Issues Magazine

Biofuels: A Roadmap

By Robin Batterham

Second-generation biofuels are a real prospect for Australia, according to a new report.

Recent world events have brought the issue of fuel supply into sharp focus. In no fuel sector does Australia have fewer obvious alternatives than in transport fuels, but one area of the transport fuels conundrum in which Australia seems positioned to advance strongly is in Generation 2 biofuels.

Australia has modest prospects in the domain of Generation 1 biofuels – ethanol and biodiesel – where a fledgling industry is based on food by-products. While there is some room for growth, competition for scarce resources, including water and agricultural land, make it unlikely that a substantial Generation 1 industry could further develop in Australia without market-distorting mandates or subsidies.

But in the Generation 2 biofuels domain, where non-food resources dominate, Australia may be well-situated to establish a thriving future industry based on the prolific and lower-value resources that Australia has in abundance. The significant potential for the economic conversion of lignocellulosics to ethanol and specialised algae strains to biodiesel warrants enhanced commitment to focused Australian research and development in this sector.

In a major report on biofuels released on 17 November 2008, the Australian Academy of Technological Sciences and Engineering (ATSE) recommends that a national Biofuels Institute be established along the innovative lines of the recently announced Global Carbon Capture and Storage Institute, the National Low Emissions Coal Initiative and the soon-to-be-created Australian Solar Institute.

ATSE takes a strong view that the use of biofuels to enhance Australia’s liquid transport fuel security must not be at the expense of food production. It also emphasises that present Generation 2 biofuel technologies are not cost-competitive, that an expanded R&D effort is required and that biofuels research is fragmented and poorly coordinated and needs to be better funded.

ATSE says that Australia must enhance the knowledge base of its more promising biofuels resources and build on its significant existing strengths in biofuels research.

The report notes that Australia has limited biofuels production capacity which needs to be supported, and that biofuels industry development must be directed not only to the production of economic transport biofuels but also to the creation of profitable co-products.

It says Australia needs to recognise human resources development issues required to provide the range and quantum of skills needed for industry development, both in Australia and overseas, and should respond effectively to the biofuels sector assistance needs of developing countries.

Australia needs to develop clear-cut long term policies for biofuels, including an effective balance between “technology push” and “market pull”, evaluation of biofuels production and distribution infrastructure and related logistics, a major injection of R&D funding and better research clustering and cooperation.

A large-scale Australian biofuels industry will have to demonstrate robust credentials in greenhouse gas emissions, land and water impacts, financial viability and social acceptability.