BIOFUELS are about to work even harder to prove their renewable worth, under new European Union rules.
From 2018 the European Commission’s Renewable Energy Directive mandates that biofuels must demonstrate a 50 per cent emissions saving compared to their fossil fuel companions (or a 60 per cent saving when produced in refineries constructed after October 2015), compared to a flat 35 per cent saving now.
CSIRO was commissioned by the Australian Oilseed Federation and the Australian Export Grains Innovation Centre to assess the greenhouse gas emissions of growing canola in Australia, in order to continue exports to the European Union for use as a feedstock for biodiesel under the new rules.
In 2016/17, more than 3.1 million tonnes of Australian canola was exported to the EU, worth around $1.8 billion. EU buyers can pay a $20-40 per tonne premium for non-genetically modified canola (which Australia primarily produces), making the EU export market one with a cool $100 million premium riding on it.
The vast majority of this canola (91 per cent in 2015-16) is used to make biodiesel.
To secure this important export market the Australian industry needed to demonstrate that canola can be grown at a low enough carbon footprint so that once all the other processes of shipping and refining are added, the final product can be deliver to the customer at the fuel bowser within the target saving of 50-60 per cent. We are happy to say it did.
Industry and governments have woken up to the fact that resource-intensive practices are coming under mounting scrutiny. We all know our planet’s resources are finite and precious.
However, proving that a business or sector is efficient and environmentally responsible can be a surprisingly difficult task. If we are to be good environmental custodians, it’s increasingly important that the full cost of the goods and services we consume on a daily basis are accounted for.
A life cycle assessment is a method of attributing and monitoring resource use and environmental impacts throughout the entire value chain, and can reveal surprising inefficiencies that should be remediated.
How hard can growing canola be? Seed goes in – it rains – wait a few months – and whoa, profit. But not so fast. If you take a step back you start to see the bigger picture, and that is just what a life cycle assessment does – forensically counting all of the steps and associated emissions to grow a crop of canola.
It only takes a small amount of resources to produce the 3kg of seed planted to grow a tonne of canola, but lots more resources are needed to get the final product to the farm-gate. A tractor burns diesel to sow the seed, while fertiliser has to be transported to the farm from as far away as the Middle East. A life cycle assessment goes into details such as the emissions associated with extraction of oil that is refined into diesel, which is then used for the tractors on the farm, and also in the manufacture and transport of fertiliser – both highly energy intensive industries.
On the plus side, most canola production in Australia is rain-fed rather than irrigated (resulting in big savings on energy for pumping) and because we have a dry climate, the greenhouse gases released from the soil due to fertiliser-use are reduced compared to wetter regions in the world. Then other emissions from the breakdown of crop residues and the burning of stubble also need to be accounted for.
Through good practices such as zero or low-till farming, Australian canola production has some of the lowest emissions in the world. However, it’s amazing how quickly these emissions add up. By the time all these sources are added together it amounts to 468 kg CO2-eq/tonne to grow canola seed ready to ship to the rest of the world.
A number of Australian industries that depend on export markets could also find themselves exposed to changing political mandates, requiring validation of the life cycle cost of their goods and services.
Agriculture is responsible for some of Australia’s largest exports, and like canola, many other agricultural commodities may soon find themselves on the front line, facing similar demands both domestically and abroad.
In June 2017 some of the world’s biggest fashion brands such as Nike and H&M committed to using 100 per cent sustainable cotton by 2025. This will require the Australian industry to respond.
At home, KFC Australia is being proactive in assessing its ‘farm-to-fork’ credentials, and looking to find a point of difference to win over customers in a crowded fast food market. Meanwhile, McDonald’s have committed to eliminating deforestation from their supply chain, starting with beef and poultry.
Of course, challenges also present opportunities. The industries that respond first – and respond best – are likely to find themselves with increased market share as some overseas competitors struggle to meet requirements that will only tighten over time.
Also, as mechanisms such as emissions intensity schemes become more widely adopted, commodity traders are also likely to reward industries that are on the leading edge of environmental best practice. A product with a lower greenhouse gas footprint will be worth more, and the financial benefits will flow throughout the value chain.
Life cycle assessments will enable Australian industries to prove they are among the best in the world, and identify areas for improvement. Hence, the construction of the underling life cycle inventory provides a key enabling platform for Australian agriculture, and earlier investment in this inventory allowed a rapid response when the canola industry needed to prove its credentials.
Australia has a long history of agilely responding to new market signals, and sustainability certifications are just a new set that will allow our food and fibre products to compete in global markets, with the added benefit of helping to protect the environment.