National Reconstruction Fund: consultation paper

Bioenergy Australia Pty Ltd
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BIOENERGY AUSTRALIA SUBMISSION – National Reconstruction Fund

Bioenergy Australia (BA) is the national industry association committed to accelerating Australia’s bio economy. Our mission is to foster the bioenergy sector to generate jobs, secure investment, maximise the value of local resources, minimise waste and environmental impact, and develop and promote national bioenergy expertise into international markets.

This submission from Bioenergy Australia is on behalf of the Renewable Gas Alliance (RGA),
Sustainable Aviation Fuel Alliance of Australia and New Zealand (SAFAANZ) and the Cleaner Fuels
Alliance (CFA). These alliances were founded to accelerate the development and deployment of
Renewable Liquid Fuels and Biomethane for deployment in Australia. Individual members of the alliances will be providing more detailed submissions specific to their business and expertise.

Australia’s Bioenergy Roadmap (ARENA, November 2021) outlines how, by the start of the next decade,
Australia’s bioenergy sector could contribute to around $10 billion in extra GDP per annum and 26,200 new jobs, reduce emissions by about 9 per cent, divert an extra 6 per cent of waste from landfill, and enhance fuel security. Now is the time to capitalise on these opportunities by prioritising key opportunities as priorities within the National Reconstruction Fund. The current exclusion of these potentially significant industries is of significant concern.

Bioenergy Australia would strongly recommend that the Government takes a strategic approach to the roll out of the National Reconstruction Fund, and that it identifies and prioritises future industries that can play a significant role in Australia’s economy and emissions reduction targets. We would encourage the Government to look out to 2050 and ensure that all Government programs and funding opportunities are not restrictive in their nature, but inclusive of all significant opportunities.

As an immediate priority, Bioenergy Australia recommends including sustainable aviation fuel (SAF) and biomethane capture as priority opportunities. We will address these technologies individually, demonstrating the significant impacts investing in these technologies will have for Australia.

Sustainable Aviation Fuel
The immense task of decarbonising the world’s aviation sector presents an incredible opportunity for
Australia.

An opportunity to use Australia’s vast agricultural and industrial might to not only advance the nation’s climate ambitions but secure a considerable economic dividend. An opportunity to solve a complex challenge for a transport sector boasting plenty of willpower to lower its emissions, but for
aviation there are no easy avenues. And, vitally, an opportunity to address sovereign fuel security over the next decade and get on the front foot within an important emerging industry.

However, the opportunity should not be dwarfed by the challenge.

Despite advances in fuel efficiency and fleet modernisation, emissions from the Australian aviation sector are increasing, which will challenge the industry’s commitment to achieve net zero emissions by 2050. Meeting that challenge will require multiple solutions all reliant on prolonged cooperation between industry and governments, the most significant of these solutions is sustainable aviation fuels (SAF) which can be produced from diverse feedstocks to reduce conventional aviation jet fuel emissions by up to 80% over the lifecycle. The challenge to developing a domestic SAF industry is surmountable if we open the door to this critical pathway enabling the sector to meet its commitments, while remaining competitive.

Sustainable Aviation Fuel can no longer be a problem for others to solve and act on. The inherent risks of leaving development, processing and deployment of this critical technology to our global peers will leave Australia at the mercy of foreign markets, geopolitics, and distance. Simply put, without an onshore industry, SAF will not be an economically or commercially viable option to drive emissions down. To unlock Australia’s potential to become not only a participant in the SAF industry, but a leading player, governments must take concrete actions to support the creation of a domestic industry. It is essential that the SAF opportunity is recognised in significant government programs such as the National Reconstruction Fund.

This submission from Bioenergy Australia is on behalf of the Sustainable Aviation Fuel Alliance
Australia and New Zealand (SAFAANZ), the alliance it founded to fast-track the development, uptake and progression of SAF in the region.

In terms of emissions reduction in aviation, Australia’s geography is a hindrance.
Given the long distances required to travel and/or ship perishable or urgent cargo both domestically and internationally, aviation is the only viable transport option for such cases. And SAF remains the primary tool (indeed, within the technological roadmap available now, the only tool) for emissions reduction, with a portfolio of contenders on the horizon, including hydrogen and battery-powered flights, that could provide low emissions options only for short distance flights due to limitations in technology.

Even the most ambitious projections for aviation’s pathway to net zero by 2050 still see the feasibility of electric and hydrogen propulsion limited to short-haul, narrow-body flights with less than 150 seats and a 120-minute flight time, which is problematic when more than 70 per cent of Australia’s total aviation emissions come from international flights. Unlike hydrogen and battery-powered flights which are in very early-stage development and not commercially deployable, SAF is here and available technology ready to scale, and under ASTM certification is a drop-in fuel to current aviation propulsion systems up to a blend of 50 per cent.

