Fact or Fiction: What are the real value-adding opportunities for Queensland’s sugarcane industry?

BY ROBYN DEVINE

Premier Annastacia Palaszczuk’s declaration, in March this year, that Queensland “is perfectly positioned to be a clean energy superpower because we have both the sunshine and feedstocks including the largest sugar industry in the nation” shone the spotlight brightly on sugarcane.

Sugarcane is a valuable and versatile crop. The Queensland crop forecast is currently for 29.4 million tonnes of cane and whilst this estimate may be down from the start of the season, sugar remains Queensland’s second largest agricultural export, generating over $2 billion in export earnings.

There is a crucial role for sugarcane to play in a vibrant industry, whilst sugar crystals remain the lucrative product for growers, the opportunity for value-added products are beginning to be explored.

In July 2022, the Sugar Plus industry roadmap was launched, outlining a pathway to secure and grow its value for future generations.

Globally, consumer behaviour is propelling a greater demand and there is an increased interest in decarbonisation and renewable resources, having agricultural sources of feedstocks produces potentially new opportunities for sugarcane growers and the industry as a whole.

Burdekin Renewable Fuels Pty Ltd (BRF) was set up by a progressive group of growers. It has collaborated with and provided assistance to private investors and researchers alike who are looking with interest at the region’s hectares of lush cane and its production system based on a reliable water supply for irrigation.

BRF Chairman and Home Hill grower Greg Rossato said the core aim is to ultimately build more value for growers while expanding the region’s industrial and employment base.

“In around 2017 a member came into the office with an idea to use the cane tops and trash to provide a product to the Japanese energy market,” Mr Rossato explained.

“We set about doing some feasibility work on separating the tops and trash and pelletising them. We even went to Japan to look into the potential market.

“What we found was that for the amount of return, we needed to expand the idea into a project that used the whole crop—and the idea of B Green was created.”

Project B Green, led by the growers, had the goal of establishing a biorefinery to transform cane into green hydrogen for fuel and chemicals, such as ammonia and glycols, monoethylene and monopropylene glycols, for plastics and fibres. In the end, the journey landed on Sustainable Aviation Fuel (SAF) and glycols.

“We have learnt a lot since then and the learnings are that the challenges are great!” Mr Rossato said.

“Most of the technologies are still immature, and while there are some available here and now, in my opinion the most efficient opportunity at this current time is pelleting biomass for power generation.”

Sky Renewables takes the tops and trash and converts them into pellets and according to Mr Rossato that market is available right now as the Japanese Government promotes cofiring programs to reduce their greenhouse gas emissions.

“By 2030 the Japanese market will need up to 50 million tonnes of biomass,” Mr Rossato explained.

“And they have identified that sugarcane is the most sustainable crop to supply into that market, sugarcane has been included in the biomass products that can be used in their Feed in Tariffs (FIT).”

Mr Rossato acknowledged that in the Project B Green pre-feasibility study there was a return on investment into aviation fuels and glycols, but the risks and capital expenditure is very high. The technologies are still in their infancies, and to date, there are no samples of commercialised technologies.

Mr Rossato warns that growers need to tread carefully whilst continuing to explore the different opportunities.

“Currently, with the sugar juice so valuable at around of $900/tonne, we would continue to make sugar but stage the project to mitigate the risks, as the project has very high capital costs,” Mr Rossato said.

“Growers are sitting on a valuable resource, the markets are there, the prices are there for the products, we just have to work out how to make it happen.

“We always went into this with expectation that we may get nowhere but at least we will know what options are out there, we will have the information. We want to get the biggest value out of any of these options.”

Airlines worldwide have publicly committed to achieving net zero emissions by 2050 and SAF is one of the strongest tools available to airlines to reduce their emissions.

Earlier this year, the Queensland Government signed a Memorandum of Understanding (MoU) with Qantas to collaborate on developing a SAF industry in Queensland, with Ampol and ENEOS to investigate feedstocks and existing refinery infrastructure. Biofuels are a cleaner, more sustainable alternative to traditional combustible fuels.

Australian Sugar Milling Council (ASMC) Director Policy, Economics and Trade David Rynne acknowledged that cogeneration and bio-ethanol as an input to sustainable aviation fuel (SAF), have the strongest commercial potential at present but Government and Industry reforms will be required to grow the industry and to incentivise the significant investment that will be required.

