WA biofuel industry primed for second coming

A whiff of a revolution was in the air for drivers of diesel vehicles in the early noughties.

In Western Australia, at least.

For context, biodiesel may have been used in Brazilian automobiles since the 1980s, following a government program to process the country’s sugarcane into ethanol, but WA’s initial steps toward the adoption of the alternative fuel came some years later, in 2006.

Back in Australia biodiesel users were often stereotyped as eccentric hippies driving around in a clapped-out shaggin’ wagon running on fish-and-chip fryer oil.

In the first move to make the fuel source mainstream, WA-owned Gull Petroleum installed biodiesel bowsers at a few of its service stations.

Gull’s 20 per cent biodiesel mix was cost-competitive and quickly became popular enough for Gull to warrant rolling the fuel out across New Zealand.

However, this was the start of what would later become a false dawn for biofuels in WA.

Among those to ride the wave was ASX-listed Australian Renewable Fuels (ARFuels), which in 2006 opened a 45-million-litre biofuels plant in Bunbury.

At its peak, the company operated three facilities nationally.

Another was Brisbane’s EcoTech, a biorefinery backed by Gull owners, the Rae family.

“From everything that I’ve heard, (the Raes) saw an opportunity to progress into a new type of fuel that was good for the environment,” EcoTech plant manager Paul Hetherington said.

“It was a time when there were a lot of independents around … and the independents embraced it more than the major oil companies.”

It wasn’t to be.

Past

Claims in four-wheel-drive forums about tanked torque, reduced range and clogged fuel lines didn’t help the fledgling industry.

Nor did the lack of support from oil majors, which own the bulk of Australia’s service stations.

Then there was Gull’s 2013 sale to Puma Energy, which suffocated biodiesel bowser space.

Bowsers were still operating across the ditch until 2020, when costs and supply constraints forced Gull New Zealand to pull the pin.

Former prime minister Tony Abbott’s 2014 scrapping of the carbon tax rated among the biggest blows, however.

“For new industries to develop you need economies of scale or you need some type of competitive advantage,” Mr Hetherington said.

“The carbon tax or a carbon price … I disagree in the wording … could offset and make the fuel competitive.”

Emblematic of the industry’s fortunes, ARFuels fell into administration in 2016.

According to a release at the time, feedstock price and “destabilising” government policy were key factors.

Present

Today, biofuel bowsers are scarce, but the possibility of change is in the air again.

British oil behemoth BP is leading the charge with five global biorefineries in the works, including at Kwinana.

Several firms have cast their eyes to regional WA to unlock the bioenergy potential of the state’s vast farmlands.

And a survivor of the early 2000s – BioWorks Australia – is still plugging away, turning cooking oil into fuel at its 4ML/year Henderson plant.

Three things have happened to bolster biofuel prospects during the past 15 years: the acceptance of climate change, the advent of renewable fuels able to be used with no modification, and industry demand.

“In the past, I think there was the luxury of being able to kick the can down the road,” Bioenergy Australia chief executive Shahana McKenzie said.

“Now, sectors are having to really focus on how they can ensure they are able to provide a decarbonisation pathway.

“You cannot tell the difference between [fossil and renewable] fuels.

“One, however, is coming from a renewable feedstock and can be achieving up to 90-plus per cent emissions reduction.”

The scale of WA’s agriculture waste would be enough to put the state at the forefront of the nation’s biofuels aspirations, according to Agriculture and Food Minister Jackie Jarvis.

“Mallee eucalypts are currently being grown in WA as energy crops for biofuels under strategic integrated farm management practices,” she said.

“It’s estimated that waste crop residue from the Wheatbelt could supply all of the state’s agriculture liquid fuel needs.”

Projects

BP’s $1 billion plan to turn its mothballed Kwinana oil refinery into a biorefinery has been the headline grabber this year.

“It is absolutely part of the global BP strategy around what we need to do to transition as part of the energy transition,” BP Australia low carbon solutions business development vice-president Lisa Archbold said.

“If you think of all the elements that go into that biofuels production around sourcing of feedstock, manufacturing facilities … and then off-taking to customers, we have got advantages across all parts of the value chain.”

“There’s an energy trilemma …. around secure energy, affordable energy and energy that is low carbon.

“So, you will see that we are still balancing investment in hydrocarbons, and particularly things like gas, which is a really key transition energy, in addition to investing in low carbon.”

