Biofuels: Australian farmers’ untapped resource

Published: October 2018 | By: Michael Sheather

The growing biofuel industry has many benefits, including increased farm profits and reduced energy costs. How can Australian farmers cash in to turn their farm waste into biofuels?


Is harvest residue a pot of gold for grain farmers?

EVERY grain farmer in the country knows what it’s like to walk across a harvested field, crop stubble crunching underfoot. After months of demanding work and costs to get a crop into the ground and keep it healthy until harvest, some plant material is left behind.  

Traditionally, this residue is either ploughed back into the ground or left on top to secure the soil against erosion, both important roles in sustainable production. Similarly, many cattle producers leave their herd’s manure on the ground to help enrich their soils for further feed production. 

Like any production system, farming has waste materials – stubble, manure, less arable land, weeds and even perennial native grasses that, in the past, have been more bother than benefit.

But what if at least a part of that waste and crop residue could be transformed into additional farm profit? That’s just what the emerging Australian biofuels industry is hoping to achieve within the next decade – opening a wave of new income streams for Australian farmers as their waste products become the high-tech fuels for the future.
 
CUTTING ON-FARM ENERGY COSTS 

The technologies behind the biofuel industry are developing at such a rapid rate that, in just a few years, farmers may be able to make their own fuel and slash their on-farm energy costs. Bioenergy Australia CEO Shahana McKenzie says Australian farmers are in the box seat to lead the way in providing feedstocks (raw materials) for a local biofuels and bioenergy industry.

“That could provide immense benefits, not only in terms of additional agricultural profitability but also in terms of significant social and environment benefits,” she says. “Truly, the opportunities for the future are nothing short of astonishing.”

Biofuels are liquid fuels chemically derived from waste plant and animal matter, making them economically attractive in agriculture. Not only do biofuels burn much more cleanly than fossil fuels, reducing pollution, they originate from renewable resources, a crucial factor in the future sustainability of agricultural production.
 



The two most significant biofuels currently produced in Australia are bioethanol and biodiesel (otherwise known as renewable diesel). The Manildra Group, one of the country’s biggest agribusinesses, manufactures bioethanol from starch at a distillery at its Nowra flour mill on the NSW South Coast.

That ethanol eventually becomes the additive that consumers see at the petrol bowser in their E10 automotive fuel or, through a different production chain, as high-grade consumable alcohol that provides the base for gin, vodka and other spirits.
 
EMERGING BIOFUEL MARKETS FOR AUSTRALIAN FARMERS

The Manildra ethanol operation is the largest of three biorefineries currently operating in Australia. The other two are in Queensland; there are also several small biodiesel producers around the country.

The big news for farmers is the planned expansion of the biofuels industry and the markets that will open up as five more bioethanol refineries come on line in the next decade. Four refineries in Queensland will use sugarcane as their biomass feedstock while a refinery at Deniliquin, in the NSW Murray region, will access surplus and low-grade wheat as its chief energy source, opening up a market estimated to be in excess of $50 million annually. 
 
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Owned by the Korean biofuel producer Dongmun Greentec, this facility is a perfect example of the impact the biofuel industry can have on a local economy. The plant will cost more than $77 million and provide 350 jobs to Deniliquin and surrounding areas during the construction phase and 50 operational jobs, a much-needed boost to this rural community.

“Australia is well-positioned to benefit from the growth of the bio-based fuel and chemical sector due to the large amount of biomass available in Australia,” says Shahana McKenzie. 

“For an example of what the potential of this industry may be, we only have to look at the way the United States has established its biofuels industry. This entire industry was established to create income streams for American farmers and it is now worth billions of dollars every year. 
 
“There are incredible opportunities for regional and rural Australia in the biofuels industry. It is massive.”

According to a report released last year by Zion Market Research in the US, the global market for biofuels was valued at US$168 billion ($226 billion) annually in 2016 and is predicted to reach US$218.7 billion in 2022. The US Renewable Fuels Standard has set a production target of 136 billion litres of renewable fuels annually by 2022.


