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SUSTAINABLE ALLIANCE OF AUSTRALIA AND NEW ZEALAND

Bioenergy Australia

Technology Investment Roadmap

June 2020 About Sustainable Aviation Fuel Alliance

The Sustainable Aviation Fuel Alliance of Australia and New Zealand (SAFAANZ) This submission has been developed by the Alliance to present bioenergy is a working group developed by Bioenergy Australia to provide a collaborative opportunities specifically in the aviation sector. However, for more information environment to advance sustainable aviation fuel production, policy, education on the broader energy sector, we invite the Panel to refer to Bioenergy and marketing in Australia and New Zealand. Australia’s submission, as well as the individual submissions prepared by other Bioenergy Australia working groups: The Alliance congratulates the Federal Government for supporting the development of the Technology Investment Roadmap and would like to 1. Renewable Gas Alliance reinforce the inclusion of the ARENA Bioenergy Roadmap in its development 2. Cleaner Fuels Alliance and findings. We would like to specifically reference page 6 where the Bioenergy Roadmap is identified as a “Technology Need”. 3. Heat & Power Committee Bioenergy is a cross-sector solution, which can support the country in facing Thank you for the opportunity to provide this submission environmental and socio-economic challenges. Bioenergy Australia has recently Yours sincerely developed a number of reports to highlight the key opportunities of the development of a national bioeconomy, as well as some recommendations to support the growth of the bioenergy industry. These are listed below, and we encourage the Ministerial Reference Panel to have a close look at them. » Bioenergy Australia submission to the Australian Bioenergy Roadmap Shahana McKenzie, CEO Bioenergy Australia » Bioenergy Australia Economic Recovery Proposal » Shovel Ready Sample of Bioenergy Projects Across Australia Do sustainable aviation fuels meet the needs of the Technology Investment Roadmap?

Yes! As acknowledged on page 61 of the discussion paper “The aviation sector has limited low emissions options. Accordingly, have potential to make a significant impact while also helping to address waste challenge and building new regional industries” Developing a sustainable aviation fuel (SAF) industry in Australia would:

» offer large scale abatement potential - SAF offer significant life-cycle carbon reduction gains (at least 70%) and are cleaner burning, with up to 90% reduction in .

» deliver large scale economic opportunity: The Sustainable Aviation Fuel Roadmap estimates that by 2035, the development of a domestic industry for the production of sustainable fuels could generate a Gross Value Added (GVA) Figure 1 – SAF of up to £742m annually and support up 5,200 jobs in UK. implementation » leverage Australian competitive advantage, through utilisation of existing feedstocks and infrastructure, enhancing timeline domestic fuel security, driving a new export industry and supporting significant investment in regional Australia.

» capitalise on existing proven technology operating at scale globally.

» be commercially viable, with the right policy settings as shown globally. Sustainable Aviation Fuels create a unique opportunity for Australia to significantly decrease its carbon emissions using proven and commercially-ready technology, while contributing to the attainment of Australia’s technology goals. The Technology Investment Roadmap Discussion Paper identifies clear priorities in the short term (2020-2022), medium term (2023-2030) and long term (2030-2050+), as well as a number of ‘stretch goals’. Sustainable Aviation Fuels can contribute significantly to the attainment of these goals and is ready to be deployed now as shown in figure 1. The Alliance has prioritised the following challenges, global trends and competitive advantages that should be considered in setting Australia’s technology priorities. Significant challenges and how SAF can support overcoming them Declining regional economies and the need for regional investment For several decades now, as Australia’s economy has grown, rural and regional Australians have been further and further shut out from prosperity. An ACTU submission describes how Australia has developed a two-speed economy, with vastly different economies developing in metropolitan and regional Australia. Regional Australians are already experiencing significantly higher levels of insecurity and inequality when compared to people living in metropolitan areas. This issue will only worsen in the future if future of work transitions are not managed adequately. As widely demonstrated by results achieved internationally, the development of a strong bioeconomy can provide skilled employment opportunities to regional areas. The International Renewable Energy Agency (IRENA) 2019 review shows the global employment in the bioenergy sector has grown in the last few years, reaching 3.18 million jobs in 2018. A US Department of Agriculture (USDA) report “An Economic Impact Analysis of the US Bio-based Products Industry (2018)” analyses the economic impact of the biobased products industry on the US economy. Results show that an expanding bioeconomy leads to higher revenues, more jobs, innovative An expanding partnerships and key environmental benefits. The total contribution of the bio-based products industry to the US economy in 2016 was $459 billion, a 17% increase from 2014, and it was employing 4.65 million workers (direct and indirect), an increase of more than 10% from 2014. bioeconomy leads The Sustainable Aviation Fuel Roadmap developed by Sustainable Aviation estimates that by 2035, the development of a domestic industry for the production of sustainable fuels could generate a Gross Value to higher revenues, Added (GVA) of up to £742m annually and support up 5,200 jobs in UK. A further 13,600 jobs could be generated from the growing market for sustainable aviation fuels through global exports. more jobs, innovative More information on bioenergy opportunities in regional areas is provided here. partnerships and key environmental benefits. Lack of self-sufficiency and energy security Stockpiled aviation fuel The COVID-19 pandemic has highlighted vulnerabilities in Australia’s supply chains and has provided Australia with the opportunity to consider increasing domestic manufacturing and value adding for reduced reliance on imports Europe: 34 days and enhanced self-sufficiency. Australia is languishing behind other nations in fuel independence and security Americas: 28 days and has been named the least prepared developed nation to deal with such a crisis. In terms of aviation fuel, Australia’s domestic production of aviation Asia: 24 days fuel has almost halved over the last 10 years according to the interim report of the Commonwealth Governments Liquid Fuel Security Review and we hold approximately 23 days of , putting us behind the OECD Americas, Aus: 23 days OECD Europe and OECD Asia/Oceania countries.

