A key report, to be released in Bangkok today at the Advanced Global Biofuel Summit, reveals Australian biofuel production capacity is expected to double this year to over 600 million litres (ML) and could exceed 1000ML per annum by mid 2009.

The report, prepared by Mike Cochran and Graeme Bethune - principals of APAC Biofuel Consultants - assesses the state of play for ethanol (which can be blended with petrol) and biodiesel (typically blended with conventional diesel).

Cochran said demand for ethanol blends is growing and fuel ethanol production in Australia is running close to full capacity of around 120MLpa.

Bethune said such demand is being driven by rapid growth in the number of retail outlets selling ethanol blends.

“Queensland and New South Wales have had the largest number of outlets but expansion is now underway in Victoria and South Australia,” Bethune said.

“The number of E10 retail sites is expected to exceed 800 by the end of 2007 – around 13 percent of Australian service stations – almost double the number 12 months ago.”

Cochran said that with new plants and expansion of plants, annual ethanol production capacity could exceed 300ML by the first half of 2009.

“There are a number of other ethanol plants on the drawing board,” he said.

“If they come to fruition, ethanol production capacity could exceed 1000 million litres by 2011.”

But biodiesel continues to face difficulties. High feedstock costs and commissioning difficulties have contributed to biodiesel production being well below capacity over the past six months, Bethune said, however the outlook is improving.

“The cost of major biodiesel feedstocks such as tallow, canola and [imported] palm oil are beginning to move down from their highs earlier this year,” he said.

“In 2006-7, biodiesel plant production capacity increased by 390 million litres.

“A further 210 million litre-capacity is under construction, expected to be fully commissioned by the end of 2008, bringing capacity to almost 620 million litres per annum.”

The study found total biofuel production is on track to meet the Australian Government target of 350ML by 2010.

Achieving this target will also be facilitated by the New South Wales Government introducing a 2% ethanol mandate from October 1, 2007.

But availability of suitable and sustainable feedstock remains a major challenge for the biofuel industry in Australia and Asia generally.

“Both ethanol and biodiesel production in Australia predominantly rely on ‘first generation’ feedstocks, most of which compete with the food cycle,” Cochran said.

“Second generation feedstocks, such as microalgae [for biodiesel] and lignocelluloses [for ethanol] are being researched in Australia and overseas, and are seen as offering longer term and [a more sustainable] alternative feedstock source for the biofuel industry.”

Australian Biofuel Projects 2007 is an independent assessment of the Australian biofuel industry by APAC Biofuel Consultants, a joint venture of ECCO Consulting and EnergyQuest.

As commercial consultants to the biofuel industry, APAC Biofuel Consultants were invited this week to chair and address the Advance Global Biofuel Summit in Bangkok on developments in the Australian biofuel industry.