ROOM TO GROW: Australia is not yet on the map when it comes to the global production of ethanol – but there is plenty of potential for our farmers to profit from the industry. Source: Renewable Fuels Association  

A 2018 Queensland University of Technology (QUT) discussion paper, Biofuels to Bioproducts: A Growth Industry for Australia, cites statistics estimating the total amount of biomass potentially available from all feedstocks in Australia at 78 million tonnes annually, increasing to almost 100 million tonnes in 2030 and 114 million tonnes in 2050.

Assuming an average biomass price of between $50 and $100 per tonne, the paper says, the potential additional revenue available for biomass is currently between $3.9 billion and $7.8 billion, rising to between $5.7 billion and $11.4 billion in 2050. 

That biomass can come from a vast variety of sources, including low-grade and surplus crop products, such as low-grade wheat and sorghum, molasses and low-grade vegetable oils. Crop residues include stover (stalks and leaves), sugarcane bagasse (crushed cane left after sugar-making), cane trash, forestry residue, grape marc and horticultural residue. 

In NSW, the QUT discussion paper says, waste products from the sugarcane, sorghum, wheat, canola, cotton, forestry and tallow industries are all suitable feedstocks for biofuel production. 

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Additionally, several new agricultural crops offer significant potential for farmers because they can be grown on lower-quality or marginal agricultural land. These include crops such as Agave tequilana (blue agave), sweet sorghum, energy grasses and short-rotation forestry crops.
 
Native grasses also present potential, according to AgriFutures Australia. Many are perennial, so farmers don’t have to replant them, they can produce biofuel in the first year and they are easy to manage, requiring less fertiliser and fewer hours in labour to cultivate.


 
PROFITABLE ROTATIONAL CROPPING SYSTEMS: BIOENERGY CROPS 

Paul Hetherington, manager of the Ecotech Biodiesel plant just north of Brisbane and a 13-year veteran of the biofuels industry, says one of the most profitable developments for farmers will be in the use of bioenergy crops in rotational cropping systems.

“Here in Queensland, for example, a lot of work is being done with cane farmers about using a rotational crop – such as particular soybeans – between cane crops. Those soybeans will be used to produce oil, which in turn will become renewable diesel and the meal they produce will become stockfeed,” he says.

“One of the great opportunities I can see in the near future is the forming of farmers into co-ops that can then go into partnerships with the owners of biorefineries to produce their own fuel. That’s very exciting. As more biorefineries start up, that opportunity will be there for more farmers. Every farmer knows how much they spend on fuel. As far as farmers are concerned, anything that brings down costs is a clear benefit.”

PLANNING FOR A BOOMING BIOFUEL INDUSTRY   


More well-defined biofuel policies are needed as the biofuels industry expands.

Acting executive director of the Institute for Future Environments at QUT and lead author of the Biofuels to Bioproducts discussion paper, Professor Ian O’Hara, says the benefits of an expanded biofuel industry in Australia are clear – but we need a more well-defined biofuel policy.

“One of the key challenges agriculture faces is that we have rising costs of some of our inputs,” he says. “With competition on the global market, it’s a challenge for farming to be viable with single products, so if we can increase the value of the products that come off the farm, then we can start to be truly competitive, and competitive in the long term.

“One of the key benefits of using biomass in biofuel production for farmers is that we, as farmers, can earn more dollars per hectare. It’s true across a lot of different agricultural sectors. If we can add value to wastes, we can add value to the entire farming business.”

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The secondary benefit is the support generated for local communities, through employment at a rural biorefinery or secondary processing facility. “It keeps kids in the local area and The secondary benefit is the support generated for local communities, through employment at a rural biorefinery or secondary processing facility. “It keeps kids in the local area and provides high value jobs for people who want to live and work in that regional community,” says Professor O’Hara. 

“There are several biofuel plants already in Australia, but there are many more operating across the world in the US and in Brazil, which provides an amazing 70% of its fuel needs from biofuel, and around the globe. What we need here in Australia is the right public policy environment in which to grow that industry. 

“And you have to remember, too, this a technology that is in continual development. These new technologies are being commercialised right around the world and that means there are opportunities arising all the time, but we need the right policy environment to foster a local industry. If the policies aren’t right then it probably won’t happen,” says Professor O’Hara. 

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