Value key to getting growers on board with low-carbon fuels

Grain Central

THE GRAINS industry took centre stage at Bioenergy Australia’s Western Australia Low Carbon Fuels Summit held at Perth earlier this month, with speakers talking up the potential for growers to supply feedstocks for the promising domestic low-carbon liquid fuels (LCLF) sector.

However, as keynote speaker and large-scale grain producer Brad Jones of Bungulla Farming pointed out, the industry must ensure sufficient value for growers to encourage them to produce or harvest the right feedstocks for refinery needs.

Mr Jones farms around 11,000ha of wheat, barley, canola, and lupins in addition to running an aerial spraying business.

He said the idea that agriculture could be “all about food, fibre and energy” was a concept that was slowly becoming a more mainstream concept.

He told the summit that grower decisions were driven by market signals and environmental conditions, factors that would have to be considered by the LCLF industry.

“The market signals have to be conveyed through pricing, because that’s what we understand the most,” Mr Jones said.

“If the dollars aren’t there, we will swing away from that system very much.”

Mr Jones gave the example of 2021-22, when strong canola prices followed the “biggest canola crop grown in WA” of about 4 million tonnes.

He said growers will quickly respond if companies within the LCLF supply chain change.

“We are not trying to be altruistic here.

“As soon as the market becomes distorted, if someone along the value chain decides they want to create a bigger margin – turn it into a cash cow – growers will disengage; they will swing to another crop in a heartbeat.”

He said government mandates and legislation as well as consumer decision-making would drive the value for growers.

“We need policies to support our production systems that need to go right through the value chain.

“The government needs to create a mandate, however modest it’s going to be, to create, to keep investment on the horizon.”

Alongside demand-side measures, Mr Jones said the “the only place that the value…can be realised will be at the consumer face”.

He said the willingness of passengers to pay extra for renewable diesel or sustainable aviation fuel (SAF) would create value that would “come back down the supply chain”.

In addition to growing canola and other oilseed crops, such as carinata and safflower, for biofuels, growers could also supply feedstock by harvesting agricultural residues or setting aside land to grow tree crops.

Harvesting agricultural residues could provide an alternative feedstock that does not compete with international markets, and Mr Jones said making use of crop residues could solve more than one problem for growers.

A recent greenhouse gas emissions baseline found Bungulla Farming’s largest source of emissions were fuel, fertiliser, and crop residues.

“Our challenge for the future is how we can use one to benefit the other.”

He said crop residues could be collected and transformed into sustainable fertiliser, which could be applied to a canola crop, or be used as a LCLF feedstock.

Modelling by the CSIRO and Deloitte investigated the current spread of 12 feedstocks which could supply the LCLF industry, including grain and oilseed crops, agricultural residues, and municipal waste.

CSIRO scientist Cathryn O’Sullivan told the Bioenergy Australia summit these feedstocks could supply about half of heavy industry’s demand for LCLF by 2050, equating to approximately 100 petajoules.

Dr O’Sullivan said that while this volume was “not insignificant”, more work needed to be done on investigating farming systems to maximise feedstock production, as well as ensuring environmental and financial sustainability.

“If we lift our eyes beyond where we are now and think about what a future farming system might look like, one of the key points that we see is that we really need to diversify strongly that feedstock base,” Dr O’Sullivan said.

She said this could include expanding oilseeds “within their agronomic fit”, “unlock the lignocellulosic” such as residues, integrating energy tree crops into farming systems, and investigating other novel feedstocks like leaf oil and precision fermentation.

“Our current thinking is that we need to encourage and build as many of these as possible because of the critical need of diversity not just within our cropping system, but within our farming system and our energy system as a whole.”

Deloitte associate director James Boyle said while growers may need to adapt their farming systems to meet the needs of LCLF processors, the additional market could create more value and drive innovation in the grains industry.

“[I]t also becomes a really important driver for innovation in the ag system as we start to look for not just more ways to increase yield, but also to increase the energy content of some of these things,” Mr Boyle told the summit.

He said initial modelling estimated that a domestic LCLF sector utilising the 12 feedstocks under investigation could become “a multi-billion-dollar industry”.

“We’re talking about an industry that starts to look somewhere between $4-6 billion, just providing feedstock into a domestic market and that is without the diversification, that’s without reaching the sort of scale that we need to actually stay consistent with the net-zero targets.”

In WA alone, 90 percent of the canola produced is exported, with the European Union the major market, where it is crushed and the oil processed into LCLF.

Currently four LCLF projects are in development across WA: BP’s Kwinana Renewable Fuels Project; Future Energy Park at Narrogin; RenewableBio at Esperance, and the Wheatbelt Connect platform, a joint venture between ANZ, Qantas and Japanese oil and gas company INPEX.