A new report shows that traditional oil will
soon need to be supplemented with non-
conventional sources.
Image: iStockphoto 

Australia faces crucial choices about how best to respond to and plan for the converging insecurities of water, energy and food in a carbon- and nutrient-constrained world. 

The conservative International Energy Agency — along with major corporations like Shell, BP and Mercedes — now acknowledges that conventional oil will soon require supplementation from non-conventional sources.  In Australia, our yearly oil import bill was recently $10 billion and is projected to grow to $20 billion annually by 2020, as domestic oil stocks approach depletion.

The major research project undertaken by Barney Foran and colleagues called “Powerful Choices;  transition to a biofuel economy in Australia” has just been completed. 

The report found that:

The best biofuel production chains  can avoid three to four billion tonnes of CO2 emissions out to 2051, or 10–15 per cent of the 29 billion tonnes of base case emissions.

Bio-methanol from wood feedstocks is capable of meeting Australia’s transport fuel needs.

• Biomethanol substitutes effectively for both petrol and diesel and has clean combustion properties.
• 40–60 million hectares of wood production on currently cleared farmlands would be required by 2051.
• Increased landscape transpiration from these trees decreases national runoff by 8,000–12,000 gigalitres (GL), which is large in relation to currently managed water, but less than 3 per cent of average total runoff.

Bio-ethanol is feasible, but less attractive than bio-methanol.

• First and second generation ethanol produced from crop and lignocellulose feedstocks respectively is feasible, but requires more arable land and has low energy profits.
• The thermochemical approach using wood and waste feedstock has similar feasibility to bio-methanol but the technology is not yet mature.

Both compressed natural gas (CNG) and shale oil are feasible routes to transport energy security but have less possibility for greenhouse gas mitigation.

• CNG helps avoid 700 million tones of CO2 emissions, but increased gas use brings forward depletion of gas stocks by five years.
• A more radical gas scenario that combines export caps at current levels (i.e. the levels prior to the recent Gorgon deal coming on line) with mandatory engine efficiencies, can maintain gas supply to 2051 and avoid three billion tonnes of CO2 emissions, equivalent to a bioalcohol transition using woody feedstocks.
• Current shale oil technology using above-ground retorts increases emissions by more than eight billion tonnes (+30 per cent) while an electricity driven in-situ process gives increases of over three billion tonnes or 12 per cent of base case.

Advanced shale oil could offer medium-term fuel security while preparations are made for a more radical set of carbon mitigation options.

• Emissions loadings point to shale oil’s infeasibility in a carbon-constrained world, but combining advanced conventional electricity (see below) with the in-situ shale process reduces economy-wide emissions to 20 billion tonnes or 30 per cent below the base case. 

Despite higher costs and lower load factors, a renewable electricity transition with 20 per cent each of wind turbines, bio-electricity, solar photovoltaics and solar thermal is feasible and could supply 80 per cent of electricity requirements by 2035. 

• This avoids 10 billion tonnes (40 per cent) of CO2 emissions. 
• The weakest aspect of renewables — their relatively low productivity compared to energy-dense fossil fuel systems — becomes an asset in whole-economy terms if most of the fabrication occurs within the domestic economy.
• The scale of the transition revitalises the industrial sector, while the utilities sector increases its proportion of national capital stocks. 

A transition to advanced conventional electricity with equal shares of four technologies (nuclear, carbon capture and storage (CCS)-equipped advanced coal, combined cycle gas turbines and solid oxide fuel cells) could also avoid 10 billion tonnes (40 per cent) of CO2 emissions over the scenario period, subject to three major uncertainties:

• The enabling technology for CCS is prospective and requires the fluent implementation of the most complex engineering project yet attempted in Australia. 
• It only reduces net emissions if applied to high-efficiency generators. 
• The absolute requirement that CO2 emissions stay permanently underground and that medium-level radioactive waste is safely managed in perpetuity.  

Admittedly, these are modeled outputs and the real world is invariably more complex.

The tightly-coupled nature of production chains in the real economy, means that policy prescriptions which add technological ‘wedges’ to construct a low-carbon economy, probably overstate the potential.  Quality-corrected energy drives economic growth, and is the physical essence behind multi-factor productivity.  Any block to energy growth thereby blocks economic growth, and this will frustrate well-meaning energy efficiency policies.

