what are biofuels?

Biofuels are liquid fuels that have been derived from other materials such as waste plant and animal matter.

The two main types of biofuels currently in production in Australia are bioethanol and biodiesel. Bioethanol is used as a replacement for petrol and biodiesel is used as a replacement for diesel.

Biofuels represent an immense growth opportunity around the world and have an important role to play in displacing the fossil fuels the world has relied upon in the past with a cleaner, renewable alternative.

What makes biofuels so important?

Biofuels are important for a number of reasons.

Use of biofuels can reduce carbon emissions by 85% compared to mineral diesel.

The environmental benefits of biofuel use have been widely documented. The reduction in greenhouse gas emissions resulting from the use of biofuels and biofuel blends is closely aligned with the Government’s “Direct Action” approach to climate change.  Australian biodiesel has the potential to reduce emissions by over 85% in comparison to diesel and Australian ethanol can reduce emissions by approximately 50%.

The issue of sustainability is of paramount concern to the Australian Biofuel industry and the BAA was the lead participant in Australia’s involvement in the development of an ISO Sustainability Criteria for Bioenergy.

Australia’s biofuel industry has been built on a strong sustainable base where our biofuels are made from feedstock including waste starch, molasses, tallow, sorghum and waste cooking oil.  None of these feedstocks compete with human food and all have positive impacts on the environment when measured on a paddock to pump basis taking into account the full life-cycle of the product.

While there have been concerns regarding the use of food crops in some other countries, Australian producers are using only environmentally sustainable feedstocks which do not impact the affordability or availability of food within Australia.

As technology advances the efficiency of conventional biofuel processes and the technological advances occurring within the advanced biofuel aena offer a grand vision for what biofuels could provide in years to come.

Ethanol and biodiesel blends can have a positive impact on air quality due to the reduced pollutant gas emissions relative to fossil fuels. Air pollution is known to be harmful to human health; the OECD reported in 2014 that he number of deaths in Australia from ambient air pollution grew from 885 in 2005 to 1483 in 2010.  Australia was one of 14 countries to see an increase in deaths from air pollution, compared to the majority of OECD nations that recorded a drop in deaths. Diesel particulate emissions are also a rising concern, with the International Agency for Research on Cancer in 2012 classifying diesel exhaust as a Group 1 carcinogen. The Australian Medical Association noted in its submission to the 2013 Senate Inquiry into the “Impacts on Health of Air Quality in Australia” that the costs associated with motor vehicle emissions alone are estimated to be between $600 million and $1.5 billion per annum.

Air quality, particularly in and around our major cities, ports, tunnels and airports can be improved with small changes to the fuels we use, and an increased uptake of biofuels may have a positive impact on health outcomes and reduce national and state health budget costs.

In particular, a significant risk to human health is posed by vehicle particulate emissions(PM), especially fine particles known as PM10 & PM2.5. Many economies have taken direct action in setting their fuel standards to limit particulates through requiring biofuels to be part of the standard fuel blends. Given the recent determination that there is no safe level of exposure to diesel particulate emissions, the case for change is becoming even more compelling.  According to a recent OECD report, Australia was one of the few nations to see an increased death rate in the OECD as a result of higher ambient PM and ozone emissions.  the death rate due to lower air quality almost doubled from 2005 to 2010 from 885 to 1483 deaths.

A CSIRO and Orbital study in 2008, “Evaluating the Health Impacts of Ethanol blend Petrol”, concluded that there would be a “health benefit to Sydney and Urban Australian population (Sydney, Melbourne, Brisbane and Perth) arising from a move from ULP to ethanol blends in spark-ignition vehicles”, noting that the “overall quantified health benefit of using ethanol blends is overwhelmingly dominated by reductions in particulate matter”.

Overall, the BAA believes that the net public health benefit of using blended fuels is positive and should be a significant consideration when analysing future policy settings to advance the uptake of biofuels in Australia.

Today more than 98 percent of the energy used in Australia’s transportation industry is derived from liquid fossil fuels. With Australia facing significant change in terms of the make-up of industries that once drove our economy, the burgeoning biofuels industry is a relatively new player that, if fostered, can contribute future investment and jobs.

The BAA recently commissioned Deloitte Access Economics to undertake a study on the economic contribution of the Australian Biofuels Industry. The interim results of this report show that, net of the Cleaner Fuel Grants and Ethanol Producer Grants paid, in the 2012-2013 financial year, the industry generated an economic contribution of approximately $466 Million and provided about 3,387 FTE jobs as a result of the industry’s activities, and that this could grow to $554 Million and 4,002 FTE jobs should the industry utilise its installed capacity. Given that the biofuels industry currently represents just 1% of fuel sales, we believe this demonstrates the significant economic potential that this industry has to contribute to Australia’s future.

Biofuels provide an extra dimension for the Australian agricultural sector, providing more demand for Australian farmers produce and diversifying the markets they can sell their agricultural products providing much needed improved returns to our regional communities.

The BAA believes the case for increasing stockholdings for liquid fuels is quite clear.  Fuel is critical to the smooth running of vital Australian services – but our current fuel stockholdings are below our IEA stockholding obligations, and with over 90% of our fuel imported, our stocks are vulnerable to disruptions – disruptions that we have seen have disastrous impacts on our agriculture and transport sectors.

