Parratt & Associates Scoping Biorefineries: Temperate Biomass Value Chains

Acknowledgements

Thanks to Dr. Gill Gregory, Dr. Kate LeStrange and their team at the Department of Innovation, Industry, Science and Research for supporting the project and confidence. Thanks to co-authors at CSIRO; Dr. Joely Taylor and Dr. Barrie May (Chapter 3) and particularly Dr. Peter East for his encouragement, editing and co-authorship of various parts and Chapter 4 and 5. Thanks to Dr. Cameron Begley, Dr Tim Roberts for their helpful suggestions. My gratitude goes to Kim Durrant for helping with the layout and editing. Finally, and certainly not least, thanks to all those who were willing participate in the interviews and workshops.

Chapter 1. Introduction

1.1 What this report is about?

Access to renewable and sustainable sources of energy, chemicals and natural resources is a critical issue facing Australia. Energy security, food security, climate change and green growth are challenges being faced around the globe. Many countries, Australia included, have responded to these challenges through a range of policy mechanisms, all of which are intended to enhance the development of sustainable industries, protect environments and food resources, and to mitigate climate change.

An opportunity exists to establish biomass value chains to produce biobased products (bioproducts) for use by Australian industry and consumers, and also to provide export opportunities from temperate crops and feedstocks. However, there is limited understanding amongst local industry, the Australian Government and the research community of the relevance of existing capabilities and infrastructure, or of the barriers to establishing biobased value chains. In Australia, almost all current activity along the biomass transformation value chain is directed toward supporting bioenergy production. This posits a particular pressure on government support, policy development and industry development.

Internationally, there is significant funding and policy support for biobased value chains. Europe and the US have long recognised the importance of building a sustainable bioeconomy and the importance of supporting bio-based product development and value chains. Australia is yet to follow this lead from other OECD governments.

In this report we discuss the key elements of the value chain in terms of temperate biomass transformation to bioproducts. Biorefineries, the site of conversion of biomass to bioproducts, are placed within an international and national context. The main drivers for change and the adoption of biorefinery and biobased value chains are reviewed within this context. Critical to the establishment of temperate biomass value chains is an understanding of the scope, scale, availability, accessibility and cost of biomass. We review different types of biorefineries, estimating the scale and costs of establishing biorefineries to produce the products used in biobased value chains. A brief review and analysis of the research and development profile is considered. The current legislative framework is reviewed, and Australia’s current skills and education capacity in relation to the development of biomass value chains is assessed. Finally, we examine the challenges and opportunities for biorefinery development and biobased value chains within Australia.

What is a value chain?

Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities as a whole gives the products more added value than the sum of the added values of all activities. The value chain concept has been extended beyond individual firms. It can apply to whole supply chains and distribution networks. The delivery of a mix of products and services to the end customer will mobilise different economic factors, each managing its own value chain. The industry-wide synchronised interactions of these local value chains create an extended value chain,

The value chain, also known as value chain analysis, is a concept from business management that was first described and popularised by Michael Porter in his 1985 bestseller, Competitive Advantage: Creating and Sustaining Superior Performance. Porter, M. E. (1996). What is strategy? Harvard Business Review, November-December, 61–78. The value chain

1.2 Target audience

The target audiences for this report are those with an interest in the development of temperate biomass transformation to the bioproducts industry in Australia. This includes industry players, policy makers and the general community from agriculture, forestry, waste management, transport, biofuels, chemical producers and users, energy users, entrepreneurs and investors. Key messages are included at the end of each chapter. Chapters 3, 4, and 5 are more technical in nature, and may be of less interest to some audiences.

1.3 Background

‘Bioeconomy’ is an emerging term for the sustainable production and conversion of biomass to a range of food, health, fibre and industrial products, as well as energy. A biorefinery is a key development for the delivery of fossil resource product replacement. To this extent, a biorefinery can be defined as ‘any process or system that converts biomass to useful products’. Analysing the value chains for biomass transformation within biorefineries provides the opportunity to:

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  redefine and reconnect the role of agricultural and natural resources, and sustainable energy production;
  
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  identify commercial drivers and likely areas of impact (such as improved land management practices and environmental services) to realign or commence research;
  
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  develop decision frameworks to address land and water use tradeoffs across human food, animal feed, water yield, fibre, energy and environmental service needs; and
  
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  create a policy and legislative framework that supports the development of the bioeconomy.
  

There are only limited existing data on which cost/benefit analyses of the development of these value chains in Australia can be based. The majority of currently available data on biomass-based value chains, including biorefineries, has been developed from data about growth conditions or crops found in other countries.

Globally, there has been a rapid escalation of activity in the development of biomass value chains to capture industrial and community benefits from new industrial processes. Australia is lagging far behind in the application of industrial bioprocessing for bioproducts derived from renewable resources, in fact there is no current manufacturing at pilot, demonstration or commercial scale.