Abstract
Industrial biotechnology—the generation of green chemicals, plastics, and fuels at the thousand metric tons per year scale from renewable and sustainable feedstocks—is now a global reality, with large-scale biorefineries established in the US, Brazil, and Europe. 1,2 While Australia had an early history in industrial biotechnology research, changes to research funding eligibility led to de-emphasis of the sector. Now, renewed political interest in green energy has emerged as a component of an alternative energy scenario. This has prompted proposals for large-scale commercial ventures in feedstock production (Table 1). However, more broadly, industrial biotechnology has had modest traction in a country otherwise well-positioned to leverage its technology and resources, especially an abundance of temperate and tropical feedstocks and access to major Asian markets.
The Australian Industrial Biotechnology Sector: A Snapshot
Within the Australian industrial biotechnology sector, the hope and anticipation is that current political interest in green energy and biofuels will sharpen the sword for diversification into more valuable green products. Bioenergy and fuels will pave the way for green chemicals, plastics, and materials by establishing relevant value chains for biomass mobilization and certification, facilities, infrastructure, and informed investors. 3
Widespread national interest is focused on investigating the generation of green fuels and energy from renewable feedstocks such as metropolitan wastes, agricultural and animal processing residues, oils and fats, and timber and forestry wastes. The numerous scoping studies commissioned by federal and state governments (such as New South Wales [NSW], South Australia, and Queensland), often in association with regional councils and industry groups are evidence of this growing interest. 4 –6
National Support for Biofuels and Biobased Products
It comes as no surprise that ventures producing green fuels dominate the current industrial biotechnology landscape in Australia. These may be established firms leveraging agricultural or food processing residues and waste streams, large-scale proposals linking greenfield plantations with biofuels (e.g, Northern Queensland BioEnergy Corp), companies with feedstock pre-treatment technologies to generate clean sugar streams (e.g., Leaf Resources), and algal-based technologies with the promise of generating biofuels and high value green products, but also capable of wastewater management (e.g., MBD Bioenergy) (Table 1). Australia is advancing towards a commercial-scale biojet fuel and biodiesel biorefinery targeting the considerable prospects within the military, aviation, shipping, and land transport sectors. Australia's Southern Oil recently announced the development of a pilot-scale facility and a test laboratory together with the technology companies Miradel and Licella in preparation for a A$150 million (USD114 million) commercial-scale facility. 7
Within the last decade, various federal governments have funded strategic studies aimed at assessing the potential of industrial biotechnology to underpin a new commercial sector in Australia, based on temperate and tropical feedstocks and producing green chemicals, plastics, and fuels. To date, however, the sector is waiting for articulation of a national vision for a manufacturing sector based on industrial biotechnology generating an array of products for domestic use and export, supported by production targets and government procurement to drive market development. Currently, the policy position broadly addresses alternative fuels, which include such green fuels as biodiesel and bioethanol, and acknowledges potential opportunities in domestic as well as strategic fuels such as those employed by the US Navy's Green Fleet.
The principal federal funding agency with responsibility for renewable energy is the Australian Renewable Energy Agency (ARENA). ARENA is tasked with improving the affordability and increasing the supply of renewable energy in Australia. It has A$2.5 billion (USD1.9 billion) in funding until 2022 to advance the commercialization of renewable energy technologies and to diversify the nation's energy mix. ARENA's investments span the commercialization pathway from research and development (R&D) to demonstration and near-commercial projects, with 249 projects supported and 58 projects completed as a result of A$1.1 billion (USD838 million) invested to date. Disappointingly, only a small proportion (7%) of these projects involve bioenergy and biofuels. However, recently ARENA invested in a biocrude test facility to provide the necessary information to underpin both a commercial-scale facility and, potentially, to generate a tide to lift all boats in future biodiesel and jet fuel production in Australia. 7
In addition, ARENA funds a number of programs relevant to the industrial biotechnology sector, including the national bioresource assessment scheme and the industry association Bioenergy Australia. The Australian Biomass for Bioenergy Assessment (ABBA) initiative (total of ∼A$6.3 million [USD4.8 million] over 2 years) is currently mapping biomass resources available for conversion to bioenergy and other green products, with input from all states and territories. Completion is planned for 2017. The output of that project will be a publicly-available national map of biomass resources intended to overcome a key hurdle for commercial projects of assessment of biomass availability.
