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BIOFUEL DEBATE BURNS ON

Keith Newman01 June 2018

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In Hawke’s Bay, trucks, utes, farm machinery, generators, including the back-up power supply at Whirinaki, are big diesel users and unlikely to change unless there’s a compelling alternative.

A decade ago New Zealand’s first foray into biodiesel production proved to be a false start, with hopes dashed by shaky business models and the changing winds of government policy. 

New players emerged from the ashes, but still face multiple challenges – paying a premium for raw materials, including animal fat and cooking oil; ethically uncertain imported options; and bleeding edge next-generation technology. 

Crown research arm Scion has floated the idea of a large-scale liquid biofuels industry as a carbon-friendly alternative for aviation, shipping and long haul freight, presenting regional development opportunities for areas like the East Coast.

Scion’s Biofuels Roadmap recommends massive acreages of non-food crops be planted and processed, using the heat-based pyrolysis process, as potentially the most cost-effective way to create a ‘bio-oil’ and ultimately a petrol and diesel alternative. 

If 30% of our future liquid fuels were made from plants or forests grown on non-arable land, it claims this could reduce greenhouse gas emissions by 5 million tonnes per year by 2050, the equivalent of taking half our cars off the road. 

We currently have around 145,000 diesel-powered heavy vehicles, along with 650,000 light diesel vehicles, guzzling over 630 million litres annually and growing each year.

Reliance on imported fuel – 35% of our petrol and 38% of diesel – makes us vulnerable to huge price hikes and rationing if that supply is cut off through natural disaster or accident.The Marsden Point leak in September 2017 resulted in rationing, and seven years ago truckies using BP were urged to refuel outside the region until new supplies arrived.

Omarunui landfill is used for electricity, it could also deliver transport fuel. Photo: Tim Whittaker

Rendered useful 

Biofuels Association CEO, Brian Cox, suggests biodiesel won’t make commercial sense as a ‘drop in’ fuel until second generation or ‘advanced biofuels’ technology can make better use of biomass.

Early North American options that use wheat straw and ethanol-based alternatives are heavily dependent on government subsidies.

Cox says most biodiesel blends are kept under 20%, mainly through vehicle warranty issues. “Manufacturers don’t want to change their vehicles too much … If your vehicle is out of warranty by all means use 100%.”

He says the question is which technology matures first – advanced biodiesel or electric vehicles (EVS) that can power heavy long-range transport … or whether we take another look at compressed national gas (CNG).

While Scion’s proposal requires significant government and industry buy-in, investment and time to develop, other players continue to press-on with alternatives. 

Z Energy is placing a lot of store in a 5% tallow-based biodiesel blend from its $26 million Wiri factory in South Auckland and Green Fuels is transforming old cooking oil to deliver a diesel replacement or blend to run trucks, heavy machinery and fishing boats. 

Early adopters including Fonterra, Fulton Hogan and NZ Post have been waiting for Z Energy’s BioD to flow from the pumps since 2016; a trial batch was produced in January 2017, but electronics issues and the failure of pump seals caused delays.

Z Energy communications manager Georgina Ball conceded it was taking longer than anticipated and won’t now give a revised launch date until the plant is complete and producing. 

Fuel from fat and vat

At first glance, repurposing tallow to reduce carbon emissions seems like a winner, however there’s already strong demand from China and India to make soap and candles and from Singapore to feed its own biodiesel production. 

New Zealand produces an estimated 160,000 tonnes of tallow annually, 85% of it exported. On its own, HB Protein’s Napier plant works 24/7 rendering unwanted animal parts into 20,000 metric tonnes of export quality dry meal for pet food and tallow.

Z Energy is committed to producing about 20 million litres of biodiesel a year, the equivalent of removing 37,000 tonnes of CO2 from our annual carbon footprint. 

It will need to process about 14% of our tallow production to create that, creating an interesting supply and demand challenge after export orders are filled, if it wants to expand.

Ball doesn’t believe there’s any “threat to security of supply or price stability” saying the use of tallow was a deliberate decision because it didn’t compete with food production and was available at scale.

However, if another feedstock became viable Z Energy would look at adapting its plant. “We think there’s potential for collaboration with other businesses and government to help speed up the uptake of alternative transport and potentially produce more biofuels, and we are open to these discussions.” 

Z Energy conceded early on that economies of scale for the BioD B5 blend didn’t stack up — it’s seen as a kind of compensation for the company’s contribution to our high carbon emissions.

Company research confirms customers are prepared to pay “a small premium” for a lower emission alternative and there’s a pent-up demand.

The Wiri plant, when it goes live, will be the first commercial-scale biodiesel plant in the world built without government help, claiming its first year of full operation could achieve half the CO2 savings promised by the electric vehicles 2021 programme.