Domestic production of biofuels results in less reliance on imported oil and petroleum products thereby promoting energy security. A strong industry can help diversify the sources of transportation fuels and decrease Australia’s dependence on petroleum imports, which will reduce the risk of supply constraints during times of international or regional geopolitical upheaval. More information on the role of biofuels in supporting the national fuel security is provided here. Inflexibility of existing infrastructure, asset life and global compatibility Although technologies are under development to market new hybrid-electric and all-electric aircrafts, these solutions are still decades away. Decarbonisation options are required for the short to medium term to enable the sector to meet global industry targets of carbon neutral growth from 2020 and a 50 per cent reduction in emissions by 2050 from 2005 levels. The CEFC report “Clean energy and infrastructure: Pathway to airport ” concluded liquid fuels are projected to remain the most commonly used fuels in the aviation industry as they have high energy-density and are convenient to store and handle. SAF is an essential decarbonisation opportunity for the industry. T In addition, infrastructure can also be a limiting factor for decarbonisation of aviation. Airports are complex infrastructure assets, with the implementation of new emissions reducing initiatives typically requiring endorsement from Higher order waste and multiple stakeholders. Airports can facilitate the transition to biofuels by solutions required ensuring that their fuel storage and delivery infrastructure is compatible with the strict certification requirement of sustainable aviation fuels to enable The 2018 National Waste Report estimates that in 2016-17 Australia produced them to be used as “drop in” fuels. SAF can often be added into the existing 67MT of waste with 13.8 MT being Municipal Solid Waste (MSW). Approximately fuel pipelines, including by blending SAF with jet fuel, however it must be 42% of this material went to , creating poor environmental outcomes, tested to ensure it meets the global ASTM certification. With this existing including large emissions. Instead, in accordance with the infrastructure in place, airports can further incentivise aircraft biofuel uptake waste hierarchy, waste should be recovered for its highest order use wherever by removing internal or contractual barriers to the use of biofuels. it is economically feasible to do so. As an example, Fulcrum BioEnergy, based in California, U.S.A., is leading the development of a reliable and efficient process for transforming municipal solid waste – or household garbage – into transportation fuels including jet fuel and diesel. Fulcrum began construction on the Sierra BioFuels Plant located Jet fuel will be created in Nevada, U.S.A in late 2017. The Sierra plant is the first commercial-scale waste-to-fuels plant in the United States. In December 2018 Fulcrum announced that it has chosen Gary, Indiana, U.S.A., as the location for its from waste that Centerpoint BioFuels Plant, the company’s second waste-to-fuels plant. has partnered with Shell and Velocys to construct an advanced fuels facility that will annually convert around 500,000 tonnes of household and would otherwise be office waste left over after recycling into a number of sustainable low-carbon fuels, including aviation fuel. This waste would otherwise be destined for landfill and incineration. The plant, Altalto, will be located in Immingham destined for landfill and in north-east Lincolnshire on what is currently vacant land surrounded by existing industrial buildings. The fuel production process is fundamentally different to incineration: instead of being burnt (with energy recovery in the incineration form of electricity), the carbon in the waste is converted into a fuel for use in aircraft or vehicles. Global trends driving the The Norwegian development of SAF Mandate Increased government policy driving investment Due to the unique challenges presented to decarbonization by the aviation requires industry, sector-specific policies are instrumental to incentivise the use of SAF. Policy directives are implemented across America and Europe to support the development of the industry. 30 percent The new Atlantic Council report by Fred Ghatala, “Sustainable Aviation Fuel Policy in the United States: A Pragmatic Way Forward”, provides a set of near and long-term federal policy options that could be implemented in order to sustainable encourage the use of SAF. The report contextualizes each policy choice and explains the implications of each option, differentiating between policies that can be implemented in the near-term and policies that require long-term content in implementation. With the Norwegian Mandate now implemented in Europe, requiring 30 percent sustainable content in aviation fuel by 2030, further mandates are aviation fuel by expected, starting in Europe and spreading globally. This will significantly impact demand for SAF as is demonstrated in the graph below. 2030 International coalitions driving sustainable aviation fuel deployment The aviation sector currently contributes 2 per cent to global emissions, therefore, in June 2018, the International Civil Aviation Organization (ICAO) established a set of international standards for its Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The global aviation industry has committed to carbon neutral growth from 2020 and a 50% reduction in CO2 emissions by 2050 (relative to 2005 levels). Sustainable aviation fuels offer significant life-cycle carbon reduction gains (at least 70%) and are cleaner burning, with up to 90% reduction in particulates. The International Air Transport Association (IATA) supports research, development and deployment of SAFs that meet environmental, societal and economic sustainability criteria. IATA follows sustainability developments closely and is a member of the ISCC and the Roundtable on Sustainable Biomaterials (RSB). RSB has developed the most comprehensive sustainability standards for biofuels. Global aviation has committed to a 50% reduction in CO2 emissions by 2050 Figure 2. Estimate of annual global production potential of SAF (IATA analysis)

