In the quiet early morning of Melbourne’s south-eastern suburbs, an unassuming blue garbage truck is doing its rounds. Normally, this type of truck would consume roughly 21,000 litres of diesel a year, spewing about 57 tons of carbon dioxide into the atmosphere.

But this one is different.

Powered by recycled cooking oil, recovered from fast food joints and Melbourne’s fine dining restaurants, the truck’s emissions are just 10 per cent of its fossil fuel-powered equivalent.

It is one of two rubbish trucks that Cleanaway, Australia’s biggest waste collector, is piloting in collaboration with Casey council and supermarket giant Coles.

The low-carbon fuel source, known as HVO100, is emerging alongside biodiesel, biokerosene and biogas as a “drop in” fuel for hard-to-abate sectors such as heavy transport, aviation and industrial processing.

“Sustainable alternative fuels have a bigger role to play than most people appreciate,” says Clean Energy Finance Corporation alternative fuels expert Rupert Maloney.

Encompassing a wide range of non-petroleum-based energy sources – including diesel and aviation fuel made from plant and animal products such as canola and tallow, biogas derived from waste, and hydrogen produced with renewable energy – these fuels are projected to become the primary energy source in heavy road freight, shipping and aviation beyond 2050.

Quick wins

In the meantime, companies are using alternative fuels as an interim option on the path to hydrogen, taking advantage of the immediate reductions in carbon emissions with very little infrastructure modification and minimal capital investment.

Cleanaway’s HVO100-powered trucks will help the ASX-listed company meet its climate commitments, as well as helping supply chain partners like Coles to improve their scope 3 emissions profile and save money on carbon offsets.

In the long run, however, sustainable alternative fuels are crucial for heavy haulage, marine, construction, rail, manufacturing, mining and agriculture, says Bioenergy Australia chief executive Shahana McKenzie.

For these sectors, the feasibility of hydrogen – which remains Australia’s best bet in the lower carbon fuels race despite our laggard status – is years, if not decades, away. And electrification doesn’t provide enough grunt.

Huge opportunity for farmers

The burgeoning sustainable alternative fuels sector presents an enormous opportunity for Australian farmers, according to GrainCorp chief innovation and growth officer Jesse Scott.

The agricultural aggregator collects cooking oil for export alongside other feedstocks, such as canola and tallow, to markets like Europe where demand for sustainable aviation fuel and biodiesel is skyrocketing.

“Four years ago, airlines were making commitments around sustainable aviation fuel consumption that totalled around 40 million litres. Now, they are talking about 1.9 billion litres,” says Scott.

Australia produces about 4.5 million tonnes of low-emissions canola a year, at least two-thirds of which is exported, predominantly to Europe to be turned into fuel.

But GrainCorp wants to value add to biofuel feedstocks such as canola onshore. Last year, it teamed up with IFM Investors to explore the feasibility of setting up a domestic biofuel production facility.

Scott says onshore production offers three major benefits to Australian farmers.

First, they get to save on the freight differential by selling to domestic processing. Second, it gives them more control and limits exposure to geopolitical volatility.

Third, it creates a mechanism for growers to clawback investments in sustainable and regenerative farming techniques which are currently not being reflected in profit margins.

“The way renewable fuel contracts are structured, the price of the feedstock is directly linked to emissions of your crop, which is directly linked to farming practices,” says Scott.

“If it’s all in the same value chain in Australia, you can more coherently incentivise growers to adopt the right sustainable farming techniques because the money is there at the other end,” he says.

Scott sees room for two or three sustainable alternative fuel refineries in Australia which link feedstock, production and end users.

He is unfazed by Australia’s laggard status in alternative fuels.

“I like the position we’re in. We’re a first follower country in this situation. North America and Europe have proved the economics and the technical operations of these [renewable fuel] plants, so we can build these refineries and crush plants more economically, with less ramp up difficulties, and much more predictable offtake,” Scott says.

Investors test the waters

Work is under way to make sustainable alternative fuel projects more attractive to institutional investors.

Maloney says the construct of the government’s $2 billion Hydrogen Headstart program as a revenue support mechanism rather than a conventional grant scheme is a big step forward.

The program was announced last year and is undergoing an accelerated approval process for a handful of large-scale hydrogen projects to keep Australia in the hydrogen race against more advanced countries such as the United States, Germany and Japan.

Maloney says the revenue support mechanism opens the door for debt and equity investors to help large-scale hydrogen projects reach a final investment decision.

“It will be crucial to getting these really large projects across the line,” he says.

“The earlier you bring commercial banks, infrastructure or other equity investors, including off-takers into these projects, the earlier the related risks will be discovered and understood, which in turn will bring down the cost of capital of the projects.”

Community resistance

Investors remain wary of community resistance derailing decarbonisation projects. Experts say the climate wars are making it more perilous to secure planning approvals because of the amount of disinformation proliferated by activists.

Community resistance and weak policy settings continue to stall the inevitable in the waste-to-energy space, where Australia is already way behind the rest of the world in converting landfill into energy.

There is no appetite within government or the broader community to keep shovelling rubbish into landfill to deal with the disproportionately high amount of waste per capita that Australians generate and are lousy at recycling.

Geelong residents are fiercely opposing the construction of one of Victoria’s largest waste-to-energy facilities, and Ipswich locals have scuttled Remondis’ $400 million waste-to-energy incinerator in Queensland.

Companies are doubling down on community engagement strategies in response, committing more resources and deploying them earlier in the planning process.

Community consultation is already in full swing for Cleanaway’s planned waste-to-energy plants near Melbourne and Brisbane, the nation’s largest at around $750 million to $800 million apiece. The creation of a Bromelton community benefits fund is slated for next year, which will be administered by the community.

Extracted in full from:  https://www.afr.com/companies/energy/this-low-emissions-truck-runs-on-recycled-cooking-oil-20240131-p5f1ca

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