Bio-futures – a Path to Sustainability?

Tuesday, September 13th, 2016
liked this article
Autodesk – 300 X 250 (expire December 31)
FavoriteLoadingsave article

Bio-futures will play a crucial role in keeping our planet liveable.

Early bio-future success stories came from biofuels and the associated supply chain given the mature market for transport fuels. The ever-growing food waste generated in cities and communities – and the methane it gives rise to – is  an opportunity currently limited in its uptake in Australia and North America. Europe is far more advanced in its uptake of biofuels.

‘Bio-futures’ broadly refers to the industrial biotechnology and bio-products sector, which focuses on the development and manufacturing of products from sustainable organic and/or waste resources, rather than fossil fuels. Bio-futures are one component of the increasingly talked about circular economy model of development. The circular economy is a generic term for an industrial economy that is producing no waste and  pollution, by  design  or intention.

The material flows are of two types:

  • biological nutrients, designed to re-enter the biosphere safely
  • technical nutrients, which are designed to circulate at high quality in the production system without entering the biosphere as well as being restorative and regenerative by design.

Within this model, the production of waste from one process is seen as an opportunity for:

  • generating energy through, predominantly, the capture of gases to drive generators for on-site delivery
  • converting grain wastes to ethanol and bio-diesels, cellulosic biomass into bioethanol and high-value bio-commodities
  • waste solids converted into biologics and nutrients in the form of compost for fertilizing the landscape on the development site, or the development of sustainable chemicals, fuels, synthetic rubber, cosmetics, detergents and textiles, and bio-plastics (e.g. macro- algal biomass into renewable fuels and bio-products)

Bio-security is a critical aspect of the bio-futures model. Weed and pest management of the inputs and a zero emission strategy regarding wastes and pollutants that are harmful to the environment and the community are critical.

The Queensland Bio-futures 10-year roadmap and action plan quotes the World Economic Forum (WEF) on the future economic impact of the sector. According to the WEF, the bio-futures sector has the potential to  generate upwards of US$230 billion to the global economy by 2020.

At the sector level, strong government leadership and support including tax relief, loans, subsidies and grants, co-investment, investment attraction and designation of suitable land for development is required.

Facilitating the planning and development approval processes at the state level, where any development opportunity into the sector will be treated equally through the assessment level is critical to success. This includes streamlined beneficial use of waste streams approvals.

Consistency in planning approvals processes within the state jurisdictions is crucial to driving opportunities (relatively) evenly throughout a jurisdiction.

At the project level, everyone involved in projects must understand the physical factors necessary to make money from the specific project in the given location, the degree of commercial and technological risk associated with the available feedstock and the policy/program/incentive/grant opportunities available designed to encourage renewable energy production, each with its own qualification criteria and rulebook.

With the continued volatility of the price of oil (which also affects the price of gas) returns in the bio-futures sector may be constrained, particularly where there is the need to compete with solar and wind in the renewables space, as well as the attraction of other investments, such as social media and IT, in the wider economy. Subsequent to the above-mentioned constraints and opportunities, bio-future schemes may not have an attractive risk–reward profile relative to their competitors in other renewables sectors.

Research professor John DeCicco at the University of Michigan Energy Institute holds a contrarian view on the value of bio-futures. He and his team challenge the conventional methodology of assessing the ecological merits of biofuels. His team’s recent study, published in Climatic Change Journal, evaluated biofuel (e.g. wood pellets and ethanol made from corn) impacts over a set period of time – evaluating to what extent there is an increased rate at which the carbon dioxide is being removed from the atmosphere through substitute planting regimes used in Europe and North America.

The study analysed the amount of carbon dioxide (CO2) absorbed as crops grew and the amount of CO2 released when they are burned as biofuel. The study calculated that the aggregate US crop yield can remove only 37 per cent of the CO2 that burning biofuel releases into the air. Part of the article’s abstract states:

“This analysis evaluates the direct carbon exchanges (both emissions and uptake) between the atmosphere and the U.S. vehicle-fuel system (motor vehicles and the physical supply chain for motor fuels) over 2005–2013. While U.S. biofuel use rose from 0.37 to 1.34 EJ/yr over this period, additional carbon uptake on cropland was enough to offset only 37 % of the biofuel-related biogenic CO2 emissions. This result falsifies the assumption of a full offset made by LCA2  and other GHG3  accounting methods that assume biofuel carbon neutrality. Once estimates from the literature for process emissions and displacement effects including land-use change are considered, the conclusion is that U.S. biofuel use to date is associated with a net increase rather than a net decrease in CO2 emissions.”

However, Doctor Michael Wang, a researcher at the Argonne National Laboratory, questions  the study’s carbon accounting. He argues that the study does not properly account for the carbon uptake or that corn production for both ethanol and for food increased over the period of the study, where carbon uptake embedded in above- and below-ground biomass is ignored, supported by a simple assumption that carbon in these biomass sources are oxidized back to the air.

