Bioethanol in Victoria
Note Number: AG1314
Published: September 2008
Updated: November 2008
This Agnote provides information on bioethanol, drivers and barriers for production, markets, and research and development in Victoria.
Introduction
The production of bioethanol has been occurring overseas for a number of years but is in its infancy in Australia.
The current price of oil, the energy security debate and growing environmental awareness, have been key drivers behind the development and adoption of technologies for the production of renewable fuels such as bioethanol.
There is growing industry, political and community support for bioethanol production which will assist bioethanol producers and regional communities.
Refer to Agricultural note AG1313 for further information on biodiesel production in Victoria.
What is bioethanol?
Bioethanol is simply ethanol (C2H5OH) derived from agricultural sources, as distinct from petrochemical sources. A renewable liquid fuel, bioethanol is predominantly produced through the fermentation of starch or sugar found in products such as grain and sugarcane.
Bioethanol is a clean, efficient burning, highly combustible fuel. Although water soluble it has a similar density to, and is fully miscible with petroleum based fuel.
Bioethanol is an oxygenated (and effective) octane enhancer, and blending with petrol can produce fuel with higher octane ratings for improved car performance. Typically, bioethanol is used for blended fuels at a maximum rate of 10% for passenger vehicles.
Production
Globally, the United States (~ 21GL) and Brazil (~ 17GL) are the two largest producers of bioethanol. Corn-based bioethanol accounts for ~ 97 percent of total bioethanol produced in the United States. Brazil is the world’s largest producer of sugarcane derived bioethanol.
However, biofuels still contributed less than 1 per cent of the world’s liquid fuel supplies in 2006.
Nationwide there are three existing bioethanol facilities and a number of planned facilities. The Manildra facility in Nowra, NSW (100 ML/yr) is Australia’s largest, followed by the CSR distilleries in Queensland (Sarina, north Qld and Rocky Point, near Brisbane, 32 and 20-25 ML/yr, respectively).
In Australia, wheat, sorghum and molasses are the main feedstocks for bioethanol production. If all proposed grain based facilities were on stream and operating at full capacity (e.g. in 2011-12), bioethanol producers would require ~ 2.5 million tonnes of grain (sorghum or wheat) a year. Australia’s total cereal crop production is ~45 million metric tonnes of which 55% (25 mmt) is wheat.
There are no large scale bioethanol production facilities in Victoria, yet there are future plans for the first large scale facility to be located in regional Victoria. There are several small scale community and on-farm bioethanol projects.
Bioethanol production in Victoria will primarily utilize cereal grains predominately wheat and barley. The majority of wheat and barley is produced in the state’s west, in the Wimmera and Mallee regions.
Conversion of starch from cereal crops into bioethanol begins by making a ‘beer’ from milled grain, then distilling-off the alcohol, followed by recovery of residual solids and recycling of water.
Typically, from 1000 kg of wheat containing 65% starch on a dry basis and 12.5% moisture on a wet basis, the bioethanol yield is 293 kg (~370 L), the CO2 yield 283 kg, and the DDGS (Dried Distillers Grains and Solubles) yield is 458 kg.
Since the bioethanol process only removes starch, the protein, fibre, mineral matter content of the grain remains in the DDGS, which is typically sold as animal feed.
Marketing
In 2005/06 bioethanol contributed less than 1% of Australian transport fuel consumption of ~ 42,500ML.
Despite four major oil companies (Mobil, Shell, Caltex and BP) dominating the Australian fuel market, independent service stations (such as SAFF and United Petroleum) are the main retailers of bioethanol blends available direct to the public.
In Victoria, the bioethanol market is in early stages and Shell, United and SAFF are distributors of bioethanol blended fuel.
Bioethanol-blended fuel products termed “ E10” have up to 10% bioethanol in petrol and brands include Boost 98, Plus Unleaded Petrol, Unleaded 94 and E10 Unleaded.
Research and Development
1st generation technology
There are established (1st generation) technologies for bioethanol production available in the marketplace.
Typical 1st generation bioethanol either consist of sugar or starch feedstock e.g.
- Cereals (barley, wheat, oats, rye)
- Starch crops (potato, sugar beet, sugarcane) Because the feedstocks used for 1st generation biofuels are also used in the food industry there is an inevitable tension between the production of food and the production of fuel. Current research into mircoalgae may provide some relief with higher productivity and with less environmental impact than crop feedstocks. Carbohydrates extracted from algal cake can be processed into bioethanol as easily as carbohydrates derived from terrestrial crops. In the medium term, solid biofuel crops (such as cardoon, sorghum, kenaf, prickly pear, whole crop maize, giant reed, reed canary grass, Miscanthus, short rotation coppice and eucalyptus) may also provide a source of fermentable sugars for bioethanol production.
Investment in 1st generation bioethanol is required to create infrastructure for a future focus on 2nd generation technology.
