Problems and delays with biofuel project

Producing biofuel is proving to be much more difficult for Z Energy to produce than they had thought when announcing a project in 2014. They still haven’t produced anything saleable three years after their projected completion date but are still trying.

Newsroom: Why Z Energy is persisting with its biofuel plant

Four years ago, Z Energy announced a cunning plan: to build a plant to turn tallow into biodiesel. The plant would be operational in 2015 and would help Z and some of its commercial customers (companies like Fonterra, Fulton Hogan and NZ Post) take a bit of fossil fuels off their carbon balance sheet and meet their greenhouse gas reduction commitments.

Voilà. Easy.

Four years on and a new government with ambitious carbon reduction targets has put biofuels more firmly on the radar. Cars will go electric, but for the time being there aren’t many “green” alternatives to fossil fuels for heavy trucks, ships and planes.

But over in Manukau, more than two years after it was meant to go into production, Z is struggling to get biodiesel out of its plant. The company has yet to produce a single litre of saleable biofuel. Z still thinks biofuels are a good idea, and it has customers keen to buy it – even prepared to pay a couple of cents a litre extra for it.

Z’s sometimes tortuous experience trying to get its plant up and running has a key lesson for industry and government as we look at ramping up New Zealand’s nascent biofuels industry.

It’s not as easy as you think.

I hope the Green and Labour parties learn something from this. Biofuel may end up being a viable alternative for some energy needs, but it hasn’t been a quick fix so far.

What’s good about biofuels?

In the simplest biofuel scenario, you grow a plant, which absorbs CO₂. Then when you turn that plant into ethanol (the most common biofuel) and burn it in a vehicle engine, a little green sleight-of-hand allows you to write off the CO₂ it produces. Just like that: carbon neutral. Well, almost.

It’s a bit more complicated with biodiesel made from waste products (rubbish or tallow, for example), as you don’t have that handy CO₂ in-and-out exchange. But what’s not to like about making fuel from waste, especially when burning biofuels produces slightly less CO₂ than burning fossil fuels?

And what’s not so good?

Biofuels also have some significant downsides:

– As Z has found, the technology can be complex. The company knows that choosing to use an untried New Zealand technology rather buying a more expensive off-the-shelf product from overseas has added to the technical challenges. Even so, according to the Productivity Commission’s report: “advanced biofuels are much less technologically mature and therefore come with significant technical risk”. For example, five years ago, there was much excitement about a new biofuel made from algae. Algae would produce high yields and wouldn’t use up productive land. But the euphoria soon died down. Oil giant Exxon pulled out of a US$600 million joint venture, claiming viability is likely to be 25 years away.

– The easiest way to make biofuels is from plants – anything from sugar beet to corn to that spiky plant in Australia no one can find another use for. But the idea of using productive land to grow fuel (rather than food) has some serious ethical and environmental downsides, which have stymied projects overseas – and put many people offside. In 2009, US President Al Gore told a green energy conference he regretted his support for the US ethanol industry because of its role in driving up the price of corn, and therefore food.

– Most biofuels have to be mixed with carbon-emitting fossil fuels at very low ratios (5-10 percent biofuel with 90-95 percent ordinary petrol or diesel) just so they don’t mess up our engines. Sometimes it hardly seems worth it. (Interestingly, the mixing thing is more to do with engine technology than the properties of biofuels. In fact Henry Ford designed his first cars to run on biofuel, not petrol.)

Zero nett carbon emissions by 2050 are still reliant on significant advances in technology and cost of production.