The Gippsland ^ ioHub Project (G P)gccn.org.au/.../2018/03/Gippsland-BioHub-Project-Initial … ·...

The Gippsland “BioHub” Project (GBP)

Exploring the Opportunity to Advance

the Gippsland Region’s Potential in

the Emerging Bio Economy

An Initial Scoping Study

June 2017

Initial Scoping Study June 2017

This Study is submitted on the basis that it remains commercial -in-confidence. Eco Waste Pty Ltd accepts no liability of any kind for any unauthorised use of the contents of this Study and Eco Waste Pty Ltd reserves the right to seek compensation for any such unauthorised use.

Data presented is based on best available information provided to Eco Waste Pty Ltd at the time of the Study, which has not been independently verified. As such, the data can only be considered as a guide to meet the objectives of this Initial Scoping Study, and should not be relied upon for any other purpose.


Preface

The Brief

The Gippsland Climate Change Network (GCCN), with funding from the New Energy Jobs Fund (NEJF) (as administered by the Dept. of Environment, Land, Water and Planning), has engaged Eco Waste Pty Ltd to undertake the following Gippsland BioHub Project (GBP) scoping study.

The overall project aims to explore the strategic opportunity for the Gippsland Region (East Gippsland, Wellington, Latrobe, Baw Baw, South Gippsland and Bass Coast – Cardinia included as appropriate) to optimise its considerable advantages as a predominantly rural based region, with forestry, agriculture and intensive animal husbandry presenting as a major economic sectors in the region, and so benefit from, and fully engage with, the emerging bio economy.

The Task

To address this regional potential, the negotiated scope of works includes:-

Step 1

Identifying the quality and quantity of existing bio waste streams from:

Forestry – public and private/harvest and processing

Dairy – farms and processing

Red meat – farms and processing

Poultry – farms and processing Pigs – farms and processing

Horticulture – production and processing

Urban waste streams including MSW, C&I and STP bio solids

In each case, to not only record quantum and quality, but to also understand what is the current fate of these materials, the decision making processes that have determined current management approaches and understand, from the respective generators point of view, what “success” or an improvement on current practice would need to demonstrate to inf luence a change in current practice.

The initial expectation is that most existing uses and applications will initially present as “least cost disposal” options and practices.

Step 2

With a high level assessment of the regional bio waste arisings collated and a first order understanding of the circumstances and drivers for current practise understood, Step 2 includes a generic assessment of the highest net resource value (HNRV) end uses and potential products that could/should be considered as potential outcomes in an integrated bio e conomy paradigm.

Step 3

With potential inputs and preferred product outputs described, Step 3 involves synthesising this information in relation to certain general locations to a level that can support:


a) A first order Block Flow/Mass Flow description; b) A first order economic/financial analysis of the initially scoped project; c) A first order assessment of the processes and technology requirements; and d) An initial “Completion Risk Assessment” for each operational node identified, including a

schedule of further work necessary to eventually commit capital to the implementation of each project.

Step 4

Present Draft Report to the Project Steering Group and selected community consultation groups in the region (perhaps one each to the North and South of the region).

Step 5

Include all feedback and commentary on the Draft into the final report and present to GCCN.

NB: This original scope was priced and submitted to DELP (NEJF) and the eventually agreed budget was halved on the understanding that:

i) GCCN would provide “in kind” assistance to identify, contact and set up initial meetings with key regional stakeholders, to facilitate the Step 1 data collection process;

ii) Renewed Carbon would “sponsor” the production of the early chapter in the report that looks to explain what a bio economy is and how it presents major strategic possibilities and outcomes, and describe the differences when related to the “least cost disposal” of the available biomass materials presenting from the region;

iii) Eco Waste undertook to deliver essentially the same scope of work as was originally negotiated, but in much less detail as originally contemplated, in an attempt to optimise the available budget; and

iv) DELP/NEJF explained that subject to the outcomes of this initial report the additionally contemplated funding could be made available to further investigate the first order opportunities identified, to that end, this current report aims to:

a) Describe in high level, generic terms the potential if Gippsland embraces the opportunity to “de silo” current bio waste generation and treatment solutions in favour of an integrated regional approach – where most resultant systems and infrastructure are independently supplied to achieve a greater common good.

b) Identifying prospective “hub and spoke” systems and infrastructure and initially scope such facilities in terms of:

Geography Main inputs Basic products and services provided Generic technological capabilities Anticipated economic and financial outcomes.

c) Identify at least one project that, subject to scheduled final feasibility definition could deliver short term results and “proof of concept” for the GBP as a whole .


In relation to c) above, identifying a project ready for immediate progression to completion, a Generic Project Development graphic is provided to ensure a common understanding of the essential process and stages that such “new” projects will go through to attain ultimate execution. The project identified (Section 4) would qualify as a Stage 1 project and the further work recommended (Section 5) would progress the project to Stage 2a or 2b culminating in a Basic Project Definition (BFD). At this stage it would be quite usual to engage private capital and resources to take the project to completion, in whatever operational and ownership model the then prevailing stakeholder group preferred.

Figure 0-1: Generic “Green Field” Project Development Stages

NB: See Attachment A for more detail.

Stage 1: Project Initiation &

Conceptualisation

Organic growth

Adaptations

Synergistic additions (that may need to

repeat all or some of the previous steps)

Basic Project Defined

No/YesSufficient confidence

established to support funding of next stage?

Stage 2a: Options Review or Project

Scoping Study

Stage 2b: Pre-Feasibility Study

Stage 3: Feasibility Study

Stage 5: Financial Close

Stage 6: Procure & Construct

Stage 7: Nameplate Commissioning

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No/Yes



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Executive Summary

The original project concept, as funded by the New Energy Jobs Fund (DELP) was to apply the concept of a genuine Bio Economy, as sketched in Section 1 and as so successfully employed to stimulate BioHub projects in NSW (currently some $300-$400M under active development) to investigate “Jobs & Growth” opportunities in the greater Gippsland region.

The starting proposition was that Gippsland supported major a forestry and forest products processing sector, a nationally significant dairy sector (and related milk processing) an emerging red meat sector and a major poultry sector. Horticulture is also presenting as major new growth sector for the region.

Interestingly, many of the regional “foundation” sectors, such as forestry and forest products and perhaps even dairy are showing signs of economic stress related to the “commoditisation” of the primary products as a result of intense international completion, and perhaps the reluctance to capitalise to put these sectors on footing that fully valued their core businesses.

This scoping study has consulted widely and is strongly supportive of the valuable regional initiatives at EGW/Bairnsdale/GW/ Dutson Downs and the Water factory, APM/ Bio-Refinery proposal etc. and has identified significant, bio economy opportunities that could be planned for and developed centred on Leongatha and Drouin/Warragul, but the most impressive short term opportunities have emerged centred on (a)the M.I.D. area and the local dairy sector, and (b) the native forest sector centred on Orbost.

By taking a “bio economy” approach to these two potential project opportunities, some $100M of potential “jobs and growth” investment has been identified (M.I.D. $80M and Orbost $20M) for short term development. In addition these projects would provide strong support for the EGFC (Bairnsdale) project, the local forestry and forest products sector, and create a vital chicken litter processing capability to support existing and future expansion of the poultry sector.

The M.I.D. and proposed Orbost BioHubs seems to be absent of any obvious strategic barriers to progress and the completion of a thoroughly scoped feasibility study seems to be strongly justified.

In addition, the work of the GWRRG has been reviewed, since >50% of the materials in the regional urban waste streams are biomass in nature and could be processed for HNRV if processed via a regional BioHub network. To this end, a background discussion paper has been prepared (Attachment B) which could help in future planning to provide additional processing and value adding options for these more problematic waste streams.

The original project brief required that the concepts, protocols and philosophies that pertain to the development of the emerging bio economy be applied to the prevailing circumstances in Gippsland as a whole, to provide a “road map” for future planning and strategy development, and to also identify potential demonstration projects with one or two projects preliminarily identified and scoped to a level that could justify immediate progression towards timely implementation.

The two defining approaches adopted in proposing the M.I.D. and Orbost projects for such early stage implementation, have been based on:-

i) Identifying the highest net resource value of the biomass arisings, in each situation; and ii) Looking to “de-silo” potential projects to allow the full range of value adding options to be

considered and included.


Whilst this approach is now scoped (Section 7) for detailed “stress testing” in the form of “next steps” or follow on work required, if an when verified for these projects, the same approach directed at all the other generic projects identified could hold out considerable promise to systematically advance the economic future of the Gippsland region, based on fully exploiting the natural assets and advantages of the region. Certainly, this initial study has demonstrated that “least cost disposal” approaches to secondary/by-product biomass arisings is grossly undervaluing the potential for strategic investment and jobs growth in the region.


Table of Contents

Preface ........................................................................................................................................ 3

The Brief .................................................................................................................................. 3

The Task ................................................................................................................................... 3

Executive Summary ...................................................................................................................... 6

Lists of Tables ............................................................................................................................. 12

List of Figures ............................................................................................................................. 12

Glossary ..................................................................................................................................... 13

1. A Bio Economy – the Concept & Potential Benefits for Gippsland if Embraced as a Strategic Goal 15

1.1 The (Emerging) Biomass Economy................................................................................. 15

1.2 Defining Characteristics of Biomass as a Process Input ................................................... 16

1.3 Exploring the BioHub Concept ...................................................................................... 19

1.3.1 First Point of Receival/Receiver of Last Resort ........................................................ 19

1.3.2 Quality Control and Creation of Critical Mass ......................................................... 20

1.3.3 Supporting a “Streaming/Cascading” Strategy ........................................................ 20

1.3.4 Pre-treating.......................................................................................................... 20

1.3.5 Inventory Management ........................................................................................ 20

1.3.6 Product Manufacturing ......................................................................................... 21

1.3.7 Sustainable Yield Assessment and Certification ...................................................... 22

1.3.8 Trading, Brokering – Establishing Fair Value in the Biomass Market ......................... 23

1.4 Collateral Services & Benefits Provided by the BioHubs if Operated & Functioning as Proposed................................................................................................................................ 23

1.4.1 Adds Value to Primary Activities ............................................................................ 23

1.4.2 Supply Assurance for Specialist End Users .............................................................. 24

1.4.3 Platform for Continuous Technology Development................................................. 24

1.4.4 Encourage and Facilitate the Highest Net Resource Value (HNRV) Realisation of all Biomass Materials under Management................................................................................. 24

1.4.5 Supports Agroforestry, Vegetation Management & Sustainable Land Use Programs . 24


1.4.6 Direct Support for Urban Waste Minimisation Programs ......................................... 25

1.5 Summary..................................................................................................................... 25

2. Assessment of Potential Sources of Biomass ......................................................................... 27

2.1 Introduction to Generic Issues ......................................................................................... 27

2.2 Forestry – Harvesting and Processing Residues .............................................................. 27

2.3 Potential Value Adding of Forest Residues – Orbost ....................................................... 29

2.4 Australian Paper – Maryvale Mill (APM) ........................................................................ 29

2.5 Agricultural/Horticultural Harvesting and Processing Residues ....................................... 30

2.6 Dairy Production and Processing Residues..................................................................... 30

2.6.1 Sector Profile........................................................................................................ 30

2.7 Red Meat Production and Processing Residues .............................................................. 31

2.8 Poultry Production and Processing Residues.................................................................. 32

2.9 Pigs Production and Processing Residues....................................................................... 35

2.10 Urban Waste Streams (MSW, C&I) ................................................................................ 35

2.10.1 Background and Context ....................................................................................... 35

2.10.2 Medium to Long Term Potential ............................................................................ 36

2.10.3 Strategic Potential and Opportunities .................................................................... 37

2.11 Biosolids...................................................................................................................... 38

