The Bioeconomy in Regions – An Economic Opportunity

By Elizabeth Perkins.

In 2015 Renewables SA commissioned a study to examine South Australia’s Bioenergy potential with a view to creating a Bioenergy Roadmap for South Australia. This policy initiative was highlighted as one of the stand out policies in Australia by the Bioenergy State of the Nation Report in 2018.

At a national level the Australian Government has been funding the Australian Biomass for Bioenergy Assessment project (ABBA). The aim of this project is to deliver a national database of biomass resources for bioenergy across Australia taking
a national approach to mapping biomass rather than it occurring in disjointed ways within regions. It provides the backbone for a regional approach to projects ensuring consistent information is more readily available. These policy frameworks are key enablers in the uptake of bioenergy across South Australia.

The South Australian Bioenergy Roadmap identified the Limestone Coast as one of the hotspot areas within South Australia. To facilitate the Roadmap implementation, the Bioenergy Connect Program was developed by the South Australian Government. Since 2016 the Bioenergy Connect Program has been available across South Australia for individual businesses who produce a biomass product and have an energy requirement. The program has included two components: prefeasibility and feasibility. The Prefeasibility Fund is an enabling fund designed to help South Australia accelerate its exploration of bioenergy and the role it can play for businesses. The Prefeasibility Fund is a low risk means for businesses to take that first look at the viability of bioenergy. All businesses need to do is commit time to engage with an expert consultant and provide key data. The consultant then does some basic calculations around whether they have the ingredients for a successful project. Over the last two and a half years the Prefeasibility Fund has supported 21 projects across 6 industries with businesses from piggeries, food and timber processors to dairies and olive farms.

The Feasibility Fund follows the prefeasibility process. It is designed to assist those businesses who received a favourable outcome in prefeasibility to take the next step of undergoing a full viability assessment of their project. At this point the project is either deemed ‘investment ready’ or impracticable. Feasibility has supported four projects to make that next leap into the bioenergy unknown. The first business to take up feasibility funding was Blue Lake Milling, an oat processing facility in Bordertown South Australia who scoped an anaerobic digestion system for oat husks. With a favourable feasibility study, they are continuing to develop and seek approvals to pursue this development opportunity.

Bioenergy seminar 2018

 

While feasibility funding has enabled the next step for some businesses, what the Bioenergy Connect Program has more strongly revealed is that scale can be a real issue in project viability. While many businesses have the motivation and commitment to producing energy through biomass, they don’t have the scale to achieve a return on investment that makes the project attractive. This along with the recognition that much of the current biomass present in the region could have higher value through its end product rather than the energy created was a key realisation.

As a result of the Bioenergy Roadmap Project, Regional Development Australia Limestone Coast saw the opportunity to bring together businesses that had a biomass potential or had gone through the prefeasibility process with industry experts, to flesh out the opportunity that lay with hosting a bio hub for the region. A regional forum was held in Mount Gambier in December 2018 to outline this potential. With over 60 attendees from across the region and some from across the border, speakers from The University of Adelaide, Bioenergy Australia, Department of Energy and Mining and Renewed Carbon spoke to the opportunities around biomass, bioenergy, the bio economy and bio hubs.

The bioeconomy is a sustainable economic system based on the use of renewable raw materials and bio-based innovations. Bioeconomy projects can create growth, prosperity and employment but does so on a renewable resource base. Regions have a significant competitive advantage in the bioeconomy space, an advantage not yet being truly realised. Biomass at scale occurs in regions so they are best placed to pursue these opportunities as opposed to our metropolitan counterparts and turn them into economic development projects.

While it remains financially viable for some larger businesses to pursue opportunities in their own right, many of the forum participants saw that the true opportunity to enter the bioeconomy sits with a regional approach. Expanding in scale from an individual business to region wide creates a significantly greater opportunity and would bring together large volumes and types of biomass enabling a bio hub to sustainably supply markets and achieve volumes to reach global markets, opportunities that are problematic at a smaller scale. Regional bio hubs can also combine existing commercial opportunities with research and development to ensure the hub continues to develop new products to supply new markets, as existing markets change or contract. In theory a successful regional project that truly enters into the bioeconomy can generate the same or even more revenue from the secondary biomass resources as the primary products can achieve, potentially doubling the Gross Regional Product from each hectare in production.

Taking a region into the bioeconomy is not without its challenges and barriers. Perhaps one of the greatest barriers is engaging all key stakeholders to connect to the potential such a regional project would offer and appreciate the benefits that collaboration can achieve.

A bio hub project is defined by the available biomass, however biomass can’t be considered available until the owner of that biomass commits it in principle to the project. Once again, these stakeholders need to understand the value to them of doing so when they could attempt to reap the economic benefits in a project of their own. The more biomass is given a value the more likely holders of it will consider more carefully how they allocate it.

Bio hubs are also not a well ingrained technology in Australia and this can lead to challenges around obtaining approvals, as key agencies are not equipped with the guidelines yet to assess these projects. This can lead to extensive delays and potentially even regulatory barriers to projects moving forward. As more projects roll out across the country this problem will dissipate and projects will be able to more easily understand and meet the required guidelines. Government can also play a key role in this area by looking at case studies of existing projects and understanding where approvals may have been a barrier.

Investment is another perceived barrier to these projects not only in the scoping and feasibility phases when viability is completely unknown, but ultimately any infrastructure will also require investment. Given the unknowns around biomass commitment in a region, the cost of a large feasibility study can be considered a risk as no viable project may result and would likely be best enabled with some financial support from government.

The infrastructure itself can then require a significant investment although at this point in a well-planned project, viability is assured and should prove attractive to private investment. The likely job creation and new economic activity aspects would also appeal to government funding and if return on investment calculations can be improved with the use of government funding the attractiveness to private investors is also improved.

While unquestionably challenges exist in what is a relatively novel concept in Australia the potential benefits are significant. With regional businesses and industry in the driving seat, in collaboration with Government and Government agencies, biomass is a regional competitive advantage there for the taking.

ABOUT THE AUTHOR
Dr Elizabeth Perkins Manager, Investment Attraction and Infrastructure
Regional Development Australia Limestone Coast.
E: investment@rdalc.org.au

Dr Elizabeth Perkins is an experienced leader with a track record in financial management, team leadership, strategic planning and project management. Her PhD and research background is uniquely coupled with experience in managing complex facilities in challenging environments. After growing up on the family farm near Penola, Elizabeth completed a Bachelor of Science (Honours) alongside a Diploma in Languages (Mandarin Chinese) at the University of Adelaide in 2005. Elizabeth worked at the University of Queensland’s Heron Island Research Station where she was promoted through the ranks to become the Station Manager in 2012. Elizabeth has been with RDALC since 30 October 2017.