Parratt & Associates Scoping Biorefineries: Temperate Biomass Value Chains

Competitive Advantages

Australia has a number of significant competitive advantages that would enhance the development of biomass value chains and biobased products industry. It has a highly skilled workforce in some key areas of the value chain, an attractive business environment, a relatively inexpensive and vast supply chain for biomass and a regulatory framework across the value chain that can deliver environmentally sustainable biomass to biorefineries.

Each component of the value chain could provide significant uplifts in value to provide for long-term sustainable industry growth based on developing domestic and export markets. This would create a significant number of new jobs, new companies and revitalise rural sectors. The ability to integrate across the value chain exists during the development of the industry. Bringing investors, government, research and the chemical, forest, transportation and agricultural sectors together into a focused industry-wide plan would provide Australia with a significant competitive advantage. The plan must be supported by government to reduce the risk to capital investment and access to technologies.

Opportunities

The key drivers of change; energy and food security, climate change and spiralling costs from the fossil industry oil and chemicals industry create opportunities for Australia to develop a sustainable energy and chemicals sector. The way forward will be based on strategies that are realistic, have scale, increase investment and innovation across the value chain for temperate biomass to renewable chemicals and materials. The development of a biobased industry around temperate biomass has the potential to add billions of dollars from domestic production and from exports.

Key opportunities exist to add value to biomass by;

• 
  ensuring an adequate price is provided to the producers;
  
• 
  enhancing the efficiency of transport;
  
• 
  ensuring supply of biomass is year round and is consistent in quality and quantity;
  
• 
  co-ordination across governments and the sectors of the value chain;
  
• 
  improving the innovation framework for chemical and plastics sector in Australia;
  
• 
  accessing international technology and best practice for the development of biorefineries for both fuel and chemicals;
  
• 
  providing adequate skills development and training opportunities across the value chain to ensure Australian workers can meet the demands of growing industries;
  
• 
  providing a long-term, sustainable future for the forest and pulp industries, and
  
• 
  maintaining linkages between the development of the chemicals, bioenergy, forest and farming sectors.
  

Innovation

Innovation is the key component to drive new industry development. The proposal for the development of a Biorefinery Research Institute, as recommended by the Pulp and Paper Industry Strategy Group must have a broader focus than simply bioenergy. International studies and this report confirm that the integration of both platform chemicals and energy production are essential to deliver the benefits of biomass transformation both environmentally and economically. The area is of interest to the Future Manufacturing Industry, the Textile and Footwear Industry and the new Pulp and Paper Industry Councils.

The pilot scale NCRIS Biocommodities facility in Mackay is too small and too distant to provide a focus for temperate biomass. A demonstration plant capable of processing several tonne per day and from alternative sources of biomass is required to provide the platform for biobased products research and development. This should be linked to the chemicals, pulp and paper industries to provide the foundation and proof of capability for commercial scale production within Australia. A demonstration facility would provide a critical and currently missing link between Australia and overseas researchers, companies and entrepreneurs.

R&D in the chemicals industry both locally and globally has shifted from commoditised products requiring scale and efficiency to high-value low volume chemicals in the pharmaceutical industry. Arguably, the surge of research into biobased products provides a new impetus to chemical R&D. However, there is a need to be linked internationally and to leverage knowledge globally. Australia has a strong track record in chemical publication being ranked 15^th globally in 2004. However our industrial chemicals R&D is waning.

Though there is good reason to look to scale, for example retrofitting pulp mills to produce biobased products in the millions of tonnes, it is important to recognize that small steps are vital in the innovation pipeline. Many renewable chemicals are only a ‘well-understood’ step or two from fuel molecules – for example, the base chemical ethylene, used to make many of our basic bio-plastics and chemicals, is just a step away from ethanol. Ethyl acetate and acetic acid are two in-demand chemicals that are also chemically quite close to ethanol. However, research and development in this area is limited in Australia and requires significant coordination and funding.

The development of smaller scale (thousands of tonnes versus millions of tonnes) biomass transformation facilities will be economically viable given the right product mix and incentives from government to cross the ‘valley of death’ in order to reach scale.

National Benefit

Growing internationally competitive and profitable biobased products industries that are based on renewable biomass (temperate or tropical) will generate a range of national benefits. Most significantly, it can provide a basis for replacement of existing imported chemicals used within the manufacturing industry as oil production decreases and prices escalate. Currently, over 83,000 people work in the chemicals industry which contributes 1% of Australia’s GDP. A similar number of people are employed in the forestry, pulp and paper industries. Considerable international data exists to support the contention that biorefineries will reduce green house gases for product equivalents to petrochemical based products (chemicals and fuels). Development of environmentally sustainable frameworks for the growing, harvesting and collecting biomass will provide a basis for the bio-based industry to develop and serve to target climate change actions.

The development of biorefineries would provide additional jobs in regional locations, provide an on-going basis for employment in the forestry industry and also provide a basis for development of an export-orientated chemicals industry based on green jobs. Conservative estimates are that an industry based on both temperate forest plantation and crop residues could provide in excess of $20B annually in platform chemicals by 2020 in addition to income from renewable energy. The costs of establishing such industries are largely still a work in progress, however, the data suggests that economic viability is achievable and public benefits are high.

Synergies with the pulp and paper industry exist through development of a biobased products industry providing opportunities for diversification and value adding at existing mills, providing certainty for forest workers and mill operators.