2.12 Special Purpose Crops .................................................................................................. 39

2.13 Summary of Potentially Applicable Biomass Arisings in the Region.................................. 39

3. Bio Product Markets ............................................................................................................ 43

3.1 Opportunities and Guiding Philosophy .......................................................................... 43

3.2 Bioenergy .................................................................................................................... 44

3.2.1 Biogas .................................................................................................................. 44

3.2.2 Syngas ................................................................................................................. 45

3.2.3 Solid Bio-Fuels ...................................................................................................... 45

3.3 Compost...................................................................................................................... 45


3.4 Biochar/Land Applications and Fertilizer Ingredients ...................................................... 45

3.5 Metallurgical Grade Charcoals and Reductants .............................................................. 46

3.6 Pre-treated Lignocellulosic Supply Opportunities ........................................................... 46

4. Synthesis of Sections 2 & 3 to Identify Geographic & Functional Specifications for Integrated Nodes of “BioHub” Operational Facilities ..................................................................................... 48

4.1 Introduction ................................................................................................................ 48

4.2 Bairnsdale Node .......................................................................................................... 48

4.2.1 Project Overview .................................................................................................. 48

4.2.2 Current Project Status........................................................................................... 49

4.2.3 Next Steps............................................................................................................ 50

4.2.4 Summary ............................................................................................................. 50

4.3 Proposed Orbost BioHub .............................................................................................. 50

4.4 Macalister Irrigation District (MID) Node ....................................................................... 50

4.4.1 Project Concept and Overview .............................................................................. 50


4.4.3 Next Steps............................................................................................................ 56

4.4.4 Summary ............................................................................................................. 56

4.5 Drouin/Warragul Node................................................................................................. 56

4.5.1 Project Overview and Concept .............................................................................. 56


4.5.3 Next Steps............................................................................................................ 56

4.6 Leongatha Node .......................................................................................................... 57

4.6.1 Project Overview and Concept .............................................................................. 57


4.6.3 Next Steps............................................................................................................ 57

4.7 Summary of Initially Identified BioHub Projects ............................................................. 57

5. First Order Economic & Financial Analysis for Proposed M.I.D. BioHub Node .......................... 58

5.1 Approach and Methodology ......................................................................................... 58


5.2 Criteria for Success ...................................................................................................... 58

5.3 Proposed M.I.D. BioHub Project – First Order Commercial Viability Assessment Node .... 59

5.4 Overview of Potential Economic Benefits ...................................................................... 60

5.4.1 Starting Conditions ............................................................................................... 60

5.4.2 Proposed Solution ................................................................................................ 60

5.4.3 Potential Outcomes of Proposed BioHub Project .................................................... 60

5.4.4 Strategies Adopted to Achieve These Outcomes ..................................................... 61

6. First Order Completion Risk Assessments for the Various Nodes and Discussion of Primary Mitigation Measures................................................................................................................... 62

6.1 Main Completion Risk Factors....................................................................................... 62

6.1.1 Dairy Farmers Participation ................................................................................... 62

6.1.2 Supplementary Biomass/Ingredient Supply ............................................................ 62

6.1.3 Bio Product Off-Takes ........................................................................................... 62

6.1.4 Technology Performance and Procurement ........................................................... 63

6.1.5 Social Licence Issues ............................................................................................. 63

6.2 Summary..................................................................................................................... 64

7. Budget Estimates for Ongoing Work to Advance M.I.D. and Orbost BioHub Prospects ............. 65

7.1 Introduction ................................................................................................................ 65

7.2 Proposed Orbost BioHub .............................................................................................. 65

7.3 Proposed M.I.D. BioHub ............................................................................................... 66

Attachments Schedule ................................................................................................................ 68


Lists of Tables

Table 1-1: How biomass presents as a feedstock .......................................................................... 16

Table 1-2: Biomass “supply” characteristics.................................................................................. 17

Table 1-3: Biomass – the sustainable competitive advantage ........................................................ 18

Table 2-1: Profile of regional Dairy Sector.................................................................................... 30

Table 2-2: Carry Forward Values – Poultry Litter ........................................................................... 33

Table 2-3: Carry Forward Values – Residual MSW Biomass ............................................................ 38

Table 7-1: Proposed Scope of Works to Advance This Potential Project.......................................... 65

Table 7-2: Proposed Scope of Works to Advance This Potential Project.......................................... 66

List of Figures

Figure 0-1: Generic “Green Field” Project Development Stages ....................................................... 5

Figure 1-1: Context – extractive vs. agricultural supply/value chains .............................................. 18

Figure 2-1: Location of Egg Farms ................................................................................................ 32

Figure 2-2: Location of Meat (broiler) Farms................................................................................. 32

Figure 2-3: Piggeries in the study region....................................................................................... 35

Figure 3-1: Conceptual representation of ‘least cost disposal’ approach ........................................ 43

Figure 3-2: Conceptual representation of HNRV approach............................................................. 44

Figure 4-1: Site for proposed “Bairnsdale Node”........................................................................... 49

Figure 4-2: Fresh Water Supply.................................................................................................... 51

Figure 4-3: Drainage Channels ..................................................................................................... 51

Figure 4-4: Concept Process Flow – MID BioHub ........................................................................... 53


Glossary

AD Anaerobic Digester

BAU Business as usual

Biomass Once living material, preferably <100 years old

BFD Block Flow Diagram

BPD Basic Project Definition

CAPEX Capital Expenditure

Contractual customer Capable of being a certain or contracted source of biomass (see Merchant)

db Dry basis

D/T/P Drying/Torrefying/Pyrolysis as a thermal gradient

EOI Expression of Interest

FEED Front End Engineering and Design/Development

FOGO Food and Garden Organcis

GBP Gippsland BioHub Project

GCCN Gippsland Climate Change Network

HNRV Highest Net Resource Value for a particular biomass resource

IEA International Energy Agency

LFG Landfill Gas

Least cost disposal Managing wastes to achieve environment compliance at least cost, which might include even deriving certain minimum income in the process

Merchant customer Likely to be a valuable customer of a BioHub, once it is operational, but not having sufficient need to be relied upon for initial project financing

Mt Million tonnes

NEJF New Energy Jobs Fund

OPEX Operating Expenditure

Pyrolysis The process of biomass at temperatures above 300oC in the absence of oxygen

STP Sewage Treatment Plant

Streaming/cascading The concept of streaming materials to their highest and

best use whenever it is practical or cost-effective to do so,

but providing a “cascading” next best option when such an

outcome is unachievable and so avoiding binary outcomes

where materials are either processed for HNRV, or lost to

disposal as the only available default option

Stumpage Payment on a stem by stem basis

Sustainable Yield See reference document RIRDC Publication#05/190 as available (www.ecowaste.com.au Sustainability Issues RIRDC/CSIRO)

http://www.ecowaste.com.au/


Thermal Gradient

The option to apply a full range of temperature increases

to the processing of waste streams as another “sorting” or

“contaminant removal” technique

UWMM Urban Waste Management Materials

WSROC Western Sydney Regional Organisation of Councils


1. A Bio Economy – the Concept & Potential Benefits for Gippsland if Embraced as a Strategic Goal1

1.1 The (Emerging) Biomass Economy

Within a carbon constrained economy, fossil fuels (coal, gas, oil) will start to run out, become too expensive, be taxed to discourage use, or the ultimate goods and services customers will start giving purchasing preference to “non-fossil” based products. When this happens, the only truly practical alternative source of carbon based materials is biomass (usually considered as having been grown and harvested within the last 100 years).

Biomass was the original source of even the fossil fuels used today. The removal of CO2 (and equivalent gases) from the atmosphere during the formation of these fuels, up to 300 million years ago created the climatic conditions we enjoy today. However, when fossil fuels are combusted, they release the previously sequestered gases to atmosphere, which is at the heart of the current Climate Change (GHG) issue.

When applied as the basis of manufacture/production of all products and services currently sourced from fossil fuels, biomass (<100 yrs) has some distinct characteristics:

i) It is ubiquitous and widespread, however this can present as a disadvantage when compared to “fossil” alternatives in terms of the relatively low bulk/energy density of this material as an industrial feedstock.

ii) The creation of current biomass materials is actually based on directly utilizing CO2 from the atmosphere, in a potentially closed cycle. This means that no (effective or significant) increase in atmospheric CO2 is created in the provision of the same or similar array of goods and services currently supplied form fossil fuels. However,

iii) There can never be enough (<100years yielded) biomass to entirely replace demand for all goods and services currently sourced from fossil fuels. If the entire amount of the approximately 11.5 billion tonnes of global forestry and agriculture output for each year was converted to a crude oil equivalent, it would only satisfy approximately 50% of current global crude oil demand.2 This suggests that what biomass material is available as a sustainable yield should be applied for its highest net resource value (Table 1-3) and that doesn’t include current coal and gas use .

These characteristics determine the opportunities to optimise the use of sustainably yielded biomass3 for the manufacture/production of “bio” products to supplement and/or replace the existing fossil products and services:

i) Apply those biomass materials that can demonstrate a sustainable yield to achieve their Highest Net Resource Value (HNRV);

ii) Consider value adding the materials before transport (rather than transport to value add), to help address the (relatively) low bulk/energy density of these materials

iii) Establish systems and infrastructure that can accept all such materials, as and when they are available, close to source, and that can differentiate between:

1 The original research for this Section was undertaken for DIIRSTE Eco Waste July 2013 2 Personal correspondence with Jim Lane – Editor and Publisher of the Bio Fuels Digest 3 RIRDC Publications No. 05/190 and No. 09/167 for sustainable y ield principles and best practice


– the wide range of different biomass properties and characteristics;

– the immediate processing/stabilization needs; and

– subsequent finished product potential.

Clearly there is not nearly enough sustainably harvested biomass to directly replace all current global applications of fossil resources (coal, oil and gas). Therefore it is crucial to apply those biomass resources that can be made sustainably available to their best and highest uses.

From this functional platform, the opportunity to optimise the development of the biomass economy was researched in detail for the Commonwealth Industry Department (First Order Pre-Feasibility Study for DIISRTE – Eco Waste, July 2013). This report provides the background and rationale that is now referred to as the “BioHub Concept”.

1.2 Defining Characteristics of Biomass as a Process Input

Consensus in the literature and as adopted by the International Energy Agency (IEA), lists five generic sources of biomass for the purposes of this GBP.

Table 1-1: How biomass presents as a feedstock

Potential biomass supplies for this GBP will adopt the same structure.

The main point of interest from these five generic sources of biomass is that #1–#4 all present as wastes, residues or by-products of some other primary activity, such that if the primary activity ceases, expands or alters in any way, the resultant wastes will alter as well.

This issue highlights the broad spectrum of conditions which will determine the variability that a regional biomass processing facility must acknowledge and manage.

Biomass currently presents as 5 generic sources (defined by commercial circumstances at point of presentation):

1. Forestry and Agricultural harvest residues – Characteristics: seasonal or campaign availability but homogeneous by-product of core activity.

2. Forestry and Agricultural processing residues – Characteristics: regularly available, homogenous and geographically concentrated and usually a supply pushed by-product.

3. Urban waste streams – Characteristics: end of (first) life arisings to be recovered as reliable, but heterogeneous flows via streaming/cascading systems (approx. 50-60% of all national urban waste flows).

