![The sugar cane processing sector has the feedstock, technology, capital and infrastructure to invest in biofuel capacity to help abate carbon emissions. File photo. The sugar cane processing sector has the feedstock, technology, capital and infrastructure to invest in biofuel capacity to help abate carbon emissions. File photo.](/images/transform/v1/crop/frm/32XghFRykTWK8psrWNhdBMC/d5e64728-9ef8-4126-ae90-9ffdb2c5997a.JPG/r1299_146_3855_1867_w1200_h678_fmax.jpg)
Sugar is no longer just an energy food - it promises to be an important, decarbonised energy industry.
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The sugar milling sector is confident it can be a serious player in the fast emerging low carbon aircraft fuel sector, as well as generating baseload electricity to help replace power from coal-fired stations.
Cane millers already generate about 1 million megawatt hours of electricity a year by burning cane fibre (bagasse) to run steam-powered turbines, and make about 60m litres of ethanol for the E10 petrol market.
About half the electricity currently generated from sugar mills in Queensland and NSW goes into the public grid, but the Australian Sugar Milling Council says there is scope for much more.
Next generation technologies and the use of other crop waste inputs could contribute to about 3000MW hours from the industry's 22 Queensland mills alone.
They could also use new ethanol technology being adopted in Brazil and India to make far more ethanol-based biofuel for aircraft and heavy industry.
But while early movers in European and US biofuel sectors are getting hefty government incentives to scale up production and use products such as sustainable aviation fuel (SAF), the sugar industry is worried local innovation will be shackled by high investment costs, insufficient local demand, and a host of inflationary hits to its capacity, including labour shortages and energy costs.
There are considerable supply and demand side uncertainties and cost constraints in biofuel markets that require various forms of government intervention
- Australian Sugar Milling Council
"The industry shares the government's ambitions to grow a significant domestic biofuels industry," the milling council has noted in a submission to the federal government.
"However there are considerable supply and demand side uncertainties and cost constraints in biofuel markets that require various forms of government intervention to address."
While the cane processing sector had the feedstock, technology, capital and infrastructure to invest in biofuel supply capacity to help abate Australian carbon emissions, the reality was synthetic alternatives to fossil fuels were expensive to make.
In fact, biofuels could cost two to five times more than higher greenhouse gas emitting conventional fuels.
Unless the fossil fuel sector's greenhouse gas cost was subject to some form of levy at the pump, biofuels were unlikely to ever reach parity, undermining their demand and incentives to invest in new production technology and infrastructure.
In its pre-federal budget submission to Canberra, the milling industry warned the strength of incentives overseas may result in more biofuel feedstocks and investment leaking to higher earning biofuel players offshore, or other industries within Australia.
"Much of our tallow exports and other feedstocks like canola are now going to the EU and US where incentives are so strong," said milling council director of policy economics and trade, David Rynne.
US federal support for all types of renewable energy jumped from about $US7.4 billion in 2016 to almost $US16b by 2022.
Among other incentives, the US has a federal mandate to blend 136b litres of biofuels annually into the nation's fuel supplies and pays a 30pc tax credit on the purchase price of fuel with a minimum 20 per cent biodiesel blend.
Be ambitious
The sugar milling council is calling for ambitious Australian government reforms to keep pace with overseas trends and "create a vibrant domestic biofuels sector".
It supports the Sustainable Aviation Fuel Alliance of Australia and New Zealand call for mandated usage targets and standards for SAF products, and to provide funding grants to support SAF project developments.
Britain has already decided 10pc of all jet fuel supplied to aircraft refuelling in the UK must be produced from sustainable sources by 2030.
"Airlines are asking us if we can produce SAF here to help long haul carriers, including Qantas and Virgin, reduce their emissions," Mr Rynne said.
However, if the cost of producing SAF biofuel was three times more expensive than conventional aviation fuel, he said the government would need to find ways to balance the difference, including providing production grants to assist the industry build scale and efficiency economies into its early projects.
Other possibilities included a minimum SAF content in fuel supplied to the Royal Australian Air Force or other emergency services operators.
Hopeful of support
"We are confident the government is listening and are hopeful of seeing something positive in the upcoming federal budget," Mr Rynne said.
The industry's submission said Australia could substantially expand the types of sustainable energy it produced, but given the investments already being made overseas, the government and industry had to urgently work together to capture these opportunities.
"In 10 years' time Australia shouldn't look back on this missed opportunity when there is a clear pathway now to stake Australia's global role in sustainable energy production," it said.
The sugar industry has also asked Canberra to provide $6m over four years to assist a feasibility study into increasing mill cogeneration power supplies and $32m to help the sector identify and fund decarbonisation of its existing production processes.
Sugar is worth almost $4.5b to the Queensland and NSW economies, with the milling sector handling about 32.4m tonnes of cane a year to produce 4.2m tonnes of raw sugar and 1 million tonnes of molasses.