Australia’s complacency in developing a renewable fuels sector could cost it economic activity and contribute to lower than expected greenhouse gas (GHG) emissions reductions, a conference in Canberra heard this week.
While renewable power generation has grown to around 39pc of the nation’s east coast National Electricity Market cutting that sector’s emissions, transport’s path to decarbonisation is less clear with its emissions rising by 8mn t in the 2022-23 fiscal year to 30 June.
Sustainable aviation fuel (SAF), biodiesel, hydrotreated vegetable oil and biogas are likely to be key to bridging the gap between present dependence on fossil fuels and next generation options such as hydrogen and e-fuels, although the level of investment required will require significant government support.
Australia’s two main biofuels refiners — ethanol producers Manildra and Wilmar Sugar owned by Singapore-based Wilmar International — may be joined by new ventures in the coming years, with oil majors such as BP eyeing investment in agriculturally-rich Australia. It currently exports most of its feedstocks such as tallow, while around a third of Western Australia’s canola crop goes to Europe’s biodiesel industry.
SAF looms as a critical fuel for Australia, with the hard-to-abate aviation sector at risk from by a lack of domestic production with a growing tide of international targets for reducing the industry’s rising emissions.
Australia risks losing international tourism and events, as businesses reporting scope 3 emissions from long-haul travel could avoid destinations lacking lower carbon flights, the Australian Renewable Fuels week conference in Canberra heard on 20 March.
Australia’s defence force has announced it too is transitioning to renewable fuels with trials under way using SAF and renewable diesel, while airlines, transport companies and mining firms plan to move away from 100pc oil product use.
The federal government’s Jet Zero Council has begun to attract investors by working on SAF certifications, assurance of environmental credentials and raising the fuel’s public awareness.
Companies such as Lanza Jet, which proposes a 1,800 b/d ethanol-to-SAF plant in Australia’s sugarcane growing northern regions, and domestic refiner and retailer Ampol are interested in the significant domestic aviation market. But lacking a carbon tax, Australia’s subsidies or incentives have been minimal and are likely to require much more investment, potentially in the federal budget expected on 14 May.
Biogas developers are also eyeing further investment, with several projects to be announced in the coming months following Jemena’s 95 TJ/yr (2.5mn m³/yr) Malabar facility opened last year and receiving certification from GreenPower, a government-managed renewable energy certification programme.
With the clock ticking on its 2030 and yet to be announced 2035 GHG reduction targets, Australia must work quickly to establishing supply chains for renewable fuels or risk reliance on imports, market participants say. The time required to unlock agricultural feedstocks and secure offtakers may be many years, with previous studies finding the sector was unviable without such inputs.
The Australian Renewable Energy Agency, Canberra’s renewable energy grants agency, has provided about A$130mn ($85mn) to the bioenergy sector during the past decade with projects focused on biomethane, renewable diesel and energy from waste.
An A$30mn SAF funding initiative is assessing 10 separate applications, while the aviation white paper will be released mid-year and is likely to provide long-term policies on SAF use and decarbonisation. State governments are also involved. Queensland’s sustainable liquid fuel strategy, aiming to boost uptake, likely to be released in the coming weeks.
But with cost of living pressures and inflation proving major political headaches for the federal government, it faces the difficult task of balancing its climate commitments with promises to reduce financial pressure on business and households. Australia’s high-cost economy, focused on its primary industries and used to exporting raw commodities, will be tested by such a transition.