4. Land Management & Development Arisings – Characteristics: one off or irregular arisings of potentially high value homogeneous biomass.

5. Specially grown or generated biomass – Characteristics: highest quality, reliably available but most expensive as primary production costs to be recovered in sale of materials.

All wastes, residues

or by-products of some

other primary activity

Still productively

immature & still being

commercialised for this specific

function


Biomass Supply Characteristics

Ubiquitous – but disparate, low bulk/energy density (value add before transport);

Presents in myriad of different forms – all with quite different potential HNRV applications;

No uniform “sight unseen” market – as a generic commodity;

HNRV end markets awaiting assured supply and vice versa;

Currently affordable supplies are by-products and residues – not the primary products; and

No appropriate systems and infrastructure are available to address these issues (compare cereals or scrap metals).

Table 1-2: Biomass “supply” characteristics

In addition to the characteristics in Table 1-1 there is the issue of optimising the end uses of whatever biomass supplies are attracted to a BioHub.

Table 1-3 helps prioritise the end use applications given that biomass can never fully meet the market demand for all products and services currently met by fossil fuels. Channelling “bio” products to applications that cannot be provided by the other purely energy generating technologies is therefore project defining.


Table 1-3: Biomass – the sustainable competitive advantage

Table 1-2 suggests that focusing on the potential benefits of biomass (columns E-I) and leaving other low/no carbon energy sources to focus on pure power/energy, will better optimise the value and beneficial influence of whatever biomass sources can be sustainably secured.

Lastly, one defining characteristic of a supply/value chain in which surplus biomass supplements or replaces fossil fuelled production/manufacturing systems is its broad based, multi source s nature (Table 1-3).

Figure 1-1: Context – extractive vs. agricultural supply/value chains

Low carbon

energy sources

Features/Properties

A B C D E F G H I

Renewable

On

demand

supply

Heat Power Gas Oil Char

PetroChem

industry

manufacturing

precursors

Potential

to be

Carbon

negative

Fossil fuels with

sequestration

Hydro

Wind

Solar – thermal

Solar – PV

Geothermal

Wave/Tidal

Nuclear

Biomass

Biomass – the Sustainable Competitive Advantage

Whilst <100yrs biomass can be converted to fulfil all the roles currently provided by fossil resources –there is nowhere near enough – so should be applied to highest and best uses – bioenergy as a by-product.

Table 1: Comparison of benefits and properties of non fossil sources

Extractive Supply/Value Chain:

Context – Extractive Vs. Agricultural

Power

Products & Markets

Fuels & chemicals

Refined fuels & chemicals

Interim Biocrudes

Reductants, biochar & energy

Possibly 2-4 finished product bio-refineries

Possibly 10 biocrude refineries

250 BioHubs nationally

Agricultural Supply/Value Chain:


1.3 Exploring the BioHub Concept

As graphically represented in Fig 1-1, a fully functioning Bio Economy is more akin to the familiar agricultural supply/value channels than the extractive, linear supply/value channels established to exploit fossil reserves.

As an agricultural model the broad based triangular supply/value channels feature multiple individually small biomass generators (as compared with a point source coal mine, oil well or gas field), and in agricultural models value and/or products are generated at every increasing value and sophistication as they move up the triangle.

So, where the source of available and sustainably yielded biomass arises from sources (Tables 1-1 and 1-2 above) to support the generation of bio products, the BioHubs need to perform the following functions to meet needs of the emerging bio economy vs. the “least cost disposal” outcomes that are probably the current end uses of most of the materials we will identify in this report.

1.3.1 First Point of Receival/Receiver of Last Resort

The “first point of receival” function addresses the geographical issue. Biomass is a low bulk density material, and in its original form is also a low value material. Therefore it is crucial that the initial transport distance is as short as practical from the point of generation to the first point where the material will begin an iterative value adding process.

A <100km maximum radius catchment for the “raw” or unprocessed materials is considered the right balance to ensure a critical mass of incoming material, with the least transport cost inherent in the transaction. This radius might be extended to say 300km for certain higher value materials or materials that have undergone some crucial level of pre-treatment/value adding so as to be able to “afford” the additional transport costs.

The “receiver of last resort” characteristic reflects the fact that of the five generic sources of potentially available biomass (Table 1-1), four are by-products or wastes, or generated as a result of some other primary activity.

In these circumstances, the generator will naturally look to put such materials to the most cost effective end use that they can achieve after ensuring that their primary activity receives the most immediate focus. In these situations, the surplus, waste or undervalued sources of biomass will usually only be supplied to a regional BioHub when all other potential applications have been exhausted.

There may be occasions where the easy access and the widely communicated BioHub option will be a convenient and ready outlet for the available biomass, for fair value, when compared with other “least cost” disposal options that may require disproportionate effort to achieve little, if any, greater net benefit.

As receiver of last resort, BioHubs would always accept surplus biomass materials, and this service offering will be reflected in the gate fee structures that will also reflect prevailing market circumstances.

The provision of the physical infrastructure to provide local first point of receival convenience, coupled with the receiver of last resort certainty, is anticipated to transform the potential biomass


sector by providing convenient and logical options for materials that might not otherwise be put to a fully productive use.

1.3.2 Quality Control and Creation of Critical Mass

A comparison with the scrap metal sector is useful. Scrap metal yards exist in all significant population centres. At these facilities scrap metals are received, materials are logically assessed for quality and quantity before being accepted and subsequently stockpiled like-with-like to optimise end market returns on all materials accepted. The same process applies with biomass received at the proposed BioHub facilities.

Realising the highest end product value for all materials under management will require a detailed assessment of the actual qualities of all biomass being received as the basis for producing quality assured products at least cost.

The proposed BioHubs will provide the capacity to accumulate like materials, as and when they are presented. This could act as a basis for supporting the highest value markets for such materials, rather than being inevitably down-cycled with lower quality materials in the absence of any other use or application.

1.3.3 Supporting a “Streaming/Cascading” Strategy

Realising the highest net resource value (HNRV) from all materials received or gathered into a BioHub means generating maximum value and revenue. A foundation concept in achieving this is to provide the ability for materials presented to be streamed, like-with-like, towards the production of the most valuable end markets that their respective qualities, quantity and reliability of supply will support. However, given that most such markets are seasonal, cyclical, or occasional, ideally BioHubs would offer “next best” or cascading opportunities for materials presented. Without this capacity, BioHubs would be obliged to accept only a binary option of disposal (including basic energy recovery) or rejection alone.

1.3.4 Pre-treating

Value will be created for the original biomass generator/supplier if materials can be assessed, screened, stabilized (if reactive as presented), size reduced, decontaminated or partially processed to the level of at least an intermediate quality product.

This could be especially true for:

Municipal Solid Waste (MSW) sourced organic fraction (separation and sterilization); Surplus green/garden waste (screening and size reduction); Processing wastes and sludges (digestion and/or stabilization); Wood waste/forest residues (screening, streaming, size reduction, decontamination); and Manures and agricultural residues (blending, stabilization, streaming).

Pre-treated materials can then be transported as “interim” products to other sites specialising in product manufacture based on these materials (such as a regional Bio-refinery), or traded/brokered to specialist third parties.

1.3.5 Inventory Management

As noted in Table 1-1, the most immediately available sources of biomass, to support the emergence of an integrated local bio economy, currently present as wastes, residues and process by-products.


The origin of these materials imbues them with some crucial physical and commercial characteristics (Table 1-2) that must be acknowledged and managed if HNRV end products , and the much increased capital expenditures necessary to achieve these outcomes, are to be achieved.

In particular, the amount of waste generated or available, and/or the reliability of its supply, are highly unlikely to match the size of a potential HNRV end use, or be available when required to address such market demand. This then describes an essential function of BioHubs, individually, and especially when operating as an integrated network:

1) To be able to receive such biomass supplies when they are available, and

2) To provide bio products or services when they are needed.

This means having the capacity to manage gross regional biomass inventories to achieve the greatest net benefit.

Streaming/cascading strategies (1.3.3 above) are one approach, and storage/stockpiling of biologically stabilized materials (logs, timber etc.) is another obvious strategy, but when biomass presents as reactive putrescible or non-biologically stable for a prospective storage interval, then immediate pre-treatment/stabilization will be required on receival.

The outcome of this stabilization may result in some immediately valuable products (eg. biogas from AD processing) or it may result in the production of defined “ingredients” being produced, such that they are defined by quality (and quantity) and suitable for interim storage, but are perhaps not “end products” in their own right (e.g. stabilized digestates from AD processes, or basic biochars from a torrefaction/pyrolysis process), all of which may not achieve their respective HNRV outcome until blended into a precise, customer defined final fertilizer or soil amendment product.

The collateral benefit of BioHubs providing a gross inventory management function will also underpin the development of a maturing market in such biomass materials trading (see 1.3.8).

1.3.6 Product Manufacturing

Inevitably some regions can attract a surplus of biomass, while others may be able to supply markets with finished products that far exceed the ability of the local region to supply the volume or type of biomass required.

This will require the pre-treatment function at all fixed BioHub sites, and even the production of some basic products such as bioenergy, in most locations. However certain locations will need to focus on larger scale product manufacture. This will utilise biomass that is available in the region, and intermediately processed products imported from other sites and sources where the resultant transport and logistics can be cost effectively absorbed.

For example, in the Orana region of NSW, the apparent demand for tailor-made, biochar-based, all-in-one fertilizer products appears to grossly exceed the capacity of locally sourced biomass to sustain. Such a situation may also arise in the provision of tailored fertilizers to service the regional sugar cane sector.

At other sites, such as South East NSW/North East Victoria or the Peneplain area of NSW, the opportunity to specialise in the production of low ash, high density industrial reductants and/or coke/coal replacement products may be appropriate. In so doing, these sites will supply a market that is potentially far larger than any single site or region to fully satisfy on its own.


Within this proposed framework, the BioHub facilities may all be established with similar basic technological capabilities to receive, sort, screen, stockpile and pre-treat materials. Final product manufacturing capabilities may be selected to exactly suit the respective local conditions, such as torrefaction, pyrolysis, energy production, fermentation, digestion, fertilizer blending and pelletising etc.

Fixed regional BioHub facilities will also be able to offer contracted extension services, including for:

Vegetation/weed management; Seasonal harvesting; Campaign based land management/clearing or biomass aggregation/collection; and Power line and road side maintenance and the like.

Additionally, certain temporary BioHub sites (with skid mounted and transportable plant and equipment) might be established on an occasional/seasonal/campaign basis and operated in any one particular location for only weeks or months each year (e.g As attached to cotton gins during the season). The equipment could then be rotated to other sites as required, or a system to aggregate regionally generated manures and effluent streams may prove to be a practical approach to address the issue of multiple small individual effluent generators.

1.3.7 Sustainable Yield Assessment and Certification

The drivers for optimising biomass as a sustainable source of carbon, to replace or supplement fossil resources, stem from the emergence of at least three generic global agendas:

i) Address climate change by avoiding the release of “fossil” CO2; ii) Address natural resource depletion; and iii) Observe sustainable economic practices.

The growth and production of biomass is essential for the provision of much more than just sustainable carbon molecules to support complex, integrated industrial economies. Such higher order benefits include, at least, the provision of:

ecosystem services; sufficient food and fibre to sustain the global population; amenity and recreational services; and biodiversity and habitat maintenance.

