Australia’s place in a future biofuels boom could be lost to fast-moving rivals in Singapore unless the government acts quickly to treat agricultural waste and food scraps as its next strategic fuel reserve.
Old cooking oils, waste matter from crops like sugarcane and food scraps from households can be turned into carbon-neutral fuels and chemical catalysts that airlines, steelmakers and even motorsports like Formula 1 are increasingly hoping will minimise their carbon footprints.
Airbus Australia’s chief representative, Stephen Forshaw, said local supply would become even more scarce if fast-moving foreign nations were able to swoop in and take Australian biomass before a local industry was established to process locally made fuels.
“If we don’t get the policy settings right in the next 12 to 18 months, we won’t be talking about a future made in Australia, we’ll be talking about a future made in Singapore,” he told The Australian Financial Review ESG Summit.
“Singapore is moving so much faster than us, they’ve already got their first refinery in Singapore. It has the capacity to produce a billion litres of SAF [sustainable aviation fuel] a year.
“They don’t have a feedstock supply chain in Singapore, so they will look to harness our feedstock. I want to see that fuel made in Australia, I want to see the production incentives from government back an Australian industry and for that fuel to be used on aircraft flying around, and from Australia.”
Ampol chief executive Matt Halliday agreed that demand for waste biomass could run hot in the future and Australia might miss out if it did not act soon.
“Feedstock is a real constraint,” Mr Halliday said.
Fuels made from biomass are considered carbon-neutral because the plants have previously sucked carbon out of the atmosphere, unlike fuels made from coal, oil and gas, which are extracted from underground and put additional carbon into the atmosphere.
The Summit heard that carbon-neutral diesel made from biomass was selling at more than double the price of traditional diesel, while sustainable aviation fuel was more than three times as expensive as traditional aviation fuel.
Airbus and Qantas have invested in a Queensland project to convert the pulp left behind from sugar cane into sustainable aviation fuel.
Australia is the world’s eighth-largest market for jet fuel and Mr Forshaw said investors and airlines were eager to build a domestic industry that turns biomass into sustainable fuels.
But he said governments needed to stoke demand by setting firm targets for adoption of sustainable fuels.
“The airlines are ready to buy it … the capital’s ready to flow. We need the policy settings right,” he said.
“We actually require, in the blending of the fuel at the airports, that there will be a small percentage of sustainable fuel that goes into that fuel mix.
“We’ve put on the table an idea of about 1 per cent to 1.5 per cent.
“Singapore just announced a mandate of 1 per cent from 2026. Japan has gone far further at 10 per cent by 2030. But we think start gently, because that sends a signal to industry to get behind the production and start moving.”
Mr Forshaw said the aviation industry did not expect governments to own and operate the future refineries that make sustainable fuels, but he said governments should consider incentives to get the early movers started.
“On the supply side, there’s a role for government to come in and de-risk some of the early projects,” he said.
“Some early steps by government, as they’ve done in the hydrogen sector, to sort of head start some of the programmes and some of the initiatives to produce, will bring the cost of capital down.
“It will make the production of SAF more affordable and, most important, it’ll make the offtake price competitive with Singapore, and that’s what we’re going to need to get the industry moving.”
Biofuels experts like Karl Seck from Mercurius Biorefining have previously predicted that Australian sugar cane waste will be a more viable source of sustainable fuels than the vast cornfields of America’s Midwest because the harvesting of corn tended to leave waste strewn across large fields, whereas the processing of sugar cane left piles of waste that would pose less of a challenge to collect.
“The one really good thing about bagasse [sugar cane waste] is it is already aggregated,” he told the Tech Zero podcast in 2022.
Jenny Selway from the Heavy Industry Low-Carbon Transition Cooperative Research Centre (HILT CRC) told the Summit that her members were closely studying the logistics of using waste biomass as a feedstock.
“The other complicating factor we see is the proximity of the biomass to where it’s going to be used, and whether or not that needs to be focused on sort of hub type developments,” she said.
“We’ve got a suite of energy related research, including into biofuels, that are looking into these topics, testing if it’s realistic.”
Extracted in full from: https://www.afr.com/companies/energy/keep-food-scraps-onshore-for-future-aircraft-fuel-industry-20240604-p5jj41