What is evident is the need to consider the source materials for bio-futures, the extraction methodologies, and the need to create a truly sustainable supply-chain to feed production.

Some challenges and opportunities

It is clear there are substantial challenges and opportunities in moving toward a bio-future. To explore these in detail would take a PhD or three (at a minimum) and countless years of research and practical implementation to deliver the potential outcomes for society and the planet. As the well known saying goes, “one size does not fit all” and this will be especially true for each local government area, state, nation and continent as they work toward locating the most appropriate fuel sources that are local and sustainable for this exciting future.

To help ensure the economic, social and environmental opportunities that a bio-future could deliver, the following non-exhaustive list of actions are required:

  1. Regulatory frameworks need to be established to force companies and local governments to better manage their biological wastes through dis-incentivising the use of landfills. Opportunities and funding must be provided to construct and operate anaerobic digestion systems at landfills, thus reducing waste into landfills and providing base-load energy opportunities for the local community.
  2. Anaerobic digestion systems can be installed at cattle and pig feedlots, and at landfill sites, to generate on-site and possible grid-fed energy opportunities, with the added bonus of the dried end products being high value fertilizer. Food waste contains many organic components and can be biodegraded. One important way to treat it is through anaerobic digestion. This process breaks down food waste in the absence of oxygen. It can produce biogas as a green bioenergy. Where bio-futures opportunities are proposed in rural and remote settings, there is the opportunity to co-locate with additional upstream enterprises for feedstock and with alternative renewable energy operations to contribute to base-load energy for communities.
  3. Another opportunity is available through the acquisition of existing power plants, undertaking a feed-stock conversion partially or fully to bio-fuel, bringing it back online with a short-term power purchase agreement (PPA) and creating the opportunity for downstream enterprises with high energy usage to be established on adjacent lands (e.g. food processors who may also be a feedstock supplier). Upon expiration of the PPA, all power generated can be fed into these downstream enterprises. Carbon credits and similar incentives can be monetized by the utility. The carbon credits can be sold at an agreed rate to the downstream enterprises. The utility is obliged by Government and/or regulator to produce a certain percentage of green power.
  4. Start-ups in the bio-futures sector need to consider research and commercialisation joint ventures with universities and research centres of excellence, EPCM contractors with a sustained history in the specific sector and technology to be used. Where possible, they must bring the regulators and the community on the journey from the earliest possible opportunity (without compromising commercial viability, increasing project risk or increasing commercial-in-confidence/trademark/copyright infringement opportunities).
  5. Developing new talent to undertake the research and the commercialisation of these new technologies is necessary.
  6. Bio-future start-ups and operators require government policy settings that encourage the development of the sector – through supportive taxation and financial incentive regimes (including grants and research and development support structures), capital  expenditure incentives and/or operational expenses incentives.

Commercialisation of bio-future technologies is difficult. As noted, volatility in oil gas and coal prices, grid energy prices and potentially feedstock prices can make a biogas or similar enterprise marginal in its financial viability. Given the early stage technology development of bio-future projects, there is a mismatch between the technology risk and the pricing risk associated with the inputs and outputs of biogas in relation to the equity returns available from projects.

The ability to finance a bio-futures project is a significant risk. Unproven technologies can be a disincentive for traditional financiers into the sector. Funding for projects could take a number of forms, including traditional forms such as non-infrastructure financial products (such as government or bank bonds, infrastructure-related corporate equity, or debt products) and dedicated pure infrastructure financial products, where there is an infrastructure related output such as grid-feed. Infrastructure, energy or agri-business investment trusts could be a source.  Other sources include:

  • Equity capital – though this can be an expensive option for operators, particularly start-ups.
  • Loan guarantees for project debt – making a loan where the financier acts as a trustee holding title to the bonds and to the project security, and in return the financier provides low-cost funds on a longer term on it because maturities on bonds are longer than tenors on loans.

Internationally, bio-futures are seen as the next wave of economic development, providing major opportunities for innovation, jobs and growth.

Industry policy settings, continued research, sustainable supply-chains (including constant renewal/replanting of feedstock), quality investment and risk management regimes, bio-security and supporting land use planning/environmental approval regimes must converge to provide the best possible opportunity for these  burgeoning industries to grow sustainability.

For rural and regional communities, bio-futures provide the opportunity to supplement grid-fed and/infrastructure scale renewable energy sources into value-adding production cycles and assist in community resilience in times of “acts-of-god” events such as floods and bushfires.

For larger centres and capitals, there is opportunity to help create virtual energy grids in selected communities and/or creating closed loop, circular economy cycles within major industry and business park centres.

With careful, considered planning, the bio-future is bright.

FavoriteLoadingsave article


 characters available
*Please refer to our comment policy before submitting