There are a wide range of competing uses and values of certain biomass supplies. The provision of biomass to provide carbon based molecules to supplement or provide those core or “drop in” functions currently provided by fossil resources is just one option. As such, the sustainability of biomass yield must be assessed in absolute terms in relation to the requirement that the earth’s soils should be maintained or improved in quality, but never degraded (unless a satisfactory post use rehabilitation plan is agreed at the time)4.

Many parties and countries are currently grappling with the establishment of bioenergy/biomass sustainable use and yield standards in the face of carbon being priced in the economy and carbon sequestration being valued and recognised. However the immediate driver is that the final value of any products and services generated from a BioHub will be greatly enhanced where the

4 Bioenergy – a Sustainable and Reliable Energy Source – Main Report, IEA Bioenergy: ExCo:2009:06, page 71. www.ieabioenergy.com.


sustainability status of the yield of all biomass presenting to a BioHub can be verified, confirmed and/or certified.

Example #1: the value of biochar as a sequestration product is dependent on the source materials being sustainably yielded. Example #2: a metal product is offered to a manufacturer of a retail product as having a “carbon lite” value (as compared to an identical product made from fossil supplies). Ultimately it is the certifiable sustainability of the yield of the source biomass that enables the manufacturer to market the final product as having a lower carbon profile, and to request acknowledgement of the lower carbon emissions liability in jurisdictions where a legislated price has been put on such CO2 emissions.

As first point of receival, BioHubs will be ideally placed to assess the source and the sustainability of the yield of all materials presented as the basis for all subsequent downstream sustainability/carbon assessments. The provision of this expert service will be of tangible value to all parties in a resultant supply/value chain.

1.3.8 Trading, Brokering – Establishing Fair Value in the Biomass Market

Biomass presents in a wide range of different forms, at different times and for different reasons (Table 1-2). Each form is best suited to the manufacture of different materials, products or energy in response to varying market demand.

The wide range of biomass materials discussed and categorised in Table 1-1 are currently wasted, undervalued or simply lumped together into high level generic categories. They are considered only suitable for leaving on the ground in a passive attempt to return nutrients to the soil, for simple composting or for energy production as a primary activity (examples of least cost disposal).

If operated as described in this document, BioHubs will raise awareness of the different properties, characteristics and values of the various biomass types presenting, and establish benchmark pricing for each type. They will also be able to broker volumes of such materials between BioHub facilities and to specialist third parties, such as specialist end users looking for assured supplies.

The establishment of fair value for the various biomass materials and the establishment of a reliable platform to trade and broker supplies of biomass materials is a significant collateral benefit of BioHubs, but one which cannot yet be valued in this initial PFS.

1.4 Collateral Services & Benefits Provided by the BioHubs if Operated & Functioning as Proposed

This study assesses and evaluates the viability of the core functions of the proposed BioHubs in the regional context – that is, to value add biomass and provide the essential systems, infrastructure and logistics to channel disparate biomass arisings towards specialised processors and end users. However, a wide range of strategic, commercial and social benefits will al so be provided as a result. These benefits are of commercial and economic value but will not be estimated in this study other than to be noted for future reference.

1.4.1 Adds Value to Primary Activities

By providing the cost effective and sustainable realisation of lasting value from wastes, residues or surplus biomass sources, the efficiency and sustainability of the respective primary activities will be enhanced and their viability improved.


Even biomass sourced from special purpose crops (Table 1-1) will benefit from accessing established systems, infrastructure, markets and trading values.

1.4.2 Supply Assurance for Specialist End Users

Many of the potential end uses and markets for specialist biomass derived products are currently unviable to initiate because suitable supplies, by quality and quantity, are not available. Lack of availability may be in either absolute terms or for all practical purposes, due to geography and/or the lack of the supportive logistics systems.

BioHubs will create tangible value by being able to provide contracted supply assurance to end users or specialist processors.

1.4.3 Platform for Continuous Technology Development

The emerging supply/value chains for the various sources of biomass, from generation, harvesting, processing and final product manufacture to ultimate use and application, are providing a rich framework of need and opportunity for a wide range of technology developers and vendors.

The proposed BioHub concept will provide at least two crucial benefits to such technology developers and vendors:

a) Better scoping and definition of the actual functional specifications at each stage of the value chain, for which new or improved technological solutions are required; and

b) Offer actual sites where pilot or demonstration technologies can be applied to fast track their logical development and commercialisation, without necessarily needing to secure their own supply and off take arrangements during the nascent stages of their development.

1.4.4 Encourage and Facilitate the Highest Net Resource Value (HNRV) Realisation of all Biomass Materials under Management

Due to the disparate nature of existing biomass supplies there is a natural tendency for the emerging biomass processing sector to overlook or oversimplify the wide diffe rences in biomass types or the wide range of end products needed and possible, and focus on products like simple bioenergy.

This situation arises because biomass supplies are not readily differentiated or reliably available, or the potential end markets are not yet commercially established.

The BioHubs are proposed to address this issue in detail and create tangible value in the process.

1.4.5 Supports Agroforestry, Vegetation Management & Sustainable Land Use Programs

The broad range of land management activities that involve invasive species management, reforestation, and revegetation of riparian zones, shelter belts, ridge lines and biodiversity/wildlife corridors etc., are all activities that have the potential to yield sustainable supplies of biomass as a supporting or collateral benefit to the primary objective.

Having a local BioHub would open up options for land owners and managers that can improve the viability of the primary activity by ensuring that surplus biomass can be delivered for fair value to a local BioHub. This capability could be a defining benefit for the proposed BioHubs.


This provision of service by the BioHubs has a parallel in the cropping sector, where the railhead silo infrastructure capacity addresses the ready access to markets for cereal growers, who are then able to concentrate on the core business of growing the crop.

In the case of “woody weeds” or Invasive Native Species (INS) management, progress is often limited by the availability of funds. Assuming regional BioHubs are economically viable and able to offer fair value for the biomass from woody weed management, then there may be more scope to ensure best practice regulatory, environmental and weed management outcomes can also be achieved.

1.4.6 Direct Support for Urban Waste Minimisation Programs

Australia currently produces some 30 Mt/pa of urban waste, of which about 60% is “biomass”. In the Gippsland region, the 6 Councils currently produce some 400kt/pa. If this material is separated from the balance (plastics, metals and inerts etc.), the considerable societal cost of disposal and treatment would be greatly reduced or eliminated, and significant resource recycling would occur in support of the sustainable circular economy.

The biomass fractions of urban waste streams fall into certain generic categories:

Timber/wood waste; Garden/green waste; Organic fraction in residual waste streams; and Biosolids.

All of these can be accepted, treated and converted into value added products at a BioHub as a specialist service for respective local communities when delivered by expert and experienced BioHub operators.

1.5 Summary

The core focus of this Gippsland BioHub Project (GBP) review is to identify logical, timely and cost effective opportunities to transition the management of the Gippsland region’s wastes, residues or by-product biomass arisings from the prevailing practice of “least cost disposal” outcomes, into valuable inputs into a fully functioning bio economy.

“Least cost disposal” outcomes tend to arise as a result of the following logic:

1. Core business could be milk production, milk processing, forestry and timber processing, poultry production or even urban waste management as a public health protection and community service primary focus.

2. All such activities result in waste, residues or currently undervalued by-products.

3. Waste disposal is now a highly regulated and costly option, to be mitigated or avoided wherever possible. Such costs can be mitigated by:

a) Treating such materials to reduce disposal impact/costs or even,

b) Processing/upgrading such materials to be of some value to a specialist end user (soil amendments, low cost energy sources etc.)

This logical approach aims to avoid unnecessary capital expenditure whilst trying to produce a result that is more cost effective than simple disposal.


In comparison, managing the same materials for HNRV, as defined inputs into a fully functioning bio economy follows a completely different logic:

1. The end markets for bio products and services are as deep and complex as the existing markets currently supplied from “fossil” resources. (Table 1-3 especially columns E,F,G)

2. Since there can never be enough biomass produced (sustainably) to replace all current uses of fossil, gas, oil and coal with “bio” gas, “bio” oil or “bio” coal (charcoal) (1.1iii) above) focus must be to channel the available biomass materials towards the products and services that cannot be supplied from other “non-fossil” sources, such as primary energy/power (Fig. 1-3).

3. A fully functioning BioHub network allows all the existing biomass materials to be allocated to the best and highest use, considering the qualities and characteristics of each. Often similar or compatible biomass sources from alternative sources can be applied to provide the volume and finished product qualities necessary to meet the identified market needs and specifications.

4. This HNRV based strategy will involve the allocation of considerably more capital than a “least cost disposal” and may well introduce elevated levels of performance, technology and market risks (to be assessed in Section..) but in each case the highly elevated value of the resultant end products should always demonstrate rates of return and collateral benefits that more than compensate for the approach taken.

These concepts and commercial disciplines will guide and inform the project identification and scoping work in the balance of this report.


2. Assessment of Potential Sources of Biomass

2.1 Introduction to Generic Issues

As identified Table 1-1, the potential sources of biomass available to “kick start” a regional bio economy currently present as wastes, residues or by-products of existing primary industries.

In this section we review each in turn and summarise each in terms of:

a) More general future potential as the nascent bio economy develops (>5 years long term-LT)

b) Projects with more immediate potential in the medium term – contingent on certain identified factors (2-5 year medium term-MT)

c) Shovel ready – subject to immediate full feasibility study (1-3 years short term-ST)

d) Quantity/quality/material status

e) Approximate “gate fee” (±) as likely to present to a new facility

f) Contractable/Merchant status

A feature of accessing this data has been to, wherever possible, interview the individual owner/ generators of the waste streams identified. Knowing the generic information alone, has little commercial value unless it is possible to:

i) Understand how or why the waste stream is generated

ii) What happens to these materials currently, and what are the prevailing factors that make this the current “disposal” option of choice, then

iii) What they would like to happen to these materials, if only ….?

iv) What would be their respective “criteria for success” if a different higher value option could be presented to them and be robust enough for them to change current practice to participate in some new, integrated or collaborative approach.

This style of data collection allows conclusions to be evolved which should have the best chance of being commercially implemented, subject to any subsequent detail project feasibility studies.

2.2 Forestry – Harvesting and Processing Residues

The forestry sector in and to the north east of Gippsland is an industry of State significance and a foundation economic activity in the region.

The two main timber suppliers are Vic Forests (pulp logs and saw logs) and HVP plantations as a private sector supplier of mostly saw logs. The primary end users are:-

APM (pulp logs);

Australian Sustainable Hardwoods (ASH) an integrated saw mill and finished timber products manufacturer;

CHH timber products manufacture; and A number of smaller family run saw mills.


In Bio Economy terms, native and plantation forests represent a significant absorption of CO 2 (GHG) from the atmosphere, which is subsequently stored in the resultant timber, in effect solar powered (photosynthesis) into stored and sequestered timber (native “batteries”).

Until now, the regional competitive advantage, to produce such a quality timber resource, has supported the existing pulp, paper and timber products sector, which has grown to represent the major industrial speciality in the region. But this status quo now seems to be at a crossroads. Challenges are emerging in terms of:-

Native forest protection vs quality timber extraction.

Primary product ranges pulp, paper, structural timbers are showing signs of commoditisation, resulting in downward pressure on sales values whilst product cost structures are rising or static at best.

Existing industry wastes, residues or by-products are not yet achieving their HNRV potential.

But within a fully functioning bio economy these challenging conditions can be squarely addressed by restructuring to extract the optimum value from every recognisable fraction of each bio material under management.

The APM Bio Refinery announcement is an excellent example, looking to process lignin for far more end value then just as a raw energy product and instead looking to fully exploit this material’s inherent properties to produce direct “fossil” replacement products.