Away from the headlines, Perth-based Renewable.bio has been quietly shaking hands with south coast farmers to feed a $300 million biorefinery in Esperance.

Renewable.bio director Brian Scott said liquid fuels would play an important role in the economy for at least another three decades.

“There is a healthy export market for ethanol itself … then ethanol can be used to produce renewable diesel or sustainable aviation fuel, which in some ways will be the big prize,” he said.

“There are certain areas where electrification or hydrogen is just not going to be the answer.

“We need to reduce fuels in a way that enables people to travel the way they still want to but be able to do that in a sustainable way.”

BP’s facility is expected to come online in 2026 and Renewable.bio is eyeing a final investment decision on the Esperance biorefinery in late 2024.

Future Energy Australia is still working on a technology pathway for its Narrogin project, and a Qantas-ANZ-Inpex aviation fuel project in the Wheatbelt has shown “promising” early results.

BioWorks and Renergi declined to comment.

Policy

The strong view from industry is that Australian policy is behind the rest of the world, where mandates and targets for ethanol and renewable fuels are commonplace.

But there is a sense of optimism.

“The pace this government is moving at in relation to its emissions reduction portfolios, announcements, policies, I am quietly confident the government understands the essential role of renewable fuels in order for it to achieve its 2030 targets,” Ms McKenzie said.

Among the green shoots for industry are the creation of the Jet Zero industry council to push aviation decarbonisation, and a $200 million Qantas and Airbus fund to support projects.

Ms McKenzie said those efforts could be bolstered by mandates for the Department of Defence to use renewable fuels.

“They use around 350 million litres a year of jet fuel,” she said.

“For us, in relation to a sustainable aviation fuel project, you are looking at around the 80 to 100 million litres that it would be producing initially … so it is not unsubstantial.

“We really do need to look at this from the defence strategic fuel security lens also, producing domestic fuels that would be able to be used and stored domestically.”

Ms Archbold, whose employer (BP) is on the Jet Zero Council, singled out the safeguard mechanism as a policy supporting the green fuels transition.

However, she cautioned that it was too soon to have definitive answers to what support was needed for the industry.

“What we are pushing for is something that will support everyone through the energy transition,” Ms Archbold said.

“There are a lot of inputs we have got to consider.

“If it was easy, I think there would be a quick solution that most regions and most geographies would have put in place.”

At the state level, the 2022 WA Climate Policy report called for a bioeconomy strategy.

Ms Jarvis said that strategy was still on the drafting table with no release date pencilled in.

“The bioenergy and bioproducts sectors are complex, comprised of different resource streams, technologies, products, stakeholders and markets,” she said.

“The regulatory and policy environment and instruments sit across state and national governments and are changing in response to the decarbonisation agenda.

“Initial analysis will provide insights into the role for government in supporting the sustainable development of bioenergy and bioproducts industries in WA and guiding investment.”

Ms Jarvis said the Department of Primary Industries and Regional Development was assessing feedstock, supply chains, market barriers, market development and education.

The state government is also working on a sustainable fuels position to support the industry.

Potential

With a strong focus on aviation and industrial fuels, the industry does not appear to be rushing back to the bowser to offer an alternative to electric vehicles.

“We should electrify everything that we can electrify,” Ms McKenzie said.

“At the moment we can absolutely play a role in supporting decarbonisation of the … passenger vehicle fleet.

“We can and we should, but the long game out to 2050 is really supporting sectors that actually don’t have other options.”

Numerous reports have highlighted the sector’s potential.

Among them is a Horizon Power-commissioned study in May, which touted a $20.4 billion boost to WA’s economy by replicating Future Energy Australia’s Narrogin project into 22 biofuel plants by 2030.

A 2023 WA Department of Agriculture report forecast that without policy to retire WA’s heavy vehicle fleet early, diesel combustion emissions would be locked in well beyond 2050.

And the federal government’s 2021 bioenergy roadmap was backed by $33.5 million for the Australian Renewable Energy Agency to co-fund aviation and marine biofuels programs.

Qantas has committed to using 10 per cent sustainable aviation fuel by 2030 and is currently sourcing from overseas.

And biodiesel at the bowser isn’t completely out of the question, either.

EcoTech is still working away and markets its fuels to “anybody who would like to use it”, according to Mr Hetherington.