Traditional fossil based fuel suppliers investing in SAF Today sustainable aviation fuel is at a global tipping point, with a number of projects on the verge of commercial-scale production and a number of airlines and some companies are now making investments in sustainable aviation fuels through joint ventures. As an example, in November 2016, Fulcrum and BP formed a major strategic partnership that included a $30 million equity investment in Fulcrum by BP and a 500 million gallon jet fuel offtake agreement with Air BP, the aviation division at BP, that will provide Air BP with 50 million gallons per year of low-carbon, drop-in jet fuel. Velocys has also recently announced that resolution to grant planning permission has been given to Altalto Immingham, the UK’s first commercial waste-to-jet-fuel plant, which will be built in collaboration with British Airways and Shell. The Sustainable Aviation Fuel Roadmap developed by Sustainable Aviation estimates that in 2035 there may be between 14.5 and 30.9 million tonnes per year of sustainable aviation fuels produced globally. This would correspond to 4%-8% of global aviation fuel use. Competitive advantages for SAF development in Australia

Australian domestic airline industry committed to the development of the industry Domestically, the Group flew Australia’s first commercial flight using SAF in 2012 and the world’s first SAF flight between the United States and Australia in January 2018 using carinata as the feedstock, in partnership with Canadian agricultural seed company, Agrisoma. In 2013, the Group undertook a feasibility study with Shell and ARENA, that found an industry is technically viable in Australia however investment in feedstock and infrastructure as well as a supportive enabling environment was essential to the development of an advanced SAF industry in Australia. In 2019, the Qantas Group set a target to achieve net zero emissions by 2050 and will invest $50 million over the next ten years to help develop a sustainable aviation fuel industry. In October 2017, Group announced a trial of through ’s jet fuel supply infrastructure. This was the first time a sustainable fuel type would be delivered through a traditional fuel system at an Australian airport. In September 2018, Virgin Australia announced the completion of the trial, with the biofuel blend fuelling 195 domestic and international flights out of Brisbane Airport. Brisbane Airport’s Draft 2020 Master Plan highlights their intention to continue to work with airlines to expand the use of biofuels for aviation. This partnership and trial demonstrate the capacity for airport stakeholders to co-deliver emissions reduction initiatives. In addition, the formation of the Sustainable Aviation Fuel Alliance of Australia and New Zealand and the significant membership of this being Australian Airports gives a strong indication of the support for developing the sector.