“Cogeneration utilises bagasse as a renewable fuel. Producing around 9 million tonnes of bagasse per annum from around 30 million tonnes of cane purchased, more bagasse can become available for more cogeneration if mills invest in those complex engineering projects to improve steam, mechanical and thermal energy efficiencies in the mills themselves as well as new cogeneration capacity, which in today’s cost environment will be upwards of $100 million for a 35 MW plant for example,” Mr Rynne said.

“Sugar mills also require significant annual upgrades and large injections of capital to maintain their operability and reliability. Addressing supply risk and achieving reliable annual cane supply and revenues on sugar and by-products will also be essential to fund new cogeneration and bio-ethanol capital projects.

“Cogeneration is attractive to mills because it is known and understood from a technical and engineering perspective and because of the potential circular loop of benefits –that is, energy efficiency investments allows for additional bagasse liberalisation to occur which would then provide for more cogeneration to occur.

With the Queensland Government’s announcement of funding to support SAF facilities to power flights, the industry’s potential contribution to national SAF supply is a topical discussion point.

The International Energy Agency calculated that by 2040, 19% of the aviation industry’s fuel consumption would need to be SAF in order to achieve the industry’s voluntary 50% abatement target. In Australian terms this equates to 1,800 ML’s of annual demand by 2040 (by comparison there is currently 440 ML of Australian ethanol capacity including 60 ML at the Sarina distillery). Through new 2nd Generation ethanol technologies that can utilise bagasse and tops and trash, there are opportunities for the sugar industry to increase its bio-ethanol production further.

“As ethanol-to-SAF costs will be an estimated 3-5 times more expensive than conventional aviation fuel, it will be necessary to create both demand and supply drivers.

“Ideally these would come in the way of ongoing and increasing voluntary commitments by the airlines to de-carbonise, and government interventions such as mandates that reduce risk, create demand certainty, then supply expansion occurs which then leads to a lowering of costs through greater demand.

“Australia’s current policy settings are unlikely to incentivise the commercialisation of bio-fuels, including SAF. For example, the available carbon incentive is currently not sufficient to cover the cost difference between SAF and conventional fuels.

“That is, the Safeguard Mechanism which compels the airlines to reduce their carbon emissions year-on-year may be ineffective in incentivising

SAF consumption as a carbon price of more than $300 per tonne would be required to bridge the gap between conventional jet fuel and SAF—much higher than the $75 carbon cap announced as part of the mechanism.

“For bio-fuels, including SAF, numerous government programs have been effectively implemented overseas. These programs involve a mix of mandates like the U.S Low Carbon Fuel Standard that drive demand for various bio-fuels, including ethanol, as well as assistance to consumers and distilleries to drive bio-fuels supply. Like Brazil, the United States, the European Union and Thailand, Australia will also need a suite of additional demand and supply incentives to realise the significant environmental and economic benefits from a mature Australian bio-fuel industry” Mr Rynne said.

The Department of State Development, Local Government, Infrastructure and Planning’s Queensland New-Industry Development Strategy (QNIDS) sets out the Queensland Government’s approach to developing the new industries that will be in demand as the world moves to a decarbonised future.

“Building on Queensland’s strengths it identifies emerging industries that have the most potential to enable industry and economic growth and to help existing industries, such as agriculture, to decarbonise and then to thrive in a decarbonised economy,” the department’s spokesperson said.

One of the six emerging industries targeted in QNIDS that is particularly relevant to the industry is number six, the bioeconomy including biofuels, such as renewable diesel and SAF, and future foods.

The development of the bioeconomy sector in Mackay is an example of how the Queensland Government deploys a long-term industry development strategy to build a connected supply chain.

The challenge remains for the industry to achieve its potential, but without support and incentives from government policies the obstacles are onerous. With attractive possibilities and opportunities on the table for the future, the need remains for sugarcane, that one plant with many products, and growers to stay pivotal in these discussions.

“I’m passionate about this because we’ve got to look to the future. If we can re-value every acre of cane, get the value up for the grower, that would be great,” Mr Rossato said.