New Zealand Strategic Assessment of Biofuels Calls for Emphasis on Synthetic Diesel from Wood

A report from the New Zealand Parliamentary Commissioner for the Environment, Dr Jan Wright, is calling for a more strategic approach to biofuels. The report, “Some biofuels are better than others”, addresses the pros and cons of various biofuels and biofuels policy. The report concludes, and Commissioner Wright emphasizes in an overview of the report, that if biofuels are to play a significant role in New Zealand’s energy future, then drop-in synthetic diesel made from wood is the pathway on which the country should concentrate.

The purpose of the report is to consider strategically how biofuels might lessen the country’s dependence on fossil fuels and thus reduce greenhouse gas emissions. Furthermore, New Zealand still imports virtually all its liquid fuels; while domestic crude oil production has expanded, it is not nearly enough to meet local fuel demand. “...New Zealand’s liquid fuel bill will certainly increase again, and there may be security of supply difficulties. Replacing imported fuel with locally produced biofuels would reduce this risk,” the report notes.

Commissioner Wright said that the report led him to four conclusions:

  1. The kinds of biomass currently being used as feedstock for biofuels in New Zealand cannot take the country very far. Most biofuel currently produced in New Zealand is made from by-products – ethanol from whey and biodiesel from tallow. Some more whey and tallow could become available, but the potential for growth is not great. A small amount of canola is grown for processing to biodiesel, but the amount of agricultural land available for growth is limited because other land uses are more valuable, certainly in the foreseeable future. Although Henry Ford was right about being able to make fuel out of virtually any plant material, only wood could be grown in sufficient quantities to make biofuel mainstream. Algae could well play a valuable subsidiary role, especially if its use as a biofuel feedstock can provide the added benefit of improving water quality. Other feedstocks, such as switchgrass, could also be minor players.

  2. The biofuels currently being produced in New Zealand can only be used to supplement conventional petrol and diesel. Ethanol can only be used in a blend of up to 10% with gasoline, biodiesel is being limited to no more than a 5% blend with conventional diesel. If biofuels are to be major players in the energy future, Wright said, they should be drop-in fuels. These include both hydrogenated renewable diesels and fuels produced via the Fischer–Tropsch process.

  3. It makes sense to focus on biofuel substitutes for diesel rather than substitutes for gasoline. Wright says that in contrast to the transport of freight and the land cultivation, there is much more flexibility in the demand for gasoline. Electric cars appear to be coming into their own, and many trips can be made by public transport, cycling, and walking. The decrease in congestion on Auckland’s motorways when the price of a liter of petrol rose above two dollars in 2007 is testament to this flexibility, he said.

  4. It makes no environmental sense at all, and “indeed is unethical”, to import “bad” fuels made from feedstocks such as palm oil. The Government has set up a Biodiesel Grants Scheme, under which New Zealand biodiesel manufacturers can obtain subsidies on a per liter basis. Although no company is currently making biodiesel from imported palm oil in New Zealand, there is nothing to stop this happening.

In light of these conclusions, if biofuels are to play a significant role in our energy future, we should move toward developing drop-in biodiesel made from wood. Some biofuels are good, some are bad, and some are probably downright ugly. The challenge that lies before us is to develop and commercialize biofuels in a practicable way that will significantly reduce our greenhouse gas emissions, improve our energy security, and genuinely make our country cleaner and greener.

—Commissioner Wright

The report finds that drop-in hydrogenated renewable diesels (HRDs) from vegetable oils and animal fats would be better biofuels to make than the fatty acid methyl ester biodiesel currently made in New Zealand, although presumably they would be less economic. The NZ Biodiesel Grants Scheme applies only to FME biodiesel.

Technologies to transform cellulosic (woody) feedstocks into drop-in liquid fuels soon to be available in New Zealand include:

  • The Fischer–Tropsch process. Solid Energy and L&M Mining are also considering using the Fischer–Tropsch process to make synthetic fuels from lignite coal in New Zealand.
  • Supercritical water processing and hydrogenation, similar to the process used to turn algae into green crude. A consortium of firms, including Ignite Energy and Methanex, has recently proposed introducing this technology to New Zealand.

Because significant quantities of renewable diesel could be made from wood in New Zealand using the Fischer–Tropsch process, two peer-reviewed studies were commissioned as part of the report. These appear as Appendix A and Appendix B.

The first is an analysis of potential wood supply to specific sites by Scion. The second is a feasibility study for a wood-to-biodiesel plant using the Fischer–Tropsch process, by CRL Energy.

The CRL Energy analysis suggests that a Fischer–Tropsch plant processing 6,000 dry tonnes per day could produce about 1 million liters (264,000 gallons US) a day of unrefined synthetic biofuel. The majority of this would be high-quality diesel, enough for 10% of New Zealand’s 2008 diesel consumption.

Taking the Scion and CRL Energy studies together, it appears that a useful quantity of high-quality diesel could be produced from low-quality wood, at a cost of about NZ$1.85 per liter (US$5.12/gallon US).

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