Resource availability and quality The major feedstocks for bioenergy are crop and forestry residues, processing residues and wastes, and purpose-grown crops. As showed in the Australian Renewable Energy Mapping Infrastructure (AREMI) platform, these resources are abundant in Australia but are currently underutilised. In addition, there are large tracts of undeveloped, unproductive agricultural lands, especially in the NT and WA. Australia has a natural advantage in the development and deployment of biofuels whereas it has a natural disadvantage in mineral for liquid fuels.

Strong economy, highly skilled workforce, strong financial and governance systems to support investment Australia has a number of socio-economic and financial advantages that make the country a safe and secure place to do business. We can count on an effective regulatory environment, a highly skilled workforce, and Australian businesses are innovative and world leading with a high level of confidence and growing investment. The shortlist of technologies that Australia could prioritise for achieving scale in deployment through its technology investments SAF has wide-reaching market potential in Australia following proven models across Europe, the UK and North America. It is available today and with appropriate policy. SAF is relevant for the short, medium and long term. The following drop-in alternative jet fuels are approved for use with a blend ratio of up to 50%. These approved fuels represent multiple conversion processes associated with various feedstock types. Approved pathways for sustainable aviation fuel

Annex A1: Fischer-Tropsch Synthetic Paraffinic Kerosene (FT-SPK) Year of Certification: 2009 Blending: Required to be blended with petroleum-based jet fuel, up to a 50% maximum level. Feedstock(s): Synthesis gas (or , a mixture of CO and H2). Syngas is typically produced from the of such as municipal solid waste (MSW), agricultural and forest wastes, and wood and energy crops, as well as non-renewable feedstocks such as coal and natural gas. The feedstock is gasified at high temperatures (1200 to 1600 degrees Celsius), which deconstructs the feedstock into carbon monoxide, hydrogen, and CO2 primarily, as well as some ash. The gas mixture is separated and cleaned to produce pure syngas, and it is then converted to long carbon chain waxes through the FT Synthesis Process. Syngas, or its components, can also come from other industrial processes. Process/Product Description: The Fischer-Tropsch (FT) Synthesis Process is a catalyzed chemical reaction in which synthesis gas is converted into liquid hydrocarbons of various forms via the use of a reactor with cobalt or iron catalyst. The wax is then cracked and isomerized to produce drop-in liquid fuels essentially identical to the paraffins in petroleum-based jet fuel, but the FT process does not typically produce the cyclo-paraffins and aromatic compounds typically found in petroleum-based jet fuel. Annex A2: Hydroprocessed Esters and Fatty Acids Synthetic Paraffinic Kerosene (HEFA-SPK) Year of Certification: 2011 Blending: Required to be blended with petroleum-based jet fuel, up to a 50% maximum level. Feedstock(s): Specifically, fatty acids and esters, or more generally various lipids that come from plant and animal fats, oils, and greases (FOGs). Process/Product Description: Natural oils are converted from lipids to hydrocarbons by treating the oil with hydrogen to remove oxygen and other less desirable molecules. The hydrocarbons are cracked and isomerized, creating a synthetic jet fuel blending component comprised of paraffins. Annex A3: Hydroprocessed Fermented to Synthetic Isoparaffins (HFS-SIP) Year of Certification: 2014 Blending: Required to be blended with petroleum-based jet fuel, up to a 10% maximum level Feedstock(s): Sugars Process/Product Description: The process uses modified yeasts to ferment sugars into a molecule. This produces a C15 hydrocarbon molecule called farnesene, which after hydroprocessing to farnesane, can be used as a blendstock in jet fuel. Annex A4: Fischer-Tropsch Synthetic Paraffinic Kerosene with Aromatics (FT-SPK/A) Year of Certification: 2015 Blending: Required to be blended with petroleum-based jet fuel, up to a 50% maximum level. Feedstock(s): Same as Annex A1. Process/Product Description: Uses the FT Synthesis Process plus the alkylation of light aromatics (primarily benzene) to create a hydrocarbon blend that includes aromatic compounds that are required to ensure elastomer seal swell in aircraft components to prevent fuel leaks. FT-SPK/A introduces the migration toward fuels that offer a full spectrum of molecules found in petroleum-based jet fuel, rather than just paraffins. Annex A5: Alcohol to Jet Synthetic Paraffinic Kerosene (ATJ-SPK) Year of Certification: 2016 Blending: Required to be blended with petroleum-based jet fuel, up to a 50% maximum level. Feedstock(s): This annex is intended to eventually cover the use of any 2 to 5 carbon alcohols, but at present, it only allows the individual use of and isobutanol. The alcohols can come from any source, but are usually derived from: Fermentation of starches/sugars, which themselves can come from starch/ producing feedstocks (e.g. field corn, sweet sorghum, cane, sugar beets, tubers) or derived from cellulosic biomass (e.g. via hydrolysis from lignocellulose). The biochemical conversion of other forms of hydrogen and carbon (e.g. via organisms that convert CO, H2 and CO2 to alcohol). Process/Product Description: Dehydration of isobutanol or ethanol followed by oligomerization, hydrogenation and fractionation to yield a hydrocarbon jet fuel blending component. Annex A6: Catalytic Hydrothermolysis Synthesized Kerosene (CH-SK, or CHJ) Year of Certification: 2020 Blending: Required to be blended with petroleum-based jet fuel, up to a 50% maximum level. Feedstock(s): Specifically, fatty acids and fatty acid esters, or more generally various lipids that come from plant and animal fats, oils and greases (FOGs). Process/Product Description: Hydroprocessed synthesized kerosene containing normal and iso-paraffins, cycloparaffins, and aromatics produced from hydrothermal conversion of fatty acid esters and free fatty acids along with any combination of hydrotreating, hydrocracking, or hydroisomerization, and other conventional refinery processes, but including fractionation as a final process step. Annex A7: Hydroprocessed Hydrocarbons, Esters and Fatty Acids Synthetic Paraffinic Kerosene (HHC-SPK or HC-HEFA-SPK) Year of Certification: 2020 Blending: Required to be blended with petroleum-based jet fuel, up to a 10% maximum level. Feedstock(s): Specifically, bio-derived hydrocarbons, fatty acid esters, and free fatty acids. Recognized sources of bio-derived hydrocarbons at present only include the tri-terpenes produced by the Botryococcus braunii species of . Process/Product Description: Bio-derived hydrocarbons and lipids are converted to hydrocarbons by treating the feedstock with hydrogen to remove oxygen and other less desirable molecules. The hydrocarbons are cracked and isomerized, creating a synthetic jet fuel blending component comprised of paraffins. The Committee D02 on Petroleum Products, Liquid Fuels, and Lubricants, as well as their D02.J0 Sub-committee on Aviation Fuels, have also approved the co-processing of renewable content with crude oil-derived middle distillates in petroleum refineries. This includes: Lipids (plant oils and animal fats) Fischer Tropsch Biocrude (unrefined hydrocarbon content coming from an FT reactor) The co-processing provisions have been added to Annex A1 of ASTM D1655, Standard Specification for Aviation Turbine Fuels. The Annex includes co-processing of up to 5% by volume of these components as feedstocks in petroleum refinery processes. Goals for leveraging private investment in SAF

