Parratt & Associates Scoping Biorefineries: Temperate Biomass Value Chains

2.7 Biobased Products – Increasing Value Creation in a Bioeconomy

Biobased products derived from renewable resources can deliver positive environmental effects and improved product characteristics, while reducing Australia’s crude oil and oil-derived raw polymer imports⁴⁰. Life-cycle assessments of biobased products have been limited, but results to date suggest that

products can have clear environmental benefits. Assessments also indicate areas where process improvements could have a large impact on sustainability outcomes. Biobased industries in the rural sector can generate demand for higher value crops or create more value from currently produced biomass, while encouraging the establishment of regional bio-industries. Evidence from interviews and reports suggest that Australia currently lacks a shared understanding of the benefits of biobased products and their potential to reduce our dependence on imported oil and polymers, reduce greenhouse gas emissions, and foster home-grown industries to stimulate a sustainable, value-adding manufacturing sector. The US government’s bio-preferred procurement program illustrates one step possible in helping develop this clearer understanding (www.biopreferred.org) of the benefits of developing a bioeconomy.

The value chain for bio-product development will begin with the development of in planta modification of crops (both GMO and through plant breeding), access to waste streams (crop and forest residues) and plantation forests. However, there are obstacles to development at almost every point along the value chain. Figure 2-2 identifies the major components in the development of a series of potentially valuable biobased products produced in a sustainable fashion. This current report addresses various aspects of the value chain, some in greater detail than others and delves deeper into the critical areas and obstacles to the development of the value chain for biomass conversion to bioproducts.

Figure2-2: Bio-product Value Chains⁴¹

The World Economic Forum⁴² report provided an analysis of the international value chain for future biorefineries. The authors identified five sectors and 3 additional subsectors that could be categorised as potential sources of additional revenue over the value chain. The table below provides a breakdown of the analysis;

Table 2-2: Revenue Potential along the International Biomass Value Chain (source: WEF 2010, The Future of Industrial Biorefineries)

Sector	Description of Activity	Estimated additional revenue by 2020 US$B	Percentage of total
Agricultural inputs	Seeds, Crop Protection, Fertilisers	15	5.1
Biomass Production	Energy Crops, Sugarcane, Short rotation forestry	89	30.2
Biomass Trading	Aggregation, logistics and trading	30	10.2
Biomass Power and Heat	Co-firing, dedicated heat and power	65	22
Biorefinery Inputs	Enzymes, organisms, pre-treatment chemicals	10	3.4
Biorefining chemicals and downstream chemistry	Fermentation of bulk chemistry, downstream reactions	6	2
Biorefining fuels	1^st and 2^nd generation biofuel production	80	27.1
Total		295	100

Each of these sectors and embedded activities is relevant to Australian value chains for temperate biomass in biorefineries. The following chapters emphasise existing biomass developments rather than future developments. In regard to agricultural inputs – a significant component of the value chain – only crop, plantation and forest residue inputs are considered. The production of biofuels has also been dealt with extensively in Australia and has been the subject of a number of studies by the Rural Industry Research Development Corporation. Biofuel production from temperate biomass offers significant potential within Australia; however, this study focuses on co-products of biomass transformation in biorefineries. The global trend is away from the creation of single product biorefineries (e.g. 1 generation ethanol plants) and toward multi-product refineries (e.g. 2^stnd generation plants producing fuels and biobased chemicals, or fuel plus protein, or protein plus chemicals). Multi-product refineries, the products they produce, and the potential challenges are examined in more detail later in this report.

Key Messages :

Critical global risks are energy security; infrastructure for agriculture and sustainable growth; adaptation to climate change.

Four shocks that could impact Australia are; asset price collapse; oil and gas prices; extreme climate change; and biodiversity loss.

Australia’s has growing trade deficit due to importing oil and chemicals. This could be as high as $17.5B p.a. by 2020.

Biorefineries may impact negatively on water usage.

Biomass value chains are complex and are impacted by a variety of societal and legislative elements. Australia lacks a shared understanding of the benefits of biobased products and their potential to reduce our dependence on imported oil and chemicals, reduce greenhouse gas emissions, and to foster home-grown industries to stimulate a sustainable, value-adding manufacturing sector.

International research indicates annual revenues from global biomass value chains could exceed US$250B per annum.