Another example might be to remove ALL stem wood at harvest time, (including branches and off spec stem wood) leaving bark, tops, twigs and leaves etc. on the forest floor for primary nutrient retention and erosion control, then applying non saw mill grade stem wood for processing into other direct “fossil” replacement products, such as petro/chemical precursors, reductants, and fertilizer supplements. This strategy would also deliver some useful collateral benefits such as:-

Greatly facilitating the post-harvest land management operations (without piles of stem wood to navigate during replanting).

Allow processed carbon amendments to be applied at replanting time, that would be products to deliver exactly the nutrient profile at replanting time and sequester carbon for >100s of years, rather than 5-10 years in the case of decomposing off spec stem wood, with a complete loss of the inherent energy recovery in the process.

Such generic concepts have been broadly assessed in the past, but always within the “siloed” perspective of the traditional forestry sector. Within the fully functioning bio economy, much of the essential value adding systems and infrastructures would have been established independently, and the major change may be little more than developing revised harvesting and replanting techniques.

The carry forward concept from these reflections will be to identify, scope and estimate wastes, residues and by-products from the existing forestry and timber processing sector that can be significantly value added at each BioHub node that is identified in Section 4.

Ref:

i) F&WPA PNC 285-1112 Jan 2016 – “Carbon Stocks & Flows in Native Forests and Harvested Wood Products in SE Australia”

ii) POYRY, 51A15253 Sept 2011 – “Review of Issues Affecting the Transition of Victoria’s Hardwood Processing Industry from Native Forest to Plantations”.


2.3 Potential Value Adding of Forest Residues – Orbost

The discussion above, in relation to the potential value adding of stem wood and large branch forest residues, reveal that where such materials occur in the economic catchment of APM, are more usually provided as furnished for paper making. But further afield forest saw log harvesting in the economic catchment centres around Orbost no viable market currently exists to fully utilise such a potentially valuable resource.

In addition, the two saw mills in Orbost are too far from even the Cardinia poultry bedding market to be able to sell even their high quality saw dust products.

Vic Forests and Orbost Chamber of Commerce data has previously established that >100kt/pa of such forest residue material and local saw mill residues could be available to an appropriately sized and scoped value adding operation in Orbost.

To date studies have been undertaken into applying all or some of the available material into, briquettes, fuel pellets, direct dispatchable power and a range of lignite/wood composts. To date no such proposals have demonstrated commercial viability.

However, applying the principles in Section 1 of this report to the tailoring of a specific facility focused on the production of HNRV product manufacture from these available resources may well overcome the viability concerns of the previous studies.

The nature of these low ash hardwood materials is that, as shown Table 1-3, their HNRV may well be achieved as high quality bio reductants, with residual char materials being sold to local fertilizer blending operations, (See 2.6 and 4.4 below) and residual process heat and syngas directed to local power production (Orbost local demand approximate 3MW).

This possible BioHub project is further discussed 4.3 below.

2.4 Australian Paper – Maryvale Mill (APM)

The APM facility is not only the oldest and largest paper mill in Australia, but has recently expanded its operations to include a significant paper and packaging recycling facility.

As with all such paper mills around the world, two main wastes/residues are generated by such facilities. First, the lignin removed from the initial wood pulp and second, a variety of waste sludge materials.

Currently, APM applies lignin as a fuel to raise heat/steam for the main production processes.

On 22nd March at Federation University, APM announced their “Bio Refinery” plans for the future and the initial project announced was a plan to value add lignin by processing it into a precursor for plastic container manufacture.

The various “paper sludge” streams, some 80ktpa (wet) [approx. 40 ktpa(dry)] are currently supplied to local composters for application as final product amendments and additives. And in view of the recent “Bio Refinery” announcement, APM may have these materials earmarked as potential input feedstock materials for such a project in time. However, pyrolysis trials conducted on these very same materials 2004/5 have now demonstrated that when converted to biochar (and some 2-4MW energy) as a by-product, these materials can be applied as valuable ingredients into the preparation


of high value, synthetic fertilizer replacement/supplementary products, that maybe one of the most HNRV applications of these materials, even if a Bio Refinery project is established.

In the event that a “hub & spoke” BioHub network is established in Gippsland, the operators of such a network would be well placed to approach APM to offer an end use of these materials many times more commercially attractive than the current composting option. An example of the “shandy Principle” at work (Attachment B 4.4).

2.5 Agricultural/Horticultural Harvesting and Processing Residues

With the establishment of BioHubs in Gippsland, the Agricultural (broad acre) and Horticultural sectors will be afforded the potential to benefit in a number of ways:-

1) Being able to realise fair market value, for any waste, residue or by-product materials that they may not have more advantageous uses for from time to time.

2) The opportunity to grow special purpose “break” crops from time to time, that the BioHubs could apply to markets and end use applications not readily available to individual growers.

3) Access tailor made (food grade) fertilizer and amendment fortified biochar products as supplements/replacements for synthetic alternative.

However, these relationships between potential BioHubs and these sectors is considered to be “Merchant”. In other words the BioHubs will need to be capital justified by other more initially Contractable inputs and off takes, but once established, able to derive considerable extra throughput and value creation by developing lasting relationships of material value, with these sectors.

2.6 Dairy Production and Processing Residues

2.6.1 Sector Profile

Dairy is a major farming and economic sector in Gippsland, producing some 21.4% of national milk production.

Table 2-1: Profile of regional Dairy Sector

Municipality Farms Milk Production – ‘000 % Cows– ‘000

South Gippsland 438 695,183 35 125.9

Wellington 375 589,605 30 114.6

Baw Baw 306 365,878 18 61

Bass Coast 96 91,068 5 18.1

East Gippsland 57 75,509 4 15

Latrobe 43 57,647 3 11.4

Cardinia/other 93 85,635 5 17

Totals 1,411 1,980,225 100% 363

By extrapolation, the average farm in the region:-

Is a family concern of approximately 257 cows

Produces 1,403,420 litres of milk per annum


And because all farms are pasture based and the cows are only on concrete for milking twice/day or 10-15% of the time, manure production is approx. 5kg/cow/day which needs approx. 50lts/cow to wash down ∴ producing some 55lts/day/cow of raw slurry.

Current effluent management practices involve wash down to fixed (anaerobic/aerobic) pondage, with “stabilised” water directed for release or irrigation and mature solids that accumulate in the ponds, cleaned out as necessary and applied to paddocks for a level of nutrient recovery.

This nutrient recovery is valuable, but is not the total nutrient/fertilizer amount necessary to optimise pasture productivity for the year.

The effluent/manure slurry management system described is “low capital” and effectively “least cost disposal” even when irrigation water and nutrient recovery is fully valued. Certainly, no bioenergy recovery from the stabilisation of these raw manure slurries is achieved.

Typical farm 257 cows – 55lts slurry x 257 = 14,135 lts/day 14,135 lts/day average = 32.22m3 CH4/day 32.22m3 CH4 = 1,167 MJ/day = 85.92 kwh/day = 30,931 kwh/… or 30.9MW Or 247,200 MWhrs @ say $100/MW hr Or approx. $24M/pa currently unrealised income for the entire Gippsland region Or approximately $60 - $65 per cow.

The carry forward issue from a dairy perspective seems to be:-

a) Can the energy be recovered cost effectively?

b) Can the principle and practices of “precision farming” be applied to existing pasture productivity management traditions?

c) Can the daily operating costs of manure and effluent management be streamlined and reduced?

d) Can any of these goals be achieved in the short to medium term?

2.7 Red Meat Production and Processing Residues

Radfords Meats, Warragul is the only significant red meat abattoir in the study region. Whilst current “save all” solids are composted on site, and effluents processed by a standard anaerobic/ aerobic pond system, if a specialised wet waste/AD based system was ever established in the Drouin/Warragul region, perhaps in response to the establishment of a poultry abattoir/render plant in the region (and the two local piggeries see 2.8) an opportunity might be created to service all such operations and thereby create a competitive advantage for the participating facilities.

Alternatively, whilst ever Radfords operates as it currently does, an appropriately sized, wood fuelled, skid mounted torrefaction/pyrolysis unit might be a viable option to convert all current “save all” solids and yard scrapings into value added “ingredients” that could be sold to a regional BioHub facility that manufactured tailor made, fortified biochar fertilizer products, such an outcome would not only minimise waste management costs, but also ensure compliance with licencing conditions and reduce labour costs.


2.8 Poultry Production and Processing Residues

The poultry industry is mostly clustered in the Council areas of:

Casey

Cardinia

Mornington Peninsular Frankston

Dandenong

Generally to the west of the main Gippsland region.

Figure 2-1: Location of Egg Farms

Figure 2-2: Location of Meat (broiler) Farms

Some 2.3 million birds on the border of the study region.

This material is very relevant to the current study as most existing markets for the litter and manures produced by this sector are in the main study area.


Broiler shed litter is approx. 50% bedding/shavings and 50% manure and the sheds are cleaned out by speciality contractors each time the birds are sent to the abattoir and the sheds are fully sanitized before fresh bedding is applied and fresh hatchlings introduced.

For the “layer” sheds, the pure “guano” contains no litter or bedding and is cleaned out regularly as an individual shed management issue.

Working with generic VFF data sets, a regional shed cleaning contractor (trading as “OLDS”) was interviewed as the basis of the following data estimates.

OLDS average (eggs and meat) shed cleaning 6,500m3/month

= 78,000 m3pa (40% market share)

= 195,000 m3pa total regional arisings (2m3 of litter = 1 tonne)

Current reliable markets for raw, composted or semi matured litter products estimated 100,000 m 3 pa.

Therefore, current “stock piles” of “maturing” litter materials approx. 95,000m3 or some 50,000tpa

When “layer” and “broiler” litters are mixed in the approximate proportions of their availability a 40% litter/60% manure product is the average blend available for a higher value end use in an emerging regional bio economy.

Table 2-2: Carry Forward Values – Poultry Litter

Material Potential t/pa Approx. Local Value

MC Wet/Dry Term Contractable/ Merchant

Poultry bedding and manures

50,000

$30-$40/t delivered regionally

Approx. 35% MC

Short

Contractable

Term = Short (1-3 years): Medium (2-5 years): Long (>5 years)

Matters Arising

i) With the potential closure, downsizing or relocation of A.S.H. at Heyfield, a crucial source of sawdust and shavings could be lost. This is causing the sector to look for an affordable alternative bedding materials. Milled straw and rice hulls are currently being explored. This issue:

a. Throws up an opportunity within the broader bio economy framework to look for suitable alternative materials for the poultry sector; and

b. Means that the actual quality of existing poultry litter products may change materially in the short to medium term.

ii) Future expansion of the sector will be materially affected by securing viable local markets for litter (and dead birds or “morts”) and the regional development of a poultry abattoir and rendering capability – which in turn will need to be able to access cost effective effluent and waste water processing facilities.

iii) The VCMC-2025 Strategic Plan, “ constraints to sector growth” in the specific region are listed as (in part):


a) State and Local Governments partner with the chicken meat sector in the immediate to medium term in relation to infrastructure planning and development approvals.

The need for:-

b) New breeder farms and hatcheries;

c) New investment in boiler farms, processing and value-adding processing;

d) Skilled jobs creation;

e) Increased water usage and recycling;

f) Increased energy usage; and

g) Increased waste recycling and disposal.

