In no fuel sector does Australia have fewer obvious alternatives than in transport fuels. In searching for solutions all the alternatives present challenges policy challenges, environmental and ethical challenges, economic challenges and risks (including security of supply) and engineering, infrastructure and research implementation challenges.
But one area of the transport fuels conundrum in which Australia seems positioned to advance strongly is in ''Generation 2'' biofuels. Australia has modest prospects in the domain of ''Generation 1'' biofuels ethanol and biodiesel where a fledgling industry is established, based mainly on food by-products, within an uncertain policy environment.
While there is some room for growth, competition for scarce resources, including water and agricultural land well-suited for food production, make it unlikely that a substantial Generation 1 industry could further develop in Australia without market-distorting mandates or subsidies, despite the compelling need for transport fuels' security.
But in the Generation 2 biofuels domain, where non-food resources dominate, Australia may be well-placed to establish a thriving future industry, based on the prolific and lower-value resources which Australia has in abundance.
The significant potential for the economic conversion of lignocellulosics to ethanol and specialised algae strains to biodiesel warrant enhanced commitment to focused Australian research, development and demonstration in this sector which should be aligned with the significantly greater RD&D efforts of other nations.
The Australian Academy of Technological Sciences and Engineering recommends that a national Biofuels Institute be established, along the innovative lines of the recently announced Global Carbon Capture and Storage Institute, the National Low Emissions Coal Initiative and the soon-to-be-created Australian Solar Institute. These models, building on the clustering and industry-creating experiences of a number of Cooperative Research Centres, are expected to be able to go further than the centres realistically can.
With strong governance, guaranteed funding and appropriately focused international linkages, it says the impressive cadre of Australian researchers in the bio-industries could come together far more effectively than through the fragmenting competitive grant-driven step-by-step processes that characterise much of Australia's RD&D.
Team building, sought by many but seriously inhibited by competition for scarce funding, could be dramatically enhanced, as could creative relationships between RD&D, industry and government.
Despite its fragmented and underfunded competitive RD&D effort in the biofuels area, Australia has many worthwhile initiatives.
Bioenergy Australia, as the national industry body, provides an effective leadership role in drawing the industry domain together. The National Collaborative Research Infrastructure Strategy Biofuels Project is a worthy program but further steps, such as the recommended Biofuels Institute, are needed to improve mutual cooperation between Australian researchers and to build and sustain collaborative international arrangements.
The academy takes a strong view that the use of biofuels to enhance Australia's liquid transport fuel security must not be at the expense of food production. It also emphasises that present Generation 2 biofuel technologies are not cost-competitive, that an expanded RD&D effort is required and that biofuels research is fragmented and poorly coordinated and needs to be better funded. It says Australia must enhance the knowledge base of its more promising biofuels resources and build on its significant existing strengths in biofuels research.
The report notes that Australia has limited biofuels production capacity which needs to be supported and that biofuels industry development must be directed not only to the production of economic transport biofuels but to creation of profitable co-products. It says Australia needs to recognise human-resources development issues to provide the range and quantum of skills needed for industry development, in Australia and overseas, and should respond effectively to the biofuels sector assistance needs of developing countries.
Australia can valuably draw from the European Community and the United States in developing a vision for strategic biofuels research. Furthermore, given the very significant overseas funding, Australia should, where appropriate, conduct much of its RD&D work in focused partnerships and/or joint ventures with appropriate international agencies.
Australia needs to develop clear-cut long-term policies for biofuels, including an effective balance between ''technology push'' and ''market pull'', evaluation of biofuels production and distribution infrastructure and related logistics, a major injection of RD&D funding and better research clustering and cooperation.
A large-scale Australian biofuels industry will have to demonstrate robust credentials in greenhouse gas emissions, land and water impacts, financial viability and social acceptability.
Professor Robin J. Batterham, a former chief scientist of Australia and now group chief scientist of Rio Tinto, is president of the Australian Academy of Technological Sciences and Engineering.
The academy's report, Biofuels for Transport: a Roadmap for Development in Australia, was issued yesterday.
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