Booming investments into biofuels, set out in government’s ‘Future Made in Australia’ plan, presents a huge opportunity for Australia’s regional agricultural producers and farmers, according to Airbus.
Carbon-neutral fuels, including sustainable aviation fuel (SAF), can be created using waste matter from crops like sugarcane, food scraps, and old cooking oils, with, according to Airbus, the potential to not only deliver profit for the agricultural industry, but contribute to the development of a domestic SAF production industry with huge economic opportunity for regional communities.
Airbus Chief Representative for Australia and the Pacific, Stephen Forshaw, recently warned that a “Future Made in Singapore”, not Australia, could be a reality if local industry does not embrace these opportunities now to tap into domestic gains.
Australian Rural & Regional News interviewed Stephen and learnt a good more about just what’s involved and the prospects for Australia and Australian farmers.
ARR.News: The process itself. What’s actually involved in turning (agricultural) waste into sustainable aviation fuel? How would this work from a farmer’s perspective? Who does what and who pays for what? Would they need to set up collection points? Are there already businesses set up in Australia that come and collect it? Is there a need for co-operatives to start up to do this? Doesn’t this dilute any potential income? Transport logistics and costs?
Stephen Forshaw: Low carbon fuels, including sustainable aviation fuel (SAF), can be created using non-food waste matter from crops. Two popular methods likely to be adopted early in Australia are HEFA, which takes fatty waste acids from used cooking oil and tallow and converts it to SAF, and alcohol-to-jet (ATJ), which involves taking waste products from sugarcane and wheat chaff, and creating ethanol that is then converted into SAF. Other pathways, such as Power to Liquid (using green hydrogen to create synthetic liquid fuels such as SAF), are more nascent, but have potential in Australia.
The process starts with farmers, who sell waste byproducts to local refineries to then convert to SAF—these refineries will ideally be located close to the feedstock itself and key transport infrastructure, reducing transport costs and emissions.
Airbus and Qantas have partnered to commit US$200 million to invest in companies seeking to start production in Australia. We’ve already invested in a local startup called Jet Zero Australia, which are partnering with a global Alcohol to Fuels company, LanzaJet, to build an ATJ (alcohol-to-jet fuel) refinery in Townsville, Queensland. Because SAF uses waste byproducts, it doesn’t interfere with the existing food supply—giving farmers a potential additional revenue source. This is a win-win for Australia as it creates jobs and economic benefits for our agricultural industry and regional communities, contributes to Australia’s aviation decarbonisation targets and, importantly, allows us to produce more liquid fuels in Australia, reducing our dependence on imports, which is a national security risk in the event that Australia is blockaded or supplies interrupted.
ARR.News: Costs and benefits. How can individual farmers make an additional profit from this? ie on top of their current income streams.
Stephen Forshaw: SAF is primarily made from waste feedstock and agricultural byproducts. For farmers, this means a chance to generate additional income from products previously considered waste, such as wheat chaff or sugar cane waste. It also provides optionality in revenue sources, providing more consistent revenue streams throughout the year for farmers.
Booming investments into biofuels, set out in the government’s ‘Future Made in Australia’ plan, present a huge opportunity for Australia’s regional agricultural producers and farmers. It opens the possibility of selling their products to local SAF producers, providing additional jobs, investment, and collaboration possibilities.
Additionally, SAF production is set to contribute A$13 billion GDP annually by 2040, generating nearly 13,000 jobs in the feedstock supply chain and 5,000 new high-value jobs in facilities, primarily in regional areas. As such, local farmers have the chance to utilise their waste for profit, but also become a crucial part of Australia’s lucrative and environmentally important SAF supply chain. The Government has recognised this, pledging $18.5 million over the forward estimates to develop a certification scheme for low-carbon liquid fuels such as SAF.
Further, it has signalled to industry that it is taking SAF usage targets seriously, with $1.5m committed to study the benefits of a mandate. A mandate is critical in driving adoption by requiring fuel suppliers to blend an increasing portion of SAF into the jet fuel supply—which is then increased at a rate supported by supply.
ARR.News: Would this involve changing their farming and cropping practices to maximise the profit potential?
Stephen Forshaw: It’s really for farmers to work out where they can play in the SAF value chain. For some, harvesting their production waste will be challenging, but may be worth it given it opens new revenue opportunities. For others, the off-season growth of crops that may be inedible, and thus not attractive from a revenue perspective, may now open new opportunities to earn revenue.
ARR.News: How to be sure any change of focus does not threaten food production and security?
Stephen Forshaw: The International Air Transport Association (IATA) defines SAF as fuel only made from feedstocks that “do not compete with food crops or output, nor require incremental resource usage such as water or land clearing”. If they do, they can’t be sold as SAF as they are not sustainable, so the SAF industry, by definition, can never compete with food production.
Put simply, the proposition is not to solve one problem (emissions) by creating another (reduction in food supply).
The Australian government has announced in the Budget a forthcoming certification scheme for SAF, which would ensure that food isn’t taken out of the food supply. However, we need to ensure that Australia’s policy on this is consistent with international standards, such as those set out by the EU, where policy is more advanced.
ARR.News: The energy value of SAF compared to conventional aviation fuel. How much SAF is required by camparison?
Stephen Forshaw: SAF is a drop-in solution and is compatible with existing Airbus aircraft. At the current time, aircraft are certified to fly with a blend of up to 50 per cent SAF to kerosene. It is expected that certification to 100 per cent use will be achieved by 2030, after regulators study the longer-term impact of the use of different fuels. SAF is almost chemically identical to conventional jet fuel and has no impact on the aircraft’s energy efficiency, whilst simultaneously reducing emissions by as much as 80 per cent, or potentially a little higher depending on the feedstock used.