An outcome of this GBP – Scoping Study should be to contemplate providing a practical framework to fully address this VCMC “wish list” as the basis for encouraging optimum “jobs & growth” in the region as a direct results of adopting the principles for encouraging a regional bio economy as outlined in Section 1.


2.9 Pigs Production and Processing Residues

As Fig. 2-3 there are only two piggeries in the study region.

Figure 2-3: Piggeries in the study region

With only these two piggeries in the region, the effluents and wastes produced are unlikely to influence the commercial viability of any potential processing capability in the region.

But in the event that a processing capability proves to be viable to service the Drouin/Warragul area, these piggeries at Trafalgar and Warragul should be interviewed in such a context with local processing capabilities established, probably AD facilities, with digestate value adding at a dedicated fertilizer blend plant, these two piggeries could be offered structured services that:

Minimised manure management costs Controlled odour Optimise pasture productivity Captured inherent bio energy and nutrient potential

2.10 Urban Waste Streams (MSW, C&I)

2.10.1 Background and Context

The currently “Gippsland Regional Waste & Resource Recovery Implementation Plan” (Aug.2016) is taken as the primary data and information source for this section. This document provides a logical plan for Urban Waste Management Materials (UWMM) for the next 10 years and beyond, based on historical approaches to UWMM and planned, but aspirational programs for the future.

Since some 50-60% of these UWMM are “biomass” in the event that a fully functioning bio economy develops in Gippsland, additional options for the recovery of HNRV from these materials will become available.

It is most likely that a suite of new systems and infrastructure will initially be proposed, developed and capital justified based on the efficient processing and value adding of wastes, residues and by -products from the livestock, agricultural, horticultural and forestry sectors, but once established, these same facilities (and the end markets developed for this initial project) will then provide biomass processing and value adding opportunities that could not logically be justified for the processing of UWMM biomass fractions alone.


So, because this GBP – Initial Scoping Study, is looking to provide long term vision and a “road map” to inform future possibilities and directions, as well as short term “shovel ready” project ideas, (Attachment B) Is a Discussion Paper: “Strategic Options for the all of waste stream management of urban wastes arising in Gippsland and any participating neighbouring Councils”, as additional background on the subject of UWMM for the medium to long term, from which selected ideas and concepts are referenced and included in this section.

2.10.2 Medium to Long Term Potential

(Attachment B refers)

(Some 50-60% of Urban Waste Streams are biomass)

Within the traditional/historical approach these urban waste materials have generally been managed for ‘least cost’ treatment and disposal. Often this management approach results in the production of composts or Landfill Gas (LFG) products that can demonstrate some residual value, but within the context of the emerging ‘bio economy’ the opportunity now exists to plan in the short to medium term for medium to long term outcomes that will see these same materials achieving a significant portion of their inherent highest net resource value.

To this end, attachment B is provided:-

a) To canvas the concepts, principles and strategies that will ultimately inform a systematic transition from ‘least cost treatment and disposal’ outcomes, to systematic HNRV application for these same materials as inputs into the ‘bio economy; and

b) Provide a guide to the development of future Regional Waste Management Strategies for not only the >50% of biomass in such urban wastes, but also for all the other non-biomass material streams that would be liberated and aggregated in the process.

The biomass fractions of urban waste streams include:

i) Domestic garden/green wastes; ii) Domestic food and small garden wastes (FOGO); iii) Residual biomass materials presenting in the residual waste bins; iv) STP sludges and biosolids; v) Sale yard wastes; vi) C&I wood wastes (non “treated” or painted); vii) C&D wood wastes (non “treated” or painted); and viii) C&I trade wastes/grease trap and Gross Pollutant Traps (GPT) wastes.

The current fate for these materials includes:

Landfill disposal (with or without LFG recovery) Composting for (usually semi-restricted) application to land as soil amendments Treatment/stabilization/spray irrigation etc.

All such uses and applications are achieved as a cost to the waste generators or ratepayers, even after application of any marginal income achieved for certain compost products.


The transition to systematically realising the HNRV for all these materials must follow the ‘shandy principle’ (Attachment B 4.4) because, however much effort is applied to source separation, these materials will still present in process engineering terms as ‘indeterminate’ in both quality and quantity for the purposes of singly or solely supporting the manufacture of genuinely highest value products.

Attachment B describes the processes and strategies to:

a) Collect and process MSW materials into a full range of broadly specified secondary resources, such that

b) Genuine consumer facing finished goods and services manufacturers/providers can fully utilize these materials by ‘shandying’ them in with virgin resources to produce HNRV outcomes for the supplier of these reclaimed materials.

This approach, focused on transitioning secondary resources, reclaimed from urban waste streams, back into the productive economy at HNRV, will require significant expenditure on systems, infrastructure and beneficiation plants. The objective of the approach adopted in Attachment B, is to be able to capital justify most such expenditure from the increased receipts from the high value product outcomes, rather than putting up the domestic waste charge .

In fact, this approach, when fully detailed should aim to initially stabilize domestic waste charges (DWCs) to CPI increases only, and subsequently, demonstrate downward pressure on DWCs as the full value of all the reclaimed resources are shandied back into the productive economy for full value. For a current case study see http://ecowaste.com.au/issues.html (WSROC Options Review) which establishes the concepts advanced in Attachment B into a deliverable framework for the WSROC Councils. The same concepts could be adapted to exactly suit the prevailing circumstances in the Gippsland region, once an emerging “bio economy” is established to immediately value add the organic or “biomass” fractions.

2.10.3 Strategic Potential and Opportunities

In considering the medium to long term strategies and options for the management of the >50% organic/biomass content of the regional urban waste streams, the existing and planned strategies (as detailed in the RWP – 2016) provides the essential starting point from which to assess and evaluate future options.

The emergence of a readily available regional system of networked BioHubs and related infrastructure, that is proposed and capital justified to address all the other identified non-urban wastes biomass sources can then present as a tangible, proven and costed option for individual councils or Gippsland as a whole to consider in due course.

Adoption of the concepts and principles outlined in Attachment B will facilitate a structured transition from the current ‘least cost disposal’ (with or without token product sales) to one where the same materials are presented, with ‘shandying’ pathways to HNRV outcomes as discrete ingredients, rather than trying to present as finished products in their own right.

Further, whilst the ‘key drivers and policy context’ for current strategies are expressed in terms of legislative compliance, by focusing on presenting reclaimed materials being ‘shandied’ into the production of full value, consumer facing products and services, the actual achievement of all the priority action areas and objectives will be achieved or facilitated as collateral outcomes.

http://ecowaste.com.au/issues.html


Fully developing these concepts and strategies is beyond the brief for this ‘Gippsland BioHub Project’, but the need and opportunity is listed in Section 7 as a specific ‘further work’ task that could be undertaken in parallel with any subsequent review of the existing RWP, or by individual councils with a specific interest in this area of ‘next generation’ urban waste management.

However, the proposed concept provides a framework to project potential biomass inputs into an emerging Gippsland BioHub network. Such potential biomass arising can be considered by type:

i) The >50% mixed biomass content in kerbside collected residual waste;

ii) FOGO collections;

iii) Parks, gardens and garden wastes;

iv) STP solids and nutrients; and

v) C&I trade wastes and (supermarket) food wastes etc.

Such potential arisings can also be considered within the short/immediate, medium and longer term project implementation time lines as anticipated by this. Table 2-3 Initial Scoping Study and subsequent key makes some initial, but practical projections to provide some basic data to be included in Section 4.

Table 2-3: Carry Forward Values – Residual MSW Biomass

Material Potential t/pa Approx. Local Value $/t delivered

Term Contractable/ Merchant

Mechanically Separated Residual Biomass

35,000pa

[$40-$50/t]

Medium to

Long

Contractable

Term = Short (1-3 years): Medium (2-5 years): Long (>5 years)

2.11 Biosolids

Waste water treatment systems have great potential to recover the HNRV from the effluents and “biomass” under management, and if operated appropriately can provide a strong commercial platform to attract and encourage food, fibre and related biomass processing development in a selected region.

Traditionally, reticulated waste water management systems have been constructed and operated with public health and environmental protection as the primary objective. This focus has shaped systems responsibilities and services to reliably aggregate waste water and pipe it to a treatment facilities, where the materials are stabilized (aerobically) until the treated water is of a suitable standard to be released back to the environment. The liquid to land or a suitable water course, the residual solids (Biosolids) to land, or landfill, or maybe for further stabilisation via a composting facility.

In a fully functioning bio economy these waste recovery channels offer the opportunity to:

i) Capture the biogas that in traditional systems is just lost straight back to atmosphere (as a GHG).


ii) To process the mineral nutrients into important ingredients for specialist fertilizer manufacturers/blenders to “shandy” into fully balanced finished products.

iii) Return treated water for productive reuse, rather than just “least cost disposal” to a local water course.

iv) Attract appropriate food, fibre or related biomass processing industries to any particular location by specifically offering bio-waste, bio effluent processing capabilities rather than insisting that such businesses install all their own waste processing facil ities, before being allowed to discharge to sewer.

In Gippsland, the Water Factory, Dutson Downs and the East Gippsland facility at Bairnsdale are all excellent examples of providing waste water treatment capabilities that achieve these bio economy objectives. APM, as a major client of the Water Factory is an excellent example of (iv) above.

Perhaps an advanced version of this concept could be explored in the Drouin/Warragul area to service existing “bio” industries and act to attract other such businesses in the interests of “jobs & growth” in the region.

Certainly, a prospective BioHub that emerges from this scoping study that involves waste water treatment (AD facilities) should consider integrating with local waste water systems where practical to do so.

2.12 Special Purpose Crops

Discussion

Where a Bio Economy looks to increasingly replace or supplement “fossil” resources in the provision of all the carbon molecules the community needs to support our complex industrial economies, relying on only existing wastes, residues and by-products will not address demand. At this point special purpose crops will be required to supply ever more sophisticated “bio” materials.

To preserve the essential “sustainability” concept and the ultimate driver for the emergence of a bio economy, special purpose crop production will need to address:

i) Best and highest use of available land, in relation to the provision of ecosystem services, amenity, food and fibre etc.

ii) The application of genetically advanced crops, that optimise photosynthesis in relation to the primary yield achieved, without generating undue stress on soil quality, water use, subsequent emissions.

But one collateral advantage will be that the broad systems and infrastructure networks, designed initially to process wastes, residues and by-products of existing primary activities, will be available and ideally situated to handle such special purpose crops when they need processing and value adding.

2.13 Summary of Potentially Applicable Biomass Arisings in the Region

A review of the major biomass arisings discussed above is useful to scope possible project opportunities for general or long term development, medium term assessment, after more feasibility research is undertaken and short term, or “shovel ready” after only direct feasibility assessments have been completed.


With this in mind, each potential biomass resource is reviewed in terms of how each could initiate, or best be applied in terms of the long term, medium term and short term criteria and the Council area where this initial scoping suggests the earliest potential.

i) Forestry Residues

As discussed 2.2 above, the primary application of native forestry and plantation output is being applied to support increasingly commoditised finished product manufacture, and the resultant wastes, residues or by-products are mostly applied for very undervalued application, e.g. harvest residues are left on the forest floor to “recycle” nutrients, and minimise erosion control, and ultimately, because existing end uses or markets do not exist for these materials, net of the logistics costs. In a functioning bio economy in Gippsland strong value adding markets will exist for all off -spec stem wood and branches; leaving tops, twigs, bark, for initial nutrient recycling and erosion control, and in so doing making the sites much more accessible for replanting and for the direct application of tailor made fortified biochar based fertilizers as a “precision farming” approach.