The challenge is supply, and the domestic policy levers that can unlock an Australian industry to flourish.

As Australian airlines set about achieving emissions reduction, they have embraced SAF as an alternative to conventional jet fuel, with Qantas targeting a 10 per cent SAF blend by 2030 and 60 per cent by 2050. However, Qantas is the only Australian carrier currently able to source SAF because of its long-haul flights to the UK and the US where supply is readily available. Australia has no domestic
SAF production or supply, despite an abundance of feedstock, which includes sugar cane and canola,
forestry residues, agricultural and animal waste, used cooking oil and municipal waste that would normally go to landfill. Without a viable SAF industry on the ground, Australian growers and producers are seizing opportunities to export their raw material overseas to refiners, at times locking in five-to-
10 year off-take agreements that send countless millions of dollars overseas to markets banking the dividends of early action on renewable liquid fuel.

As a result, Australia risks becoming a net importer of a renewable fuel derived from feedstock grown on its soil, and abundantly. This is a real and immediate threat with export increases of Australian feedstocks including over a 30,000% increase in the export of used cooking oil from Australia to the
USA from 2020 to 2022. Long term feedstock offtake agreements are being secured placing Australia at risk of not only having a limited supply of feedstock but the sustainability credentials of imported renewable fuel will ultimately be lower.

While governments and industry across Europe, the United States, the United Kingdom, New Zealand,
Singapore, Japan and Canada progress policy to accelerate the adoption of SAF signalling to the market through ambitious SAF targets, through fuel subsidies, blending mandates, capital grants and loans, and funding for individual projects, Australia remains at first base, beholden to international competitors and inflated prices that are ultimately borne by the consumer.

SAF remains as much as three-to-five times more expensive than conventional jet fuel. However, with supportive policy frameworks that encourage investment and innovation, Australia could produce and export SAF at a competitive advantage to global peers due to our extensive feedstock and resource inputs.

With support for early deployment of pre-commercial SAF production plants, Australia’s Bioenergy
Roadmap, released by the Federal Government in November 2021, estimates production potential of up to 1908 ML per annum, representing 18 per cent of the aviation fuel market.
To realise the full benefits of that production is to realise an economic windfall.

It is estimated the establishment of an Australian SAF industry would create 7400 jobs by 2030 and up to 15,600 jobs by 2050, mostly in regional areas, while generating a $2.8 billion contribution to GDP per year by 2030, rising to $7.6 billion per year in 2050. These would be the lucrative results of industry and governments working together to create a supportive investment and policy environment.

It is essential that SAF is included within the National Reconstruction Fund.

Biomethane Injection
Australia is in the midst of an energy crisis that is compounding cost of living pressures for households, businesses and industry.

At the centre of this global phenomenon are soaring energy prices with no immediate signs of retracement or moderation, thanks largely to international forces and a shortage of domestic supply.

This scenario is coupled with a renewed push from governments to reduce our reliance on traditional energy sources and fast-track emissions reduction, making the pursuit, development and deployment of renewable gas in Australia like Biomethane, time critical.

But roadblocks to such alternatives remain.
They are roadblocks that are restraining the pace at which Australia reaches its climate ambitions, and undermining valiant attempts by manufacturers, food processing and high carbon-intensive industries, to reduce their emissions.

Biomethane has a significant role to play in the decarbonisation of Australia’s gas network and those industries reliant on gas to deliver their products and services.

It is game-changing in its application: clean, cheap, proven, and importantly, ready for immediate use.

In its own words, the Clean Energy Regulator describes biomethane as a “methane-rich net-zero carbon emissions natural gas substitute”.

It is less expensive than renewable hydrogen in the short-to-medium term, is interchangeable with natural gas without the need to upgrade gas infrastructure or appliances and can be scaled quickly to account for 23 per cent of the total pipeline gas market by 2030.

For Australian manufacturing industries where gas will remain an integral part of the energy mix, biomethane looms as the only genuine short-to-medium term solution for not only emissions reduction, but reducing energy costs overall.

Australian manufacturers and industrial companies cannot electrify the heating, refining and reforming processes required in their operations. Gas is required, both now and well into the future.

As well as a solution to the energy and emissions equation confronting governments and industry alike, biomethane is an economy-builder, a jobs-creator and a valuable tool to build Australia’s sovereign capability.

Thank you for taking the time to consider our submission. Any questions or request for further assistance are welcome and can be directed to

Sincerely,

, Bioenergy Australia