Renewable diesel and biodiesel to support the net zero transition
Decarbonising heavy machinery industries, such as agriculture, is a complex and multifaceted challenge. Agriculture is heavily reliant on fossil fuels for energy, from fuelling farm machinery to providing heat and electricity. Decarbonising the sector will require a range of solutions that address both the direct and indirect emissions associated with agriculture. It will also require a coordinated effort from farmers, policymakers, and industry stakeholders to transition to low-carbon farming practices, develop and implement new technologies, and build more sustainable supply chains. This article discusses the potential for biodiesel and renewable diesel as alternative fuels for the transition.
In Australia, diesel fuel represents around 10% of emissions in the agriculture, fisheries, and forestry sector, which consumes approximately 2.6 billion litres of petroleum diesel fuel each year. Diesel is used to fuel stationary pumps, generators, heaters, as well as mobile machinery, while marine diesel fuels fishing trawlers. Economic, fuel security, and sustainability factors are driving the sector to consider alternatives and reduce its reliance on petroleum diesel fuel. However, the transition away from diesel fuel use is a significant challenge that requires a coordinated effort to replace diesel equipment and transition the on-farm energy infrastructure, as well as energy systems and skills in communities and across regions.
Our recent report on the diesel transition identified several technology pathways that the sector may adopt. Agricultural equipment manufacturers identify battery electric and hydrogen fuel-cells as the dominant technologies by 2040, although combustion technology is expected to remain in product lines for some time to come. Manufacturers such as Volvo have identified that, in the transition, internal combustion will likely involve direct diesel substitution with synthetic renewable diesel, or using blended biofuels, as well as blending natural gas or hydrogen to increase energy density. There are some agricultural applications that will require further innovation, for example cotton crops are one of the highest consumers of diesel fuel, due to high volumes of water lifting required, and an alternative energy solution for high volume floodplain harvesting has yet to emerge.
During Australia’s 2023 evokeAg conference, a panel discussion on the ‘risks and rewards of renewables’ explored the potential for renewable diesel and biodiesel fuels to be used as a transition option for the agriculture sector. Moderated by Oli Madgett, our partner Cassian Drew was joined on the panel by Steven Hobbs, an innovative farmer with a 30-year history of experimentation and production of biodiesel on Yarrock Farms, and Jennifer Patterson from the Frontier Impact Group which has invested in one of Australia’s few renewable diesel projects.
Renewable diesel offers a more efficient, cleaner-burning, and more convenient alternative to biodiesel for powering diesel engines in the agriculture sector but has yet to be produced at commercial scale in Australia. Renewable diesel has a higher cetane rating than biodiesel, which means it burns more efficiently and cleanly in diesel engines, resulting in fewer emissions (the subject of ongoing research). Renewable diesel has a lower cloud point than biodiesel, which means it remains liquid at lower temperatures, making it more suitable for use in cold climates, and the fuel can be used in existing diesel engines, pipelines, and storage facilities without the need for modifications or special handling procedures. Renewable diesel also has a longer shelf life than biodiesel, which can degrade over time and in certain storage conditions.
A lifecycle assessment on any fuel considers the contributions of raw materials and their transportation, fuel refining, fuel transportation and fuel use. Today renewable diesel uses a range of waste products as feedstock, including: animal fats from food industry waste, vegetable oil processing waste and residues (e.g., palm fatty acid distillate, spent bleaching earth oil, palm effluent sludge, fish fats, tall oil based raw materials, and technical corn oil (a residue from ethanol production). Commercial renewable diesel producer Neste has plants in Singapore and the Netherlands and has established an office in Australia to coordinate sourcing of feed stocks.
There are several reasons why people are still producing biodiesel despite the advantages of renewable diesel. One reason is that biodiesel can be produced from a variety of feedstocks such as soybean oil, animal fats, and used cooking oil, which are widely available and cost-effective. Biodiesel is also a well-established industry with a proven track record, whereas renewable diesel is a relatively new technology with limited production capacity and market penetration. Today, Australia produces around 100ML of biodiesel per year, representing about 3% of the agricultural sector’s annual demand. Despite its premium price over petroleum diesel, Australian Biodiesel is in demand from other sectors and is also exported abroad. Investment in the biodiesel industry will need a dramatic boost if the fuel aims to become a substitute that fuels Australia’s aging diesel engine stock.
As a small-scale on-farm producer of biofuels, Yarrock Farms’ experience highlights some of the policy barriers that exist today. Under current regulation, the farm is required to conform to the same standards as a multinational petroleum manufacturer, including requirements to meet fuel standards and testing requirements that represent an unviable cost to the farm. Despite producing for on-farm consumption, the fuels are subject to excise, which then need to be claimed back by the farm through the diesel rebate. Steven Hobbs shared that, like many farmers, his tractors aren't 2023 vintage and his B100 biodiesel is used as a direct diesel substitute, without blending — noting his engine warranties have long expired.
The Australian federal government committed $1.9 billion to low-emissions technologies in 2020, signalling support for research and development of alternative fuels. However, it is likely that more needs to be done to incentivize farmers to invest in renewable energy systems. The cost of renewable energy systems can be a significant barrier for farmers, particularly for smaller operators. There is an opportunity for government and industry to work together in the transition to renewable energy systems in communities across regional Australia. This could include providing grants or other forms of financial support to encourage investment in renewable energy infrastructure.
In conclusion, the agriculture sector in Australia is facing significant challenges in transitioning away from diesel fuel use. The sector's transition to alternative fuels requires a coordinated effort that encompasses the ultimate replacement of diesel equipment, as well as the energy systems in communities and across regions. Biodiesel and synthetic renewable diesel are substitute fuels that can be used in existing diesel equipment, but they will have a role while new technologies such as battery-electric and hydrogen fuel cell machinery are adopted, and their supporting energy systems developed. The government and industry need to work together to provide support and certainty for farmers to make significant changes to their energy systems, so that they can transition to renewable energy sources and ensure the sustainability of the sector.