Whilst such a change to existing “standard” practice will take a while to adjust to, the extra “yield” of hard and soft wood material, will be available to support a range of value adding activities (Sections 3 & 4).

For subsequent project scoping assessments, assumptions have been made that such forest residue material could be made available at, say a delivered price of $50/tonne.

The assumption is made that such material could be supplied to any proposed BioHub anywhere in the Gippsland area if required on a contractual basis.

ii) Paper Sludges

Whilst APM is announcing their bio refinery initiative, starting with a dedicated project to convert lignin into plastic containers, the balance of the paper sludges (containing no lignin) have been included as a potential input into a dedicated BioHub project (see Section 4.3) on the basis that the value and performance of these materials as ingredients in the production of high value fertilizer products is now very well-known and understood and that a much higher HNRV end use could be achieved, rather than as inputs into basic compost products only.

The assumption is made that such materials would be best applied to BioHub projects in the Latrobe/ Wellington/MID region on Contractual terms after detailed negotiation.

iii) Agricultural & horticultural Arisings

As waste biomass arisings, no accurate assessment has been possible in this initial scoping study , but the appetite from this sector for tailor made, food grade fertilizer products has been mentioned in many of the interviews conducted for this study (see Section 3).

iv) Dairy Slurries

These biomass resources seem to offer a significant opportunity to systematically value add to the existing Dairy sector whilst providing the focus and momentum to develop a vanguard project that could:

Generate considerable investment and employment opportunities

Contribute to the bio energy output of the region


Minimise nutrient run off from dairy pastures

Provide a platform to optimise the pasture fertilization costs and practices in the region

Establish a “catalytic” project that would include a wide range of non-dairy stakeholders and thus demonstrate a “de-siloed” functioning bio economy as a model for other opportunities identified herein.

The main dairy regions in Gippsland include:

South Gippsland 126,000 cows – 2,495,000tpa raw slurry

Wellington 115,000 cows – 2,277,000tpa raw slurry

Baw Baw 61,000 cows – 1,208,000tpa raw slurry

In discussions with the Macalister Demonstration Farm, specific short term opportunities have emerged to consider a project to service approximately 85,000 herd size in the MID area ( see Section 4.3). And whilst this initially scoped project might be best developed in perhaps three defined stages, the model might then be considered and adopted for other major dairy regions.

Such a project would be based on Contractual inputs and off takings and be deve loped in the Short term, where:

Reduced operational costs were evidenced;

Improved pasture performance was supported;

Lower fertilization costs were achieved;

Lower energy costs were achieved; and

Less nutrient run off was achieved, into surrounding water courses.

v) Red Meat Production and Processing

Red meat production in Gippsland is predominantly pasture based, with no significant manure concentrating functions such as feedlots or sale yards and so the Radfords Abattoir is the only significant source of bio wastes or effluents.

As described (2.6 above) short term, skid mounted solid waste processing could be viable once at least one regional blended fertilizer facility is established in the region to buy the product, but eventually the opportunity to link all current and prospective generators of bio wastes and effluent flows in the Drouin/Warragul area currently presents as a medium to long term project in the Baw Baw area and in close collaboration with Gippsland Water.

vi) Poultry

The regional surplus of poultry litter presents a major opportunity in the region, to stimulate HNRV markets and end uses for these materials and thus solve a waste problem and generate a tailor made, pasture specific range of fertilizer and soil amendment products. If related to the MID prospect, this material could present as a short term opportunity and within a contractually certain framework.

vii) Piggeries

See (v) above – this opportunity most likely to be best addressed as a regional solution.


viii) Urban Wastes – MSW/C&I

The systematic development of >95% landfill diversion strategies for Gippsland are considered (Discussion Paper Attachment B) but since >50% of these materials are biomass in nature, wherever a prospective BioHub is considered, based on less problematic Agriculture and Forestry inputs, the opportunity will always present to consider attracting one or another of the identified biomass waste streams as contributing inputs to proposed project.

Urban waste streams tend to be “indeterminate” in quality and nature, often containing some level of cross contamination with non-biomass materials, so these streams are best processed by “shandying” in the materials, rather than looking to attempt the production of tightly specified quality products from these materials alone.

One immediate possibility might be to accept volumes of finished, or even partially processed “product” from Dutson Downs, such that after an appropriate level of heat treatment, such materials might then be re classified as being safe, accepted and suitable for food production applications, especially those higher value applications and markets not available to them now, due to QA/QC considerations.

ix) Bio Solids

See (viii) above for preferred path to market.


3. Bio Product Markets

3.1 Opportunities and Guiding Philosophy

In adopting all the essential objectives, drivers and strategy defining concepts and principles identified in sections 1.3 and 1.4, the resulting commercial rubric results.

Currently all the available sustainably yielded biomass materials presenting in the study area are managed for ‘least cost disposal’, which invariably involves leaving or spreading materials on (sometimes in) the ground for the inherent carbon to oxidise to atmosphere and/or be eventually incorporated back into surface soils with the other minerals and nutrients.

In a fully functioning Bio Economy, these same materials present as a potential industrial input; as the prime raw material from which to manufacture any product or service currently supplied from ‘fossil’ resources. Thus the potential markets for ‘bio’ products, as full replacement, or just supplementary products and services, is well established and deep, clearly specified as to quantity, quality and performance, but also clearly benchmarked for all/any negative GHG or resource depletion impacts which:

a) May not yet be internalised into existing cost structures; and

b) Currently serve to support future pricing for non-fossil alternatives.

Whereas all such materials present as an operational cost or a lost opportunity to the current owner/manager, then, naturally, they seek to spend as little as possible on disposal compliance issues; and any final benefits may only be token, as conceptually depicted in Fig. 3-1.

Figure 3-1: Conceptual representation of ‘least cost disposal’ approach

The alternative Highest Net Resource Value (HNRV) approach however is structured to achieve a quite different net result for the original owner/manager of the materials and the local community.

Least cost process to achieve and maintain compliance

A. Net cost to current Owner/ Manager

B. Compliance Process

Final product values (±) realised as marginal

Cost of disposal to be minimised within prevailing regulatory framework

Such that A = B (±) C

C. Final Product Value


Figure 3-2: Conceptual representation of HNRV approach

NB: Even if the value for A remains similar in Fig. 3-1 and 3-2 but is no longer a lost opportunity and/or a potentially escalating liability going forward, net benefits will accrue to the current owner/manager as long as B) is demonstrated as the most efficient process to achieve C). The likelihood is that the processing capability (B) will be much more capital intensive than for the ‘least cost’ option but that the capital justification for this additional expense should be supported by the increase in product value (C) rather than by increasing the ‘disposal costs’ at (A).

All the following ‘Bio’ product categories have been assessed against this rubric.

3.2 Bioenergy

All of the following bioenergy opportunities have been assessed against the concepts defined in Table 1-3.

3.2.1 Biogas

Biogas is the gaseous product of anaerobic digestion and is predominantly CH4 (methane) with CO2

(Carbon monoxide) and may have small amounts of (H2S) (Hydrogen Sulphide) and will contain moisture as this gas is released from the aqueous conditions in the reaction vessel.

This gas is similar in composition to natural gas (NG) and LNG (Liquefied Natural Gas) which is the ‘fossil’ equivalent most often supplied where heat is required.

The original biogas can readily be dried, decontaminated and compressed so as to present to the market as a direct LNG replacement. In this form the upgraded biogas is termed CNG (Compressed Natural Gas) or RNG (Renewable Natural Gas).

As CNG/RNG, this energy product can be applied in an application where LNG can be used, including:

1. Direct power generation, usually via a specially designed reciprocating engine;

2. As a direct boiler fuel or source of process heat; and

3. As a transport fuel, most likely to be of most use in Gippsland as a supplementary or co-fuel to modified diesel engines, such as might be most suitable for direct network and/or regional stakeholder users – such as council fleets etc.

Optimally designed & operated full value realisation process(es)

A. Net cost to current Owner/ Manager

B. Value Adding Process

Manufactured to enter productive economy as fully valued product and/or ingredient

Secondary materials presented as defined inputs to recognised value adding process

Such that A = C – B

C. Final Product


As a stationary engine fuel it could be used at the respective sites of all the dairies proposing to supply their manure slurries to the central plants. This could be most attractive at the individual sites of the participating dairies. These dairies would then have the option to use the CNG they contributed to the manufacture of, for ‘on demand’ ‘behind the meter ‘power generation or heat/steam generation as was advantageous to each respectively.

3.2.2 Syngas

Syngas, or synthesis gas is a product of gasification/pyrolysis processes, and is produced at elevated temperatures (approx. 400-600°C but about 400-480°C in these proposed applications) and is a Hydrogen rich gas (with CO and some CO2) and can be applied as a petrochemical input material (significant potential if/when a ‘bio-methanol’ market emerges) but most likely, as a ‘bio’ power generating energy product.

3.2.3 Solid Bio-Fuels

As Table 1-3, converting selected biomass materials for a one-off, binary application as a solid fuel, for traditional combustion, will seldom represent the HNRV outcome for available biomass materials.

However, in the Gippsland context, certain opportunities to apply woody materials recovered from the regional urban waste streams (Attachment B) may be of value in the emerging APM Bio Refinery scenario, or as a direct replacement for the lignin (black liquor) as a supplementary energy source, if and when the currently applied black liquor is redirected to higher value applications.

3.3 Compost

The application of clean source separated biomass materials to manufacture quality, consumer demanded composts can certainly represent the HNRV application for selected materials.

The strategic difference between a ‘least cost disposal’ compost product and a HNRV product relates to the degree with which the finished material is demanded by the market, rather than ‘supply pushed’ and usually evidenced by the price end users are prepared to pay for the finished product.

An ideal situation presents in the study region, in that successful facilities currently exist, and sell/utilize their final products.

However, with the development of a fully integrated regional BioHub network, all such materials will be free to move to their HNRV. Surplus, off spec, or unsold composts will have an alternative outlet as ingredients into regional D/T/P facilities to maintain the most productive balance between supply and demand.

3.4 Biochar/Land Applications and Fertilizer Ingredients

As depicted Table 1-3, the unique properties of biomass are as the primary raw material into processes that can manufacturer the ‘bio’ version of fossil gas, oil and coal (Columns E-I) and thus provides a sustainable alternative source material for the production and manufacture of every product and service that we currently rely on fossil resources to support.

In the current nascent emergence of a Bio Economy, where certain end product categories represent readily achievable high value markets for ‘bio’ products and ingredients, the production of ta ilor-made biochars for land application, to sequester carbon whilst providing valuable soil productivity


improvements (and replacing/supplementing the use of synthetic fossil based or non-renewable or resource depleting fertilizer products) is one such market segment.

Attachment C provides a very small sample of the >2000 published pages on the subject of biochar in soils, but in summary, the tangible properties of each finished biochar is the result of the properties and characteristics of the original biomass materials and the process conditions that they are exposed to.

From this base, finished, balanced fertilizer products can be manufactured from different finished biochars that will reliably exhibit properties that can be applied to the production of f inished, blended, all-in-one tailor-made fertilizers that are produced to exactly satisfy a particular grower’s requirements for any one crop or application.

The biochar blended finished fertilizer market is now scientifically established and ready for ful l scale commercialisation by the appropriate and fully experienced parties, and for the purpose of this Gippsland BioHub Project, production of specialty biochar based fertilizer products is adopted as a foundation element of this scoping study.