Create long-term, low risk revenues. Certainty of long term revenue, either indirectly derived through practical policy settings (Clean Fuels Target) or dedicated off-take agreements facilitated by Government.

Assign value to SAF’s environmental, regional and domestic properties. This includes identifying the broad range of value delivered through the industry, including: » Carbon emissions » Regional employment » Energy security » Economic resilience

Create a tradable commodity. By commoditising SAF, markets are able to trade in the product which encourages innovation and lowest cost solutions. What broader issues, including infrastructure, skills, regulation or, planning, need to be worked through to enable priority technologies to be adopted at scale in Australia

In order to enable SAF to be adopted at scale in Australia, the following financial, regulatory, supply and institutional barriers need to be addressed:

» Long term stable energy policy supporting decarbonisation of the aviation sector in Australia

» Adoption of a Clean Fuels Target, similar to California’s “Low Carbon Fuel Standard”

» Financial support for technology development and development capital

» Clearly articulated Bioenergy Roadmap to direct feedstock and policy to key focus areas

» Nationally consistent approach to environmental protection and to create a culture of learning, education and innovation within the state based EPA’s

» Whole of government approach to capitalise on the full opportunity presented from the bioeconomy which leverages procurement, Commonwealth owned assets and infrastructure

Where Australia is well-placed to take advantage of future demand for low emissions technologies, and support global emissions reductions by helping to deepen trade, markets and global supply chains

The Commonwealth Bioenergy Roadmap will be able to provide significant detail to support this area of the technology roadmap and we look forward to seeing the incorporation of the Bioenergy Roadmap across this significant piece of work.