Turning our fields of gold into a sustainable fuel source

The Australian

by Robert Spurway, GrainCorp CEO

Australia’s next great oil bonanza could well be green and gold.

If you’ve ever driven through rural towns spread out across the east or west coasts of Australia in September, you’ve probably stopped to admire the vast fields of golden canola flowers swaying gently under the Australian sun.

National grower representative groups Grain Growers Ltd and Grain Producers Australia have signalled their members’ support of the establishment of a new domestic market for canola.

Currently, our nation’s growers produce much more than we can eat, with a surplus average of nearly 5 million tonnes of the oilseed exported overseas annually over the last three years – with the vast majority refined into biofuels.

GrainCorp is progressing plans to expand our oilseed crush capacity to manage the feedstock task, and working in partnership with IFM Investors, who are focused on establishing a domestic sustainable aviation fuel (SAF) sector as a significant manager of investments in Australian and global airports.

With a likely minimum cost of $500m, the greenfield addition to our crush would add between 750,000 and 1 million tonnes to our existing operational capacity.

In the Sustainable Aviation Fuel Roadmap published last year by the CSIRO, it was assessed that local production of SAF would prove the most likely gateway to production of other fossil fuel replacements, such as renewable diesel, lubricants and lighter hydrocarbons.

The same CSIRO research identified that just 4.5 million tonnes of canola could yield 2 million tonnes of lower-carbon liquid fuel, which is equivalent of around 250,000 return flights between Sydney and Melbourne.

A domestic SAF sector would deliver growers the opportunity to make the most of their comparative advantages of geographic proximity, while diversifying their exposure to the global feedstock markets.

Best-case scenarios

Our feasibility work on the crush plant expansion is studying the best locations and timing for what we know will be a complex value chain – for GrainCorp, that means considering proximity to oilseed supply, fuel refining capacity, customer demand and export access for canola meal.

And what does best practice look like for the future of the transport sector?

The government has recognised that transport is the third-largest source of greenhouse gas emissions in Australia, amounting to 21 per cent of our greenhouse gas emissions in 2023.

Electricity is not presently an option for driving either long-haul planes or heavy vehicles.

But the precedent is already set to inject renewable fuels into the diet of both sectors.

Currently, that excess supply of Australian canola is being used as a source of SAF that is mitigating emissions in Europe, the US and Asia, where governments have introduced incentives to attract investment in clean energy.

Earlier this year, Singapore unveiled their aviation decarbonisation goals, declaring 1 per cent of all jet fuel used at Changi and Seletar airports to comprise SAF by 2026, and to raise that to 5 per cent by 2030.

Back home, Qantas have stated a goal of 10 per cent of their fuel use to come from SAF by 2030.

We think the Flying Kangaroo should be able to source that fuel load in Australia, and GrainCorp and the local agriculture sector are up for providing that solution.

And as for the regulatory framework required to stand up this fledgling opportunity, it is critical that industry and government continue to work together to achieve the right policy settings for Australia to hold its own on the global SAF production stage.

A signal on the horizon

It was pleasing to see $63.8m pledged in the budget to support emissions reduction efforts in the agriculture and land sector and the $32.2m committed to fast-tracking the Guarantee of Origin scheme, which aims to measure and certify emissions intensity across key sectors of the economy.

And the allocation of $1.7bn to the Future Made in Australia Innovation Fund over the next decade will support the commercialisation of net zero innovations cush as low-carbon liquid fuels.

GrainCorp is encouraged by [he announcement of a consultation phase to identify options for production incentives, as well as the response of government at all levels to our views on the initiatives required to deliver demand-side certainty from refiners and consumers.

For the agricultural industry, and for Australia’s golden growers, this is the much-needed next step to securing investment for the future of our fuel.

Robert Spurway is the managing director and chief executive of GrainCorp