According to a recent Bureau of Resources and Energy Economics (BREE) report, at the end of September 2014 Australia had only 19 days cover for automotive gasoline, 18 days cover for aviation fuel and 16 days cover for diesel.  This level of stock holding is well known to be below our IEA stockholding obligations and it seems incredible that Australia is the only country of the 28 participating countries that fails to meet this obligation. Australia’s combined dependency on crude and fuel imports for transport has grown from around 60% in 2000 to over 90% today.

Given Australia’s Agricultural and Transport (automotive, truck, maritime & aviation) sectors are almost 100% reliant on liquid fuels (fig. 1) this level of cover leaves our industries very vulnerable to supply disruption.

Figure 1: Sources of Energy by Sector (Petajoules PJ)

The transport sector is not only critical for moving people from point to point, but is also vital for everything from the provision of essential and emergency services to the supply and distribution of food, health supplies, defence and all manner of goods and services. Clearly any interruption to liquid fuel supplies will have a significant and immediate impact on all Australians.

In their recently released Green Paper, the Department of Industry sets out its intention to attract energy resource investment and acknowledges that Australia has limited reserves of crude oil, condensate and liquefied Petroleum Gas (LPG).  The paper does not acknowledge the fact that Australia is almost totally reliant on imported fuel for the Transport and Agricultural sectors nor does it address the risks associated with a disruption to this supply to the Australian economy and society.  There is also no mention of targeting investment incentives towards reducing this reliance on imported product.

When our reliance on imports is coupled with a lack of local liquid fuel storage infrastructure then the depth of our vulnerability to supply disruptions becomes evident.  As recently as May this year after having issues with the quality of diesel in two shipments to WA, Perth experienced widespread stock-outs and lack of diesel availability and this follows a similar event in Melbourne the year before .  Disruptions will undoubtedly increase as our reliance on the import supply chain increases.  Even more concerning of course is that Australia’s vulnerability has been identified by terror group Al Qaeda who have published a map of critical petroleum shipping routes.

Figure 2: Al Qaeda view of global oil shipping lanes.
The BAA strongly supports the increase of mandatory stockholdings together with a focus on increasing local production of alternative fuels, including biofuels.

Given the infrastructure throughout Australia and the fact that we are increasing our usage of liquid fuels by about 1.3% per annum, we will continue to be reliant on liquid fuels for many years to come.

The BAA suggest that investing in growing the biofuel sector can be an alternative method in increasing not only the fuel security of our nation, but also add to Australia’s economic and social well-being creating high value jobs in regional communities. Biofuels offer one pathway to improving Australia’s resilience to potential disruptions to the fuel supply chain, by increasing our level of indigenous fuel production and reducing our dependence on imported fuel.  Indeed, energy security concerns have driven many countries, including the US and Sweden, to introduce policies to actively encourage the development of their biofuels industry. Biofuels capability in Australia is also an area being closely watched by Defence personnel, particularly as our US allies are moving to significantly increase the use of renewable fuels in Navy vessels.  Interoperability is a key factor to consider for the Australian Navy, as often shared supply chains are used for fuel.

The transport sector is dependent on finite fossil fuels such as oil and petroleum for its energy needs. As “finite” fossil fuels, it is certain that oil and petroleum will eventually run out – we will reach a time when total world oil production hits its maximum rate, after which production will gradually decline until stocks dry up. It is therefore crucial that we move towards more renewable and sustainable fuels and develop viable liquid alternatives today so that they may be genuine cost competitive alternatives for the future.

The biofuels industry is an incubator for innovation and is the basis on which to foster new technology and R&D. Our local producers are constantly looking for ways to improve the efficiencies within their processes, such as research into new enzymes or treatments to improve the yields and quality of the biofuel they produce.

Looking to the future of advanced biofuels, several Australian Universities and the CSIRO have active research programs and many are at the forefront of research into new feedstocks such as algae, cyanobacteria, sorghum, lignocellulose, pongamia and mallee. Importantly, the issue of how to manage biomass aggregation to allow cost effective processing of these feedstocks into fuel is also a critical area of required study. Leveraging Australian industries that already aggregate biomass is a short pathway to piloting these new technologies.

The development of a sufficient supply of renewable feedstocks is of particular interest to Defence and the aviation industry, both in Australia and globally. The global industry is keen to find ways of producing sustainable quantities of renewable jet fuel, at an acceptable cost. The key challenges remain the cost and availability of feedstocks and refining capability. This is an area where there is strong customer demand for the product, and globally, many countries are urgently looking at ways that they can take advantage of what could become a significant industry in future. Australia is well positioned to take the lead in the development of pathways to renewable jet fuel and this is evidenced by investment in local initiatives such as the Australian Initiative for Sustainable Aviation Fuel (AISAF) and Queensland Sustainable Aviation Fuel Initiative (QSAFI), along with partnerships between companies such as Qantas and Shell, and Virgin Australia, Brisbane Airport Corporation and SkyNRG (Brisbane Bio port).

For Australian biofuel production, increased investment in the development of advanced, renewable and economically viable feedstocks is critical to the growth of the industry