“If we’re not careful all these papers and reports will just end up contributing to landfill gas.”
ADVISIAN SENIOR CONSULTANT, GEORGE HOOPER

Learning from the past

There’s an element of deja vu around current biodiesel aspirations. Back in 2007, the Labour Government’s Biofuel Bill planned to reduce duties on imported blends, with all petrol and diesel to include 2.5% of biofuels within five years.

National repealed parts of that bill, offering a three-year $36 million subsidy for local biofuel production, but when the subsidies were pulled five local producers were left high and dry.

Solid Energy’s BioDiesel planned to process South Island rapeseed and used cooking oil; and farmers’ consortium Ecodiesel proposed to produce 20 million litres of tallow-based biodiesel by April 2009.

The future of biodiesel began wobbling in 2008 when Parliamentary Commissioner for the Environment, Jan Wright, questioned the funding model and unrestricted biofuel importation.

Imports often relied on felling carbon absorbing rainforests and crops like palm oil or soy, corn, sugar cane and rapeseed, which competed with animal feed. That wasn’t good for our clean green image.

Funding, she said, should be tied to results from domestic production along with greater effort to reduce our consumption of transport energy and “increase the efficiency of the vehicle fleet”. 

South Auckland-based Ecodiesel, operating in a limited capacity, had invested $4.7 million by 2009 and was desperate to double that. Shell’s distribution arm Greenstone Energy stepped up, then backed off when the subsidy ended. Ecodiesel went bust with its assets acquired by Shell’s successor Z Energy.

Subsidy struggles

“Hawke’s Bay is rich in feedstocks and residues and if you collectively start looking at how to manage these to increase value you will get some good answers.”
BIOENERGY ASSOCIATION OF NEW ZEALAND EXECUTIVE OFFICER, BRIAN COX

Biodiesel NZ, a division of state-owned coalminer Solid Energy, had managed around 4 million litres of biodiesel annually and was planning a bigger plant. 

Without the government subsidy it imploded, conceding it got in too early and relied too much on the government. After investing $60 million it was sold off in parts by 2013.

By 2011 the New Zealand biodiesel industry was on hold, amidst closures, acquisitions, buy-outs and bankruptcies.

A management buy-out of Biodiesel NZ resulted in the formation of Green Fuels NZ, which continues to produce Biogold for customers including Christchurch City Council. By August 2017 it was a division of former customer, Fulton Hogan. 

While awaiting Z Energy’s full production, it remains the only maker and supplier of biodiesel for heavy fleet and marine operators.

Meanwhile Scion’s report says the vision of a massive liquid biofuel future is unlikely to be realised without government policy support as market forces alone won’t get us there. The report, backed by heavy-hitter government and industry supporters, says further research is needed to understand what crops should be grown and where, the conversion technologies needed, and the implications of developing this industry. 

Meantime, on another biofuel front …

Gas goes full cycle

Energy experts are convinced Hawke’s Bay could achieve a trifecta for its heavy vehicle fleet by reducing our dependence on dirty diesel, turning our biodegradable waste into transport fuel and cutting our carbon emissions.

Bioenergy Association of New Zealand executive officer, Brian Cox, believes we’ve been seduced by the prospect of producing biodiesel from tallow and waste cooking oil, and missed the ‘less sexy’ opportunities in front of our noses.

He urges Hawke’s Bay councils and communities to look at waste streams, including sewage and organic leftovers from orchards and food processors to transform into electricity and biofuel. 

“Why are we talking about biodiesel instead of…waste-to-energy and how bio-digesters might produce a valuable resource for community or collective use?” asks Cox.

“Hawke’s Bay is rich in feedstocks and residues and if you collectively start looking at how to manage these to increase value you will get some good answers.”

Cox’s concerns align with those of the World Bank, which has named New Zealand as one of the top ten most wasteful nations in the world, producing over 3.6kg of waste per person each day, a 20% increase on five years ago, and five times the global average.

Wastrels with waste 

Zero Waste New Zealand co-director, Jo Knight, reckons we could reduce that by a third through investing in organic waste facilities, and slams waste management systems that mix organic matter with plastics or send it to landfills or incinerators when it could be used for generating biogas.

Hawke’s Bay’s Draft Joint Waste Management and Minimisation Plan 2018-2024 wants to reduce Omarunui landfill input by recycling or composting close to 80% of kerbside collections.

It proposes 30% of organic material; garden waste and food scraps, be put in wheelie bins to repurpose as compost but there’s no mention of a waste-to-energy option.

George Hooper, a senior consultant with Advisian, agrees CNG and biogas, despite being effective diesel alternatives, have been have overlooked in our planning cycles.

In 2015 he was asked to help assess Hawke’s Bay’s energy use and is convinced now’s the time to take a serious look at CNG, which is well-established, available through a national pipeline, and a mainstream option in the UK, Europe and the US. 

With the right processing, biogas could deliver a CNG replacement or blend from biodegradable waste delivering immediate and more effective carbon efficiencies than biodiesel.

