other nations, with Australia’s bioenergy roadmap claiming that $10 billion in GDP per annum could be added over the next decade with the development of a mature bioenergy sector, along with 26,200 new jobs.” Yet the report found that although “global investment in liquid renewable fuels more than doubled in 2021, reaching approximately US$8 billion….it remains clear that Australia is lagging behind countries like the US, UK, Canada, Brazil, Germany, Sweden and New Zealand.”

Some highlight bullet points on the value-add.

• Replacing just 6% of petrol with bioethanol, based on targets, would be the equivalent of taking 730,000 vehicles off the road.
• Replacing 2% of diesel with biodiesel or renewable diesel, based on current targets, would be the equivalent of taking 29,000 rigid trucks off the road.
• Replacing 10% of jet fuel with Sustainable Aviation Fuel, based on airline targets, would be the equivalent of around 220 million less kms flown annually by a Boeing 747.

The feedstock problem

The problem, of course, is sufficient feedstock. Australia is dry, food security and food exports are established concerns, and there’s been extraordinary disinterest in tapping bioenergy as a climate strategy, or as a value-add boost to agriculture. There’s been more interest in hydrogen and in electric transformation — two sides of the same coin, since green hydrogen in the Aussie vision will be produced from the spare, cheap power that the Deloitte report says will be hard to find.

A SAF opportunity

The Australian Federal Government is set to launch its Jet Council that will oversee the aviation sector’s transition to Sustainable Aviation Fuel, working with all levels of government and industry. However, the report concludes that “without adequate government support, the report concludes, an Australian renewable fuels industry may fail to materialize, ensuring Australia’s transport, mining, agriculture and construction sectors will continue to depend on incumbent fossil fuels, leading to continued greenhouse gas emissions.” We might supplement that with the specter of imported green fuels.

The Bottom Line

The glories of aviation on low-carbon SAF set aside, Australia needs an energy resilience strategy in order to assure continuation of the Aussie way. Will they choose one? It will take first-rate thinking. Many years ago, a university professor of mine, Donald Horne, described Australia thus: “Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people’s ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise.”

I’ve never endorsed Professor Horne’s thinking on this topic. I would say rather that Australia’s lucky run, based on its rich agricultural and mining resources, is not a streak of good fortune to take for granted, or to think that it will persist no matter how foolish the directives from the top. Well may we call Australia a lucky country; yet a failure to provide a resilient decarbonization strategy for mining and agriculture would be a Blunder from Down Under.