By 2040, if Australia supports the production of SAF, locally produced SAF could help cut 9.4 million tonnes of CO2 per year from Australia’s emissions footprint, assuming we’re producing about 28-30 per cent of our total consumption by then. Moreover, due to its full life cycle approach, SAF impacts sectors that account for ~90 per cent of Australia’s emissions.
ARR.News: Is there still time for Australian farmers to get into the SAF industry? Is there any action in Australian in this direction at the moment?
Stephen Forshaw: There is still time, but we estimate that Australia has a narrow window of 12-18 months to get the policy settings right to support a local industry stand up, before we start losing out to countries further advanced than we are in production, such as Singapore, Japan, the US, and the European Union.
Currently, much of Australia’s agricultural waste is exported to other countries that are already embracing the SAF opportunity and where production has started. If we don’t get the policy settings right, we risk a huge opportunity: that these countries take our raw feedstock, add value to it, and sell it back to us as a premium product.
Unlike Singapore, Australia’s strategic advantage is its abundance of arable land, but we do not yet have the infrastructure required—predominantly refineries—to get production moving.
Airbus and Qantas have partnered to kick-start the SAF industry with a US$200 million investment fund. The fund has already invested two rounds in local startup Jet Zero Australia which is partnering with LanzaJet to set up an alcohol-to-jet biofuel refinery in Townsville, Queensland. Once online, this facility will produce 100 million litres of SAF a year—so we need much more to meet our longer-term demand.
Airbus and Qantas are continuing to look for opportunities to invest in additional projects across Australia. Unlike petroleum refineries, it’s feasible to set up smaller SAF production facilities – and we’ve identified a number of refinery locations across rural and regional areas of the country.
ARR.News: Compared to Singapore, isn’t Australia at a disadvantage in terms of distance from global customers?
Stephen Forshaw: Unlike other forms of fuel where we are a relatively small market, there is an extremely strong domestic demand and imperative for SAF. Australia is the world’s eighth largest consumer of jet fuel – by 2030 we will use 10bn litres per year. The cost of jet fuel is currently rising. Australia spent $1.5bn importing jet fuel in 2010, up to $5.8bn in 2022, and will need to spend an estimated $8.5bn in 2040 and $10.7bn in 2050 to meet demand. Bringing production onshore will make a big difference to Australia’s balance of trade too.
Aviation is critical to our economy – it contributes up to 5.5 per cent of GDP and supports over 700,000 jobs. For Australia, and especially our Pacific Island neighbours, aviation represents the only feasible way to connect people and goods, given the distances and scarce population or water bodies located between population centres.
Demand for SAF will increase as airlines continue towards decarbonisation. Despite Australia’s track record with biofuels, the difference with aviation is that the sector cannot decarbonise at the scale needed any other way. Alternative aircraft technology, such as hydrogen powered flight, is decades away at least, at the scale needed to impact, meaning a SAF industry in Australia would have longevity.
Airbus estimates that SAF will contribute c.60 per cent of the decarbonisation journey for the aviation sector. Other major contributors include fleet renewal (c.20-25 per cent) and improved air traffic management (c.10 per cent). A domestic SAF industry could significantly reduce Australia’s reliance on imported jet fuel—currently around 91 per cent —down to as little as 21 per cent by 2050, ensuring greater long-term fuel security. To scale up to meet just a 10 per cent target by 2030, Australia will need to access a billion litres of SAF every year. It is doable, but only if we settle supportive government policy soon to attract more investment into the sector, and create demand for the fuel.
The benefits of building a local SAF production sector are massive: Just as with any industry, there is far greater value in exporting manufactured products, rather than exporting primary goods and buying back the end result where someone overseas has enjoyed the economic value added.
A domestic industry would provide a long term, more affordable source of SAF. If we do nothing, we will have to buy SAF in future at very high prices, making Australian aviation less competitive against countries with established SAF production. It will reinforce Australia’s role as a fuel buyer, not a fuel maker, when there is every reason to suggest we should be a global fuel manufacturing superpower.
While the domestic demand for SAF is strong enough to sustain a significant onshore production volume, once we can meet domestic need, there will still be international demand, regardless of Australia’s remoteness. Currently only 0.01 per cent of the SAF needed to replace traditional jet fuels is produced globally. If Australia was to bring production online, we will see international demand, particularly from those economies that have implemented a SAF mandate, which requires airlines to use a certain percentage of SAF in their fuel mix. We will also be the source market of choice for our neighbours in the South Pacific, and we need to keep in mind, many of these nations are among the most affected by the impact of climate change.
The world’s largest airlines also fly in and out of Australia, where they will need to refuel. This demand will only become stronger as ultra-long-haul flights, which can go from major western cities to Australian airports without stopping, become more commonplace. If these flights are coming from countries with a SAF mandate, then it will be important for them to be able to access a supply here. In the worst-case scenario, airlines may even be forced to decrease flights to Australia if they can’t source any SAF locally, to avoid missing targets.
ARR.News: What advantages does or might Australia have over Singapore and the industry players in other States?
Stephen Forshaw: Australia has plentiful arable land and an abundance of feedstock – whether that be agricultural byproducts or not for food crops such as the oilseed, Carinata. This feedstock has also high yield qualities, which means less feedstock is needed for more fuel. This makes Australia uniquely positioned to support the demand for SAF, without taking it out of food supply—unlike neighbouring countries like Singapore.
Australia has also previously had a large refinery industry, but many of these facilities are now disused. This creates an opportunity to convert these facilities into SAF production sites, repurposing past investment into a now diminishing industry, while protecting regional jobs, which are already at risk due to the global energy transition, as traditional importers of Australian fuels reduce their dependence on fossil fuels.
