Ground Cover North : Ground Cover 064 September-October 2006 - North
Biodiesel pioneer tests the future As the biofuels debate heats up, a Victorian grower is already putting into practice his belief that local oilseed processing for biodiesel is a viable means of lowering input costs BY GIO BRAIDOTTI n To Victorian oilseed grower Steven Hobbs, using farmland to produce grain for the food chain is a status quo option that threatens to send smaller farmers to the wall. Much as his grandfather grew oaten hay for his horse teams, Mr Hobbs views grain as fuel and the farm as a self-sufficient diesel producer through the production of vegetable oil and other biomass-based fuels. “All the charts show that the long-term price for grain is down while the costs continue to rise,” Mr Hobbs says. “This continues to drive the ‘get bigger or get out’ approach to farming. But the alternative is to start producing a different product – in this case, energy.” At Kaniva in western Victoria, Mr Hobbs has installed an on-farm vegetable oil mill and biodiesel plant to process locally grown canola. “As I was setting up the oil mill, I realised that what I grow is not ‘food’ but an internationally tradeable commodity with a multitude of functions,” he says. He is in the process of expanding his seed-crushing facilities so that he can raise production to 300,000 litres of biodiesel, an amount he estimates is sufficient to supply 10 farmers. By adding more oilseed presses, Mr Hobbs is planning to lift his production to one million litres of fuel produced on-farm. At this scale, he estimates his farm will need to process 4000 tonnes of oilseed grown from 5000 hectares. While initially drawn to the idea of fuel self-sufficiency, Mr Hobbs says that the oil mill has been delivering a set of interlocked benefits to the farm and community. The mill has allowed him to switch from planting canola – a crop that has been frequently hit hard by frost – to the hardier mustard plant, which he says is more frost-tolerant and offers more weed control options. He is averaging between 0.8t and 1.5t of mustard oilseed a hectare. More significantly, Mr Hobbs says the mill is allowing him to beat the equation that is squeezing small growers off the land: “As a farmer, my biggest input costs are energy, nitrogen and pesticides and herbicides. “I can reduce each of those costs by having an oil mill on-farm because, in addition to the fuel I generate for farming equipment and generators, the meal from crushing the mustard oilseed can be used as a natural pesticide while the compost is a natural fertiliser.” The canola meal from an oil mill can also earn up to $270 a tonne in the feed market. However, Mr Hobbs believes the real benefit of on-farm biofuel production will come from groups of growers producing enough fuel to allow decentralised hubs of biodiesel production. “Decentralised fuel production could give rural regions a way to invigorate local economies. “There are value-adding manufacturing opportunities and new employment options, while opening the door for improved environmental stewardship roles since biodiesel is a cleaner-burning fuel. “Studies have also found that the decentralised model is an efficient way of producing energy and it introduces greater sustainability throughout the grain and fuel production chain,” he adds, referring to the information he gathered as a Nuffield Farming Scholar in Europe, where he compared different biodiesel production systems. “The Europeans are producing in excess of two billion litres of biodiesel a year, with Germany in particular encouraging decentralised production,” he says. “In the process, European farmers have seen the production of rapsole (canola oil) create a whole new host of opportunities.” Biofuels GROUND COVER SEPTEMBER -- OCTOBER 2006 18 Aside from on-farm use he believes there are also markets in the automotive sector, in electricity generation and central heating, as well as consumer products such as cooking and culinary oils, laundry detergents, cleaning products and health and beauty products such as lotions, moisturisers and soaps. “Scientists are even learning how to make biodegradable plastics and polymers from plant oil, while car manufacturers are experimenting with making cars and car components from plant fibres,” he adds. “Globally, there are more than 50 different vehicle manufacturers that honour warranties for the use of biodiesel in their engines.” On the political front, the Australian Government wants at least 350 million litres of biofuel in the market by 2010. The government’s roadmap for achieving this target is centred on the Biofuels Action Plan, which brought together plans from the major oil companies, members of the Independent Petroleum Group and the major fuel retailers. Under that scheme, BP Australia has contracted to provide consumers with 200 million litres of biofuels a year by 2008, more than half the national target. The president of BP, Gerry Hueston, has stated that BP will invest in both refining and distribution infrastructure. Mr Hueston expects BP’s Bulwer Refinery in Queensland to produce 110 million litres a year of biodiesel through a BP-developed tallow hydrogenation technology. The fuel is expected to reach the market in 2007. In response, the government has amended legislation so that biodiesel made from tallow using the new technology receives the same tax treatment as biodiesel made by existing esterification processes. The government has also made $37.6 million available under the Biofuels Capital Grants Program to subsidise expanded biofuel production. Under the scheme, $7.15 million was provided to Australian Renewable Fuels Limited for the construction of Australia’s largest biodiesel plant at Largs Bay, Adelaide. With an annual production capacity of 45 million litres, it is one of four plants funded under the program. As a biodiesel producer, Mr Hobbs has to register with the Australian Taxation Office (ATO) and pay a 38-cent excise per litre of diesel produced, even if the diesel is used exclusively on-farm. Although a manufacturer’s excise rebate exists, it is based on standards tests that can cost $3000 per sample, says Mr Hobbs. Furthermore, farm-grown and manufactured biodiesel is not eligible for the Energy and Grants Credit Scheme (EGCS). Because of complex and time- consuming application processes, Mr Hobbs says he is excluded from government grants designed to promote biodiesel production. Instead, he has had two visits this year from German companies interested in buying all the oil his farm can produce. The price is reasonable, says Mr Hobbs, but more importantly it allows him to bypass a regulatory framework that he believes has offered little to rural communities seeking to benefit from decentralised biofuel production. More information: Steven Hobbs, www.bebioenergy.com, www.nuffield.com.au Victorian oilseed grower Steven Hobbs with a jar of home-made biodiesel. STEVEN HOBBS'S COSTS Conventional diesel costs about $1.45 a litre. In comparison, Steven Hobbs’s biodiesel costs $1.38/l to produce, including the 38-cent excise paid to the ATO. (He is not eligible for the manufacturers’ rebate because the government classes him as an end-user more than a producer.) n To grow, extract and produce vegetable oil: 50 cents a litre Straight vegetable oil falls outside the fuel excise scheme unless co-solvents such as biodiesel, ethanol or fossil fuel are added to improve combustion – then the entire volume is deemed to be a manufactured fuel and is liable to taxation. n Conversion of vegetable oil to biodiesel: 20 to 30 cents a litre n Fuel excise on biodiesel: 38 cents a litre n Standard rebates on the fuel excise The Energy and Grants Credit Scheme (EGCS) rebates the full excise cost but there is a standards test that can incur fees of $3000 A GUIDE TO BIODIESEL PRODUCTION 1Decide what oilseed crop to grow 2Establish a procedure to clean and dry the seed 3Establish an oil mill to extract the oil from the seed using one of two methods: hot pressing* (for large centralised mills) or cold pressing using either a hydraulic or continuous screw press** (small, decentralised production) 4Filtration to remove all suspended fine organic material, known as ‘fines’ 5Chemical modification to convert the vegetable oil to biodiesel * Hot pressing can extract 98 per cent of all available oil from the seed but German research has shown that about 1.7Gj of energy is required per tonne of seed. ** In contrast, cold pressing extracts on average 77.6 per cent of all available oil with an average energy consumption of just 0.38Gj/t. Decentralised oil mills on average consume 75 per cent less energy.
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