A year ago, Scion chief executive Tom Richardson announced a report estimating the entire New Zealand transport fleet could be powered by biofuel derived from our forests. Is he still so optimistic?
Everything now lines up against a biofuels industry—economics, politics, PR. Is it curtains for biofuels?
The long-term picture hasn’t changed. Everything has slowed down internationally, but our models already contain thresholds for determining when the technology is competitive or not and it still it is, but with the right conditions. What’s more, whether oil is $47 or $147 a barrel, the swings reinforce the lack of predictability around oil supply. For a country as far away as ours that’s a particular concern.
Surely scrapping the Emissions Trading Scheme and the biofuels obligation in petrol must be the final blow?
Well, we don’t yet know what the ETS is going to look like or what the replacement for the biofuels’ obligation will be. National will need to develop some energy strategy for the country. And unless we’re going to be the only country on the planet that ignores the issue, it will increasingly need to focus on renewables and a higher portion of energy self-sustainability.
What kind of energy policy do we need for investment in biofuels to be revived?
Scion as a research entity is continuing to invest in this area anyway, because we’re trying to keep as many options open for New Zealand’s energy future. And we have clients overseas who are investing. But for New Zealand as a whole, setting a target for renewable energy is critical. Let’s suppose that 70 percent of our electricity is renewable at the moment. That benchmarks exceedingly well internationally and gives us some scope to grow further.
But what about heat and transport fuels? Those are the two big areas begging for a government strategy. This is where energy policy and land use policy cross over. The ability to grow plants for energy is now a viable option. And that will include the sorts of things that we currently grow in New Zealand, like softwood pines and hardwoods, as well as a range of new industrial crops. But what’s our land use policy? Will we allow food crops for biofuels? We don’t have a large fraction of arable land. And what we do have is probably better served growing food, right? But we do have a lot of sloping land, marginal for crops, but which can support plant growth with low nutrient inputs. On those sorts of slopes you’re only really talking about short-to-medium rotation trees. But to make that work economically, it’s going to require putting some value on the environmental services that those forests provide.
You mean like an ETS for carbon?
Well, that’s the first one. New Zealand will develop an ETS-like scheme because there is already a price on carbon through Kyoto. But most countries now are also looking at pricing other environmental benefits as well. In New Zealand erosion and flood control are hugely important, which forests can address. So why not reward owners for their environmental contributions? Over the next decade internationally we’ll see the monetisation of environmental benefits. And then there’s the role for forests to produce new materials, such bioplastics and biofuels. But it will hinge on public policy for land and energy.
What market factors do we need before we see Kiwi biofuel from trees?
First, there has to be a vibrant wood processing sector, and second there needs to be predictability in the supply of the energy biomass. In New Zealand, we have both, including some of the world’s best information systems about the state of our forests.
From here it gets more complicated. If it’s biofuel from waste products, then you need to have a primary breakdown industry that’s less cyclic and more profitable. In Canada, there’s a huge opportunity in waste biomass. But because of the downturn in the US housing market, almost all of the sawmills in the west of Canada have slowed or shut down. And those relying on their waste streams have had to do the same.
But revenue from waste must help even out the boom-and-bust cycle?
Absolutely. With some firms we worked with their mills to see if they could produce pulp and paper and ethanol. And already most sites do use the waste to create energy to run their mills and in some cases are exporting it back onto the grid.
So what’s the missing gap between ethanol and my local petrol station?
It’s public policy. New Zealand is now pretty far out on the wing by not mapping out a sustainable biofuel substitution pathway. Even the quite conservative biofuel sales obligation was a start at getting the market infrastructure right. Around the world early adoption and substitution of biofuels is being driven by governments encouraging a switch towards more renewable fuels and self sufficiency.
The market can’t do it by itself?
The market will ultimately prevail but these policy interventions are simply kick-starts. Without a durable vision for where we’re trying to go as a country in terms of energy supply, then we won’t get companies to invest.
Meanwhile, your technical work continues?
Yes, we have our eyes on a whole range of conversion technologies that might be applicable for converting New Zealand biomass into energy and transport fuels. We have a collaboration with the Chileans, looking at gasification [turning wood and grasses into gas such as methane and butane] and with Verenium, looking at enzymatic conversion.
Even if we solve the technical and economic issues then there’s the question of actually sourcing enough feedstock, right?
Oh yeah—most people figure if they can produce 50 millilitres of ethanol on the bench-top from biomass, they’re going to make a big inroads. But if you do the numbers, the volume you require is enormous. Last year, someone in the South Island was talking about doing crop biomass. It turns out you need 1.8 million hectares of arable crop. It’s not going to happen.
So you look at algae, municipal waste, garden rubbish and wood waste. But how much of the future energy demand is it going to meet? It’s single digit percentages.
So, what biomass resource does New Zealand have that could make a significant contribution to future energy? The answer is trees, and the only landscapes that we have in New Zealand that have scalability are the marginal lands. From a land availability perspective that’s doable. There aren’t many places in the world where they could potentially substitute almost all of their transport fuel projected requirements with domestically grown, sustainably grown biomass.
Can you see the day when we’re driving wood powered cars?
It’s already happening. But I don’t imagine a future where we totally substitute oil. The key word is ‘significant’. What biomass can deliver significant amounts of fuel and energy for New Zealand, from New Zealand? The report is still correct—it’s forests on marginal lands.