Australian biofuel capacity growing strongly

Australia's capacity to produce biofuels is growing strongly, despite the drought and other challenges.

Its ethanol and biodiesel production capacity was expected to double this year, to over 600ML and could exceed 1000ML a year by mid-2009, according to report released on September 4 in Bangkok at the Advanced Global Biofuel Summit .

The report, prepared by Mike Cochran and Graeme Bethune of Australian company APAC Biofuel Consultants, provides an assessment of the state of play for ethanol, which is blended with petrol, and biodiesel, which is typically blended with conventional diesel.

Mr Cochran said demand for ethanol blends is growing and fuel ethanol production in Australia was running close to full capacity of around 120ML a year, driven by the rapid growth in the number of retail outlets selling ethanol blends.

While Queensland and New South Wales had the largest number of outlets, expansion was now underway in Victoria and South Australia.

“The number of E10 retail sites is expected to exceed 800 by the end of 2007, around 13% of Australian service stations and almost double the number 12 months ago,” Bethune said.

Cochran said that with new plants and expansion of existing plants, annual ethanol production capacity could exceed 300ML by the first half of 2009.

“There are a number of other ethanol plants on the drawing board. If they come to fruition, ethanol production capacity could exceed 1000ML by 2011,” he said. “Biodiesel, though, continues to face challenges. High feedstock costs and, commissioning difficulties are contributing factors, which have meant that biodiesel production has been well below capacity over the past six months.

“However the outlook is improving. The cost of major biodiesel feedstocks such as tallow, canola and (imported) palm oil are beginning to move down from their highs earlier this year.

“In 2006/07, biodiesel plant production capacity increased by 390ml. A further 210ML of capacity is currently under construction, expected to be fully commissioned by the end of 2008, bringing capacity to almost 620ML a year.”

The study found that total biofuel production is on track to meet the Australian Government target of 350ML by 2010.

Achieving this target will also be facilitated by the NSW Government introducing a 2% ethanol mandate effective from October 1.

Availability of suitable and sustainable feedstock remained a major challenge for the biofuel industry in Australia and Asia generally.

“Both ethanol and biodiesel production in Australia predominantly rely on first generation feedstocks, most of which compete with the food cycle,” Cochran said.

“Second generation feedstocks, such as microalgae (for biodiesel) and lignocelluloses (for ethanol), are being researched in Australia and overseas, and are seen as offering longer term sustainability as alternative feedstock sources.”