To complement ARENA, the federal government established the Clean Energy Finance Corporation (CEFC) in 2012. The CEFC has announced a A$100 million (USD76 million) cornerstone commitment to the recently created Australian Bioenergy Fund (ABF), to be managed by the UK's Foresight Group, which aims to encourage private sector equity investment in bioenergy. 8 The CEFC has identified a significant untapped potential in Australia's bioenergy sector of up to 800MW of new alternative energy generation capacity, valued at between A$3.5 to A$5.0 billion (USD2.7–3.8 billion), which could become available by 2020 and reduce the nation's carbon emissions by more than 9 million metric tons annually. 9 Some uncertainty surrounds this key agency at present. Recent changes to the federal government may herald budget cuts to the ARENA program as well as changes to the investment paradigm from grant funding to debt and equity, both of which may impact the development of the biobased sector.
Federal government initiatives provide other general, but highly regarded support leveraged by the sector. The R&D tax concession reimburses investment in eligible commercial R&D with a 45% refundable tax offset (equivalent to a 150% deduction) for certain eligible R&D entities. 10 The Northern Australia Infrastructure Facility (NAIF) will provide up to A$5 billion (USD3.8 billion) in concessional finance to encourage private sector investment in “transformative economic infrastructure” in northern Australia. 11 NAIF could potentially be leveraged by state governments to put in place necessary infrastructure in regions of Australia where prospective large-scale biorefinery ventures, co-located with feedstocks and ports, are under consideration.
The federal government has set renewable energy targets (RET) for large- (power station) and small-scale (household) renewable energy generation, although the large-scale RET is the scheme designed to deliver the majority of the government's target (33,000 gigawatt hours of renewable electricity generation by 2020). The large-scale RET provides financial incentives for the establishment and growth of renewable energy power stations to generate electricity from such eligible resources as the sun, wind, ocean movement, geothermal-aquifers, wood and agricultural waste, sugar cane bagasse, or landfill gas. The scheme is supported by the issue of tradable renewable energy certificates (RECs) as measurable units of renewable energy, as incentives for generation of renewable electricity, creating both supply and demand within the renewable energy market. 12
State-Based Investment and Initiatives
In each state, the industrial biotechnology research landscape is largely driven by immediate and strategic interests in green fuels and, by extension, crop development, feedstock pre-treatment, and extraction or conversion technologies. The state policy landscape supporting sector development is often stimulated by a need to replace declining mining or other manufacturing (e.g., automobile) activities as the dominant local industry.
Mandates for biofuel production can effectively drive the market for biofuels. 1 Both the Queensland and NSW state governments are encouraging the uptake of biofuels locally by means of mandates. The NSW mandate for 6% ethanol in petrol and 2% biodiesel in diesel has been in place since 2007; the recently-passed mandate in Queensland correspondingly provides for 3% ethanol (rising to 4% by July 2018) and 0.5% biodiesel. Reviews of the NSW mandated levels of ethanol in petrol revealed consumer resistance to the blended product, and hence the need for clear communication from government on the benefits of these products in reducing oil dependency. 13 Mandates also need to be empowered by policy to restrict the source of biofuels to that of Australian manufacture.
Queensland is positioning itself as a leading producer of advanced biofuels, biochemicals, bioplastics, and other green products in Australia, to create diversified markets for agricultural producers and significant regional development. The government's vision is of a “A$1 billion sustainable and export-oriented industrial biotechnology and bioproducts sector, attracting significant international investment, and creating regional, high-value and knowledge-intensive jobs,” as Queensland's “next wave of economic development.” Central to the vision is the Queensland Biofutures 10-Year Roadmap and Action Plan, launched in June 2016, committing A$20 million (USD15.2 million) to a commercialization fund, research support, and sector champion. 14 Queensland is already home to Australia's only pilot-scale bioprocessing facility, co-located with sugarcane resources at Mackay, and a pilot-scale biocrude plant scheduled for completion late in 2016, both supported by state investment. In addition, Queensland is the site of proposed large-scale biorefinery projects, such as the North Queensland Bio Energy Corp, Renewable Developments Australia Pty Ltd, and Pentland Biofuels Project, among others, in the northern region of the state.
Conclusions
The industrial biotechnology landscape in Australia is shaped by government funding and policy, and the future commercial success of a national industrial biotechnology sector will equally be sculpted largely by government vision and policy, by strategic funding of research, and by co-investment in critical phases of early stage commercial ventures. Therefore, the prospects of industrial biotechnology in Australia is predicated on governments taking a long view of the nation's future strategic position in an industrial world that will be green of necessity.