As a country, he says we keep looking for “a single, elegant option…pursuing artificial targets” and consequently missing out on economic opportunities while adding to the cost 

on society in general.

Rather than waiting for central government, he says councils should be leading the discussion and looking into gas use, which he recommended in the HBRC-driven energy stocktake. 

“We don’t have an energy plan … or energy planning … we only have an eco-plan which is a complete travesty,” says Hooper. “If we’re not careful,” he quips, “all these papers and reports will just end up contributing to landfill gas.”

No real gains

While the Omarunui landfill is used for electricity it could also deliver transport fuel. “All they’re doing is replacing renewable energy with another form of renewable energy … with very little carbon gain. If they used the same gas for transport fuel, they would be replacing fossil fuels like diesel.”

Some clever countries are using effluent from cowsheds, then cleaning up the biogas as CNG to run their milking sheds; in parts of Europe, 30% of CNG is based on biogas or algae from farm slush ponds to power farm vehicles. 

Hooper likens the Government to a ringmaster with its strong electric vehicle policy as a “one trick pony … it’ll keep playing until the crowd goes home”.

Electric buses, he says, have to carry extra weight that is hard on the roads; the batteries need to be fast charged, reducing their life significantly with replacement cost high and disposal toxic to the environment.

He doesn’t support the “operationally difficult” dual fuel option to retrofit diesel trucks, agricultural machinery and public transport, preferring aging heavy fleet vehicles be replaced with CNG models as part of the normal asset cycle. 

Hooper says CNG presents no risk after 20-plus years of buses deployed widely by all the major manufacturers. It’s an “obvious technology that’s … technically and commercially ready”. 

He points to gas-powered fleets in Mexico, Africa and the US, and Iveco Bus, which has provided 6,000 new natural gas (CNG) powered buses throughout Europe.

Completing the cycle

The first US-based public-private ‘waste to fuel’ partnership, the Sacramento BioDigester project, now completes the cycle by fuelling the trucks that collect the organic waste with CNG – farmers have coined the term “farm-to-fork-to-fuel”. 

Indiana-based Renewable Dairy Fuels is building the largest on-farm anaerobic digester-to-vehicle fuel operation, turning dairy waste into pipeline quality transport gas. 

While it might require some infrastructure at truck stops, “it’s not rocket science …we have one of the cheapest gas regimes in the world,” says Hooper. 

He suggests Hawke’s Bay augment CNG with biogas made from a range of biodegradable waste using anaerobic technology and plants that produce bio-methane from sewage. 

“The key technical issue is improving the quality of biogas so it’s pipeline standard and can be used as transport fuel or mixed with natural gas,” says Hooper. 

Bioenergy Association chief Brian Cox says while councils have the resources and means to enable bioenergy projects, “energy efficiency projects have not been a high priority”. 

Cox was consulting for East Harbour Management Services back in 2004 when Food Hawke’s Bay and its partners wanted a bioenergy assessment of what might be possible through anaerobic bio-digester technology. 

Technology matured 

Sites were suggested for Omahu Road and Whakatu to handle residue from processing plants, compost, and fruit and vegetable waste, including windfall apples. 

“We recommended a plant be built near Heinz Watties or the sewerage works … The first issue was the high opportunity value with farmers bringing in trucks and taking it away to feed to their cows.” 

Since that report was completed 14 years ago, integration of liquid and solid waste is more accepted and the technology has matured. 

Cox says using biogas to generate electricity and as an alternative for diesel transport fuel, just makes sense. “There’s competition for all biomass … it’s a valuable commodity – even people who own landfills can make a lot of money out of it.” 

However, he warns gas operations at landfills only capture 60% of the gas; 40% of the methane, “a greenhouse gas 25 times more potent than CO2”, is still emitted into the atmosphere, whereas biomethane is a significant transport fuel in some parts of Europe. 

Moving things forward requires a waste-to-energy strategy. “Get that right and you change waste from being a problem to a valuable contributor to reducing waste management and operating costs.” 

Cox cites anaerobic digestors at Christchurch City Council’s sewerage works that provide heat and for many years powered all council vehicles, and Mangere sewerage, which makes all the electricity to power its own operation. 

“Palmerston North reconfigured its sewage works, taking trade waste from food processors that normally went to a landfill and uses biomass for co-generation with a three-year payback on that investment.” 

And in Whangarei, where Cox is based, he says investment in a biogas co-generation plant at the sewerage works has a payback period of 3-4-years. 

That he says is the kind of return on investment you rarely see in other council operations or mainstream business. 

Unison is pleased to sponsor robust examination of energy issues in Hawke’s Bay. This reporting is prepared by BayBuzz. Any editorial views expressed are those of the BayBuzz team and do not reflect the views of Unison.

 

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Keith Newman01 June 2018

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