Unleashing power of biofuel a boost to green transition

The Australian

Somewhat hidden in the shadow of the intense focus on electrification is the reality that liquid fuels account for a substantial proportion of Australia’s total energy usage.

Bioenergy Australia estimates that 45 per cent of Australia’s total energy use comes from liquid fuels. Liquid fuels will also remain a critical energy source for sectors such as aviation, where electrification and hydrogen power will not be viable options for long-haul flights for the foreseeable future.

Decarbonising the liquid fuels we will use for decades to come is not a niche solution – it is a scalable, cost-effective way to quickly reduce emissions from hard-to-abate sectors such as transport, marine and aviation. It is also an opportunity to reduce Australia’s reliance on imported fuels.

The urgency of the energy transition was reinforced by the government’s recently released aviation green paper, which identified the role of sustainable aviation fuel (SAF) as “one of the main levers to reduce aviation emissions in the immediate and longer term”.

Australia’s globally competitive agriculture sector is well-placed to both drive and benefit from the energy transition.

Realising this opportunity, though, requires a better understanding of the role Australian farmers can play and the policy settings essential to ensure a viable domestic market into which they can supply their feedstocks.

First, we need to do more to recognise that Australian farmers are already providing feedstocks to support the decarbonisation of transportation in Europe. Most of the canola Australia exports to Europe is converted into biofuels thanks to the incentives for bioenergy production and use in the EU.

Second, there is enormous potential for locally produced renewable fuels to help decarbonise hard-to-abate sectors and streng­then Australia’s fuel security, as highlighted in the green paper and the SAF road map recently published by CSIRO and Boeing.

The green paper calls out several benefits of expanding domestic SAF production. These include liquid fuel security and sovereign capability, local options for decarbonisation, jobs and development for the regions and helping Australia become a ­renewable energy superpower.

The CSIRO road map concluded that producing liquid fuels from local feedstocks can reduce our heavy reliance on imports, which currently account for 90 per cent of Australia’s liquid fuels. Australia will have enough biogenic feedstocks to produce 60 per cent of local jet fuel by 2025, according to the road map.

Biogenic feedstocks including sugar cane, sorghum, agricultural residues, tallow and oilseed crops will need to do some heavy lifting in the energy transition. According to the International Air Transport Association (IATA), the global aviation sector will require about 450 billion litres of SAF to deliver on net-zero commitments by 2050. The current global SAF market is just 7.5 billion litres.

Third, Australia has the natural resources and the agricultural capability to meet the growing demand for renewable feedstocks without displacing food or contributing to land use change such as deforestation. Addressing our energy transition challenges should not compromise our food security or our environment.

The road map highlights the potential for non-edible oilseeds like Carinata, similar to canola, to meet bioenergy feedstock demand as they offer the opportunity to grow and use crops that do not have to compete with food markets or contribute to land use change. The crop can also help farmers improve farm productivity, regenerate their soil and enhance biodiversity. Seeing the possibility for agriculture to meet the growing demand for biofuels without displacing food crops motivated Nufarm to partner with BP, which will process our Carinata into a ‘‘drop-in’’ biofuel that replaces fossil fuels for planes and heavy transport without the need to retrofit engines.

Finally, new solutions and markets allow farmers to diversify their income through supplying these sustainable feedstocks to new policy-enabled markets.

Against this backdrop, well-designed policy becomes vital and should address four areas.

The first is that policy settings should foster a market-based and technology-neutral environment to attract investment. This approach will also accelerate the transition from first generation biofuels and feedstocks to more advanced and more sustainable lower-carbon feedstocks.

The second priority is to ensure Australia has globally aligned standards and certification schemes to ensure we remain internationally competitive. This requires the identification of the biofuels and sustainability criteria that will be accepted for use in Australia.

The third priority is to quickly build local demand for renewable fuels so farmers have a well-functioning local market to sell their feedstocks. Without a viable domestic market, Australia will miss out on the opportunity to leverage its own homegrown climate solutions, and farmers will continue to sell their feedstocks to more lucrative international markets.

Establishing a low-carbon fuel standard as a broad market approach to incentivise the development and demand for technologies will help decrease the carbon intensity of fuels.

Adopting a market-based accounting approach would ensure Safeguard Mechanism entities that purchase biofuels are able to claim their full emissions benefit. This would lower the abatement cost for safeguard entities and support demand for biofuels.

Finally, procurement targets to purchase biofuels for Australian government departments such as Defence would send a strong signal to the market, not to mention locking in a baseline of demand.

Recent bioenergy announcements from federal and state governments are encouraging. We must accelerate this momentum to help Australia catch up with other countries and to locally produce lower-cost renewable fuels.

The intensifying squeeze on feedstock demand will collide with increasing competition for investment from other jurisdictions that have more advanced bioenergy industries.

Acting with a sense of urgency will ensure farmers can meet this demand, strengthen our food and fuel security and create jobs for rural and regional Australia.

Greg Hunt is Nufarm’s managing director and CEO.