Moreover, in practice, achieving bio-fuel plantings on this scale is a formidable challenge:

• there is a limit to the distance over which the harvested woody resource can be transported to a processing plant for conversion to bio-energy or bio-fuel, measured in dollars, kilojoules or CO2, which means that many processing plants will be required;
• industrial and municipal waste, plantation residues and so on may be seen as more reliable resource supplies in some regions;
• woody crops in low-medium rainfall areas, if planted over more than ~10 per cent of the landscape, compete significantly with food crops for soil moisture and groundwater;
• the distribution of woody crops for beneficial uses is likely to be patchy — feeder areas clustered around processing nodes, with the area planted worked out farm by farm, the opportunity cost of current enterprises and land type variability as dominant determinants — and biofuel will have to compete with permanent plantings for carbon sequestration.

This study shows that with good strategic planning, sufficient investment and competent implementation, either ‘renewable’ or ‘advanced conventional’ electricity, with a second generation biofuel and land management or biochar, can displace 10, 4 and 2 billion tonnes respectively (in total 16 billion tonnes), a 60 per cent reduction against the base case CO2 emissions of 29 billion tonnes.  Finland illustrates that these results are not in the realm of fantasy.  With about the same area and population as Victoria, but a much tougher climate, shorter growing season and slower growth rates, thinnings and prunings from private forestry and biofuel plantings produce 23 per cent of Finland’s primary energy, over 75 per cent of its thermal energy needs, and 20 per cent of Finland’s electricity.

The Powerful Choices simulations have shown that, using the current and emerging technologies explored in this study, reductions of 80–90 per cent in energy-related CO2 emissions are not possible within a growing economy driven by expanding real incomes and growing personal consumption.

The Powerful Choices study also highlights a number of domestic resource depletion issues.  The first depletion is conventional oil, mostly gone by the mid-2020s here.  Australia has an urgent need to develop alternative transport fuel options, yet the renewable energy debate thus far has been dominated by the renewable energy target as an interim measure to reduce greenhouse gas emissions until emissions trading and rising carbon prices displace its need.  The second is natural gas, potentially depleted by the mid-2040s due to rapidly expanding exports.  Its potential as an interim buffer for transport fuel and for mid-carbon electricity is immense, provided we have not sold it off in the meantime.  The third is uranium, if export volumes triple and a domestic nuclear cycle is implemented.  Black and brown coal will last for many centuries.

The Powerful Choices project started with the perception that Australian farmed landscapes needed to be re-clothed with trees to combat dryland salinity, improve wildlife habitat, and provide new enterprises for farm businesses through transport biofuel production.  Times have changed.  The driest thirteen year period since European settlement has seen dryland salinity recede, but biodiversity augmentation and carbon farming have become more important, as has energy security.  Some of the results here challenge entrenched positions held by political parties, public servants and major corporations.  the Howard government’s myopia in shutting down ERDC, the primary national sustainable energy research funder in 1996, was echoed by the Rudd government in its May 2009 budget when it abolished Land & Water Australia (LWA).  Land & Water Australia was the national research funding body that specialised in rural sustainability issues across a broad spectrum from land, water and biodiversity to social, institutional and indigenous research.  It funded (and promoted the outputs of) many projects like the Powerful Choices study that tend to be overlooked by the commodity-specific funding agencies that dominate rural research in Australia¹.

The Powerful Choices study also highlights the critical dilemmas facing Australia around how we allocate land, water and financial resources to food and energy production in a more difficult climate, while mitigating greenhouse gas emissions. The continental scale biophysical-economics modelling of this study needs to be combined with farm-level economic and optimisation modelling, in a spatially explicit manner region by region.  This would help to tease out the implications for rural landscapes and regional communities of the transition to a biofuel economy, and in planning infrastructure investments such as processing plants, energy grids and low-emission transport networks.

This is the sort of research that Australia needs to give us the best possible knowledge base on which to construct a portfolio of viable alternative renewable energy supplies.  It would enable us to consider energy, carbon, water, food and biodiversity in a more integrated way, and to think through how these public policy imperatives interact, both with each other, and with rural landscapes and regional and national economies. 

This is much more powerful and useful than the more usual approach of considering carbon, water, energy and food separately, both in science and in policy.

¹ The Rural Industries Research & Development Corporation (RIRDC) does have a modest Bioenergy, Bioproducts and Energy program, which in 2007-8 represented around 4 per cent of RIRDC research investment and less than 0.2 per cent of investment across the rural R&D corporations.

Andrew Campbell is Managing Director of Triple Helix Consulting Pty Ltd and was Executive Director of Land & Water Australia from 2000-2006.

Barney Foran has retired from CSIRO and is currently a Research Fellow at Charles Sturt University.

The Future Farm Industries Cooperative Research Centre is currently researching and developing new harvesting technologies to improve the efficiency of bioenergy production chains based on oil mallee eucalypts in the sheep-cereal belt.