Report: Australia's biofuel production to double this year, despite drought

A report issued at the Advanced Global Biofuels Summit in Bangkok and prepared by energy consultants Mike Cochran of Ecco Consulting and Graeme Bethune of Energy Quest has found Australia's biofuel sector will double its output this year and becomes more sustainable despite drought in the country. Production will increase twofold to 600 million litres and could top one billion litres by mid-2009. This compares with Australia's national target of 350 million liters annually by 2010.

According to the report, biodiesel capacity is well ahead of demand, given a range of unfavourable market conditions including high feedstock costs and commissioning difficulties. However the industry outlook is improving as 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 390 million liters. A further 210 million liter capacity is currently under construction, expected to be fully commissioned by the end of 2008, bringing capacity to almost 620 million liters per annum.

Ethanol demand is being driven by a growing number of service stations providing the fuel and a wider range of feed stocks are becoming available. The number of E10 retail sites is expected to exceed 800 by the end of 2007 - around 13 per cent of Australian service stations and almost double the number 12 months ago. Production plants are running close to full capacity at about 120 million litres a year. With the expansion of plants and new production, capacity could exceed 300 million litres by the first half of 2009. If all plants currently on the drawing board come online ethanol production capacity could skyrocket to 1 billion liters by 2011:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: ethanol :: biodiesel :: Australia ::

Challenges
The report states that, while high oil prices provide an opportunity for biofuels to enter the transport fuel market, producers and world-be producers in Australia do face major challenges. These include the difficulties of trying to compete in the lower-value energy market with higher value food commodities.

The biofuels producers are also faced with a small number of buyers retailing a competing product, petrol or diesel. Other issues include consumer acceptability and product quality, capital investment requirements by consumers before they can take the product and the drought risk to feedstocks as well as the dominance of some feedstock supplies by a small group of companies.

The report says that developments in the past six months have confirmed that one of the keys to success for producers is low-cost feedstock. Imported materials are more competitive than locally produced oils, but waste material like tallow and used cooking oil for biodiesel remain the lowest cost feedstock.

References:
APAC Biofuels Consultants (Ecco Consulting, Energy Quest) : Biofuels in Australia - A growing sector [*.pdf] - November 2006.

The Australian: Biofuel industry to double this year - September 5, 2007.

Herald Sun: Despite costs, biofuel pumps - September 5, 2007.

Energy Current: Australia to double biofuel production - September 5, 2007.