2nd generation technology
There is a significant research and development effort underway globally to develop new more economical (2nd generation) processes that will improve bioethanol production efficiencies and allow for production from alternative feedstocks that lie outside of the food chain.
Typical 2nd generation bioethanol consist of cellulose or hemicellulose feedstocks and includes materials currently undesired or undervalued from industry, agriculture, forestry and households (e.g. non-food feedstocks such as woody plants, and waste from forestry, agriculture and the building industry).
Second generation processes include:
- Enzymic conversion of cellulose and hemicellulose to bioethanol
- Biological/chemical conversion of biomass to mixed alcohols
Second generation technologies enable higher bioethanol yields than from grain feedstock, offer significant improvements in environmental outcomes and allow for a wider range of feedstocks to be used. However, there are economical and technological barriers to overcome.
Second generation bioethanol production is non-commercial at present yet pilot and demonstration facilities are being developed.
Drivers and barriers
The key driversfor the bioethanol industry are:
- The end of ‘cheap oil’ linked with varying perceptions about the timing of ‘peak oil’.
- Climate change and anthropogenic greenhouse gases. Although greenhouse benefits depend upon the energy intensity of the bioethanol production system used.
- Concerns about air quality in major cities. Bioethanol is an effective oxygenator, which enables more efficient engine combustion.
- Energy security – the desire to move away from heavy dependence on a single fossil fuel source (ie. oil).
- New opportunities for agriculture and regional communities.
The key barriers for the bioethanol industry are:
- The commercial viability of biofuels, which largely depends on the production costs relative to the price of oil.
- Relatively immature industry and high level of commercial risk at present.
- Victoria is not well suited to produce significant volumes of sorghum and corn, the principal alternative bioethanol feedstock sources.
- Bioethanol production requires a considerable volume of water.
- The fuel vs food debate.
- Demand for biofuels in Victoria is low as a result of low consumer confidence, lack of understanding and high level of misconceptions about biofuels.
The Commonwealth Government has committed support for research and development on second generation biofuels through the $500 million Renewable Energy Fund. This $15 million of funding was announced in October 2008 and comprises of grants of between $1 million and $5 million for businesses and institutions researching second generation biofuels, matched dollar for dollar.
The Victorian Government’s 2006 electoral commitments included an aspirational 5% biofuels target for the State’s transport fuel supplies by 2010, which equates to approx. 400 ML.
Industry considerations
For Victoria, the economic viability of bioethanol production depends upon a number of variables including plant location, feedstock price, quality, proximity to water and energy and a good return from by-products.
- Industry economics for bioethanol favours low-cost feedstocks. Feedstock costs represent a large proportion of production costs (typically 60-70%).
- 2nd generation technologies require high capital expenditure at start up for large scale production, a constant supply of biomass once viable and requires complex technology.
There are five key factors critical to the success of a company in the bioethanol sector, namely:
- Feedstock availability and reliability of supply and quality.
- Enhanced customer acceptance and demand for bioethanol products through effective marketing and education.
- Infrastructure and logistical readiness to produce, distribute and market bioethanol products.
- Enhanced analysis of trends in production, sales and stocks of bioethanol for continuous improvement.
- Minimising the cost of bioethanol production as government subsides are projected reduce over time.
Future Directions
The development of a bioethanol industry in Victoria will require careful resource planning by bioethanol manufacturers and other stakeholders to ensure that the required volume of grain produced in Victoria can satisfy the needs of all users.
Future markets may include the use of bioethanol and related fuels e.g. biobutanol, as a fuel extender in unleaded petroleum. However, the current commercial constraints on 2nd generation technologies and use of alternate, non-food feedstocks need to be overcome.
Further info
Driving Growth - A Road Map & Action Plan for the Development of the Victorian Biofuels Industry. Regional Development Victoria, Melbourne. April 2007.
Biofuels Taskforce (2005) Report of the Biofuels Taskforce to the Prime Minister, Commonwealth of Australia. Available on-line: www.pmc.gov.au/biofuels.
DITR (2006). Biofuels Background Information. Department of Industry Tourism and Resources Fact Sheet. Available on-line: http://www.industry.gov.au
RIRDC (2007). Biofuels in Australia –an overview of issues and prospects, June 2007. Publication No. 07/070 project no. CSW – 44A. Available online: http://www.rirdc.gov.au/reports/EFM/07-071sum.html.
Renewable Fuels Association (United States) – promotes policies, regulations and research and development initiatives http://www.bioethanolrfa.org/
Reference
Allinson G, Griffin D, McCutcheon A, Paech A, Shelley B (2007). The Energy Millennium: Bioenergy in Victoria. Final Report. A report prepared for Agriculture Development Division. Department of Primary Industries Queenscliff, 2007.
Acknowledgements
This Agnote was developed by Aimee McCutheon. September 2007.
It was reviewd by:
Aimee McCutheon, Farm Services Victoria. November 2008
