Biofuel sector needs a shake-up

Analysts push for a shake-up of biofuel industry following stagnant growth figures

Queensland growers are missing the extra demand for their grain created by the Dalby bio-refinery, currently closed indefinitely.

Queensland growers are missing the extra demand for their grain created by the Dalby bio-refinery, currently closed indefinitely.


The biofuel industry is booming in many countries, aided by supportive government policy, but in Australia it is a different story.


NEW GOVERNMENT policy and supports are needed to revive Australia's moribund biofuels sector according to industry analysts.

In its latest annual national biofuels overview APAC Biofuel Consultants, a joint venture between consultancies, EnergyQuest and Ecco Consulting, found that with the closure of the Dalby biorefinery this year Australia was down to just two major ethanol refineries, the same as back in 2008.

Michael Cochran, joint chief executive said while there was slightly more positive news on the biodiesel front, with a slight increase in supply and demand due to the recommissioning of Australia's largest biodiesel plant at Barnawartha in north-eastern Victoria, the sector was still failing to attract investment.

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He singled out Federal government funding models, saying methods of supporting the sector had essentially remained the same for nearly 20 years.

"The current excise / customs duty support for biofuels has been around nearly 20 years and has failed to encourage new sustainable investment in the industry over the past decade," Mr Cochran said.

"We need to start again with a clean white sheet and see how we can do it better.

"The current development of the Bioenergy Roadmap offers a unique opportunity for the Federal Government to review Australian biofuel support schemes."

At a state level he said the 2020 statutory reviews of each the NSW and Queensland biofuel mandates acknowledged that both had failed to meet targets for ethanol and biodiesel and yet no major change has been recommended for either mandate.

Mr Cochran said there was no skirting around the fact government support was necessary.

"You look at the biofuel sector anywhere in the world, in any country you need government support and a government that is interested."

"Our job in Australia is to get the government more interested."

The demise of the Dalby bio-refinery, opened to much fanfare in 2008, has dealt a blow to the nation's biofuel industry, Mr Cochran said.

The closure took 76ML or an estimated 17pc of aggregate production capacity out of national supply.

The plant was closed temporarily with the onset of COVID-19 in February this year before re-opening briefly, switching its focus to making hand sanitiser to help with COVID health protocols.

Its owners, United Petroleum then announced its indefinite closure in the middle of the year.

The facility is believed to be available for a buyer but United Petroleum was unable to provide official confirmation of this prior to deadline.

Brendan Taylor, AgForce grains section president and a farmer at Warra, near Dalby, said the loss of the demand from the bio-refinery was being felt by growers, especially those growing sorghum.

"It was a 200,000 tonne market when it was fully going, so it was certainly a good thing for grain growers and we'd love to see it up and going again," Mr Taylor said.

Mr Cochran said the fact the refinery could not continue to operate, in spite of significant government support, suggested the type of biofuel operation needed to be looked at.

"Australia's largest ethanol manufacturers both make other products," he said.

"I understand Manildra process gluten, then use the by-product to make ethanol, with the ethanol by-product sold as feed grain.

"With Wilmar, the molasses used for ethanol can also be sold directly, there is a diversity of products."

He also pointed to Tarac in the Barossa Valley, which makes potable grape alcohol, along with industrial alcohol, as another diversified success story in the sector.

Looking forward, Mr Cochran said he thought the future lay in biodiesel.

"Internationally, the biodiesel market is set to produce in excess of 1,000 megalitres of the product, begging the question of the lost value-adding opportunity for Australian industry," he said.


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