In the proposed biomass processing facilities as described in Section 4 (‘Casino’ Fig. 4-1/’Nimbin’ Fig. 4-2/’Murwillumbah’ Fig. 4-3/’Bora Ridge’ Fig. 4-4) the digestate residuals, that contain all the residual solids (carbon, macro and micro nutrients essential trace elements and minerals) are proposed to be dried and incorporated into a range of finished biochar materials that would then be processed, as ingredients, into the production of tailor-made, customer demanded finished fertilizer products.

3.5 Metallurgical Grade Charcoals and Reductants

Vic Forests currently provides a range of quality hardwood species to the local saw mill and paper manufacturing sectors.

After ensuring reliable supply of quality sawlogs to the local saw mill industries, strong local and international markets exist for specialist metallurgical charcoals and industrial reductants that could present in the market as direct replacements for products currently supplied from ‘fossil’ resources – mostly a globally traded product – Calcined Anthracite.

Global demand for these specialty products is approximately 4.5 Mt/pa and traded at $500-$900/t in its ‘fossil’ form. A significant premium can be negotiated for high quality direct ‘bio’ replacements because of the valuable marketing advantages that ‘bio’ inputs can impart to the finished steel products. Direct ‘bio’ replacements can be readily manufactured from quality, low ash hardwood residues, and a significant by-product from the manufacture of such products is syngas as a Bio energy product.

3.6 Pre-treated Lignocellulosic Supply Opportunities

As an integrated Bio Economy emerges, a typical broad based ‘triangular’ supply/value chain will emerge (Fig. 1-1) whereby, as in most agricultural based sectors, multiple individual surplus biomass generators will be able to access convenient ‘first point of receival’ facilities, or BioHubs at which materials are sorted like-with-like to support the homogenous supply to higher order processors ‘bio’ refinery, whilst a selection of finished products are produced for local/regional consumption.


A strategic role for a regional BioHub network will be to process materials received that are surplus to local demand for secure ‘supply’ to more capital intensive and specialised facilities, such as the proposed APM Bio Refinery.

Individual BioHubs will be ideally placed to manage inventory and seasonal risks by presenting surplus materials in a form exactly suited to such higher value processors. Such higher order bio refineries will greatly appreciate being able to contract all, or even a portion of their feedstock supplies from reliable suppliers, since the absence of such ‘supply’ certainty has to be the major impediment to the development of this higher order process/refinery sector.

When detailed feasibility work is undertaken on this regional BioHub network concept, we expect that the development of such pre-treated ‘supply’ arrangements with existing or prospective higher order facilities will comprehensively manage the inevitable seasonal and network inventory management risks that will arise at that time.

It is to be expected that not only will this approach prove valuable to such higher order ‘bio’ products manufacturers/refiners, but it will also convert inventory and seasonal risks for BioHub operators from a operational problem to a significant profit centre in its own right.


4. Synthesis of Sections 2 & 3 to Identify Geographic & Functional Specifications for Integrated Nodes of “BioHub” Operational Facilities

4.1 Introduction

In this section we review potential “BioHub” projects that have been identified during the stakeholder consultations. Potential projects are categorised as:-

Short Term (ST) – indicating that progress towards implementation could be made forthwith, following detailed feasibility work to progress such projects from Stage 1 {Attachment A – Generic Project Development Process (Summarised) to at least Stage 2b (or even BPD)}.

Medium Term (MT) – indicating that realistic opportunities have been identified and that if the primary stakeholders in such potential projects wish to develop these conceptual opportunities further, an appropriate forum should be convened to establish a practical framework to take the projects forward.

Long Term or “Road Map” projects (LT) – indicating that as any related planning or collateral initiatives are considered, such projects could/should be scoped and addressed for inclusion or independent action.

4.2 Bairnsdale Node

Status: ST Demonstration & Trials – leading to medium term for commercialisation

4.2.1 Project Overview

In Bairnsdale, East Gippsland, three principle parties are collaborating to identify, scope and implement organic waste management opportunities. The three primary parties are:-

East Gippsland food cluster (www.eastgippslandfoodcluster.com.au) East Gippsland Shire Council (www.eastgippsland.vic.gov.au) East Gippsland Water (www.egwater.vic.gov.au)

And in collaboration with Federation University various technology options have been renewed in relation to some, or all of the various organic wastes generated in the basic project catchment.

This project is ongoing and being progressed by the parties. The inclusion of this project in this report is not in relation to the immediate progress being made the parties, but to look to identif y possible synergies or external initiatives that could support or value add the current project, or perhaps look to address any issues or problem that are currently presenting in the core project from a broader integrated regional bio economy context.

The core project (currently) aims to exploit some apparent synergies, on, or adjacent to the Holloway St facility, south of Bairnsdale with the EGW process plant to the east, Vegco salad washing facility to the north and a vacant block to the south, where a major greenhouse, or Controlled Environment Horticulture (CEH) greenhouse is being considered.

http://www.eastgippslandfoodcluster.com.au/

http://www.eastgippsland.vic.gov.au/

http://www.egwater.vic.gov.au/


Figure 4-1: Site for proposed “Bairnsdale Node”

The core project considerations include:

i) Developing an appropriately scaled Anaerobic Digester (AD) facility to process waste water and food waste, producing Biogas (for power generation) and digestate (potentially valuable as a fertilizer product or ingredient);

ii) The adjacent Vegco plant produces significant volumes of waste water from its salad vegetable washing and packing plant; and

iii) The proposed development of a CEH (greenhouse) on the vacant land, that could use:

Heat, power and CO2 from the AD plant;

Water from the AD plant and Vegco washery; and

Tailor made fertilizer products derived from the AD digestate (and supplemented as necessary to make a specified finished product).

4.2.2 Current Project Status

EGW has successfully installed and commissioned (as of Aug 2016) a pilot scale AD, heat and power plant on site that is generating some 40kw of power to supply the main plant with excess being fed to the grid.


4.2.3 Next Steps

Next steps include: Demo AD unit to be scaled up and other feedstocks trialled; and

CEH project to be scoped and feasibility to be assessed, including confirming the beneficial use of heat, water and CO2 fertilizer products that could be supplied, generated from the proposed treatment facility.

4.2.4 Summary

Whilst this project is being positively progressed by EGFC, EGSC, EGW and Federation University, two issues seem to present, that a regional and fully integrated bio economy might be well placed to resolve for the benefit of this project as a whole.

A. Finding a beneficial processing/value adding opportunity for all other regionally generated food wastes and urban (organic) waste streams that prove to be unsuitable as inputs into this project, especially in the short term.

B. Identifying the processes and capabilities to convert the digestate materials from the AD plant into fully QA/QC’d food grade fertilizer products that could present back to the CEH facility as balanced and entirely fit for purpose in an ongoing commercial situation.

A & B above will be considered and addressed in the balance of this report.

4.3 Proposed Orbost BioHub

As discussed 2.3 above, this potential BioHub is, in relation Figure 0-1, to a concept only at this stage (Stage 1), although the information and data collected in the many previous energy focussed studies may prove to provide a considerable base of data from which to complete a detailed feasibility study. Stage 2b or 3 – Figure 0-1.

This potential project is considered worthy of a much more detailed feasibility assessment and is scoped in Section 8 below.

4.4 Macalister Irrigation District (MID) Node

Status: ST immediate concept development opportunities

4.4.1 Project Concept and Overview

This project concept evolved from discussions at the Macalister Demonstration Farm on the subject of how a fully functioning regional bio economy could support and add value to the extensive dairy operations in the MID.

The MID is unique in Gippsland due to the extensive irrigation system that supplies fresh water via an elaborate system of open channels and receives any subsequent run off into an equally elaborate system of drainage channels.


Figure 4-2: Fresh Water Supply

Figure 4-3: Drainage Channels

As Table 2-1 – the Wellington region carries a dairy herd of some 115,000 cows on some 375 separate farms.

At least some 85,000 cows graze in a more concentrated area of the MID.

In the discussions at MDF certain aspects of current practice were collated and included:

i) Manure management is an operational task that could be improved/streamlined. Whilst most manure (approx.. 85/90%) is deposited in the grazing paddocks, the 10/15% that accumulates


in the sheds presents as a wash down/water use issue, and the subsequent aerobic/anaerobic pond systems requires specific attention and maintenance on a regular basis.

ii) Manure management, manure application to pasture and even excessive fertilizer applications can present as significant run off issues, often attracting EPA attention.

iii) Current manure management practices not only releases all methane, or CO2 generated directly back to atmosphere as a direct result of the current pond based stabilization processes.

iv) Current pasture productivity practices include a number of fertilization techniques and approaches that have strong traditional roots, but that in the modern era of precision farming could be streamlined or adapted to:

a. Reduce operational labour and application costs;

b. Reduce fertilizer run off;

c. Reduce fertilizer costs;

d. Make existing mineralised nutrient resources bio available; and

e. Maximise pasture productivity.

v) Recovery of the considerable energy production potential from raw manures, effluents and wash down waters, for either “behind-the-meter” connections to individual/participating dairies, or just simply power sales to third parties or the grid in general.

By applying the principles for the achievement of a fully function bio economy (Section 1) the following project concept has been developed and which is described in some detail as the key to Fig. 4-3.


Figure 4-4: Concept Process Flow – MID BioHub

The following key explanation is provided with reference to the numbered “Operational Nodes” in Fig. 4-4.

Inputs

Node 1 Makes the assumption that the MID dairies representing some 85,000 cows would be piped to a central process plant (or maybe 2-3 separate plants) such that on site ponds were decommissioned (and only retained for “Bypass” emergencies) and that all wash down slurries and scrappings were sluiced/pumped into the interconnected “industrial” sewer system that would consist of:

a) A pressurised slurry system to the proposed new process plant;

b) A treated water return system to each participating dairy that could be used for wash down or irrigation etc.; and

c) A conduit that would facilitate the return of “bio energy” from the central plant to participating dairies.

Such a piping system would be laid out using the existing SRW channel system to address easement issues.

This effluent stream has been calculated at some 5 litres/day of manure/cow and 50lts of wash down water/cow/day or 55lts/day/cow.

Node 2 The Bairnsdale Node (4.2 above) has indicated that some 2000tpa of high protein food waste maybe surplus to the capacity of this project to process and so a provision has been made in this project scope to receive and value add such

Poultry Litter

Fertilizer Blend Plant

To service the region

Mixer/ Dryer

Final solid & nutrient

removal & extraction

1890 ktpa

0.4% yield 8 ktpa

INPUTS PRETREATMENT PROCESSING PRODUCTS

M.I.D.Dairy slurries(85,000 cows)(On pasture 85%On concrete 15%)Delivered by new piping system

Tailor Made Fertilizer Products

Returned to dairies and other regional customers -250 ktpa

Processed water returned to dairies, to tertigated recipe to individual dairy

requirements

1.700ML/pa Power sales to dairies & others

behind the meter

50 ktpa

Forestry residuesSaw mill residues

AD Bio Reactors

Central Heat/energy

management & single point

emissions control

Biochar Reactor

280-450 C

DewateringSolids separation

& concentrationCovered/baffled lagoons with continuous sludge recovery

Condensate

Patties food waste

790 ktpa800ktpa

Gas Clean Up & Co Gen plant

Other food wastes?

APM sewer & ESR sludge30,000 tpa (wet)/ (14,000 tpa dry)

Synthetic NPK

1

3

2

4

5

6

9

8

13

11

12

10

14 15

16

19

1 % yield

2 ktpa

7

? As identified

Heat/CNG sales

17

18

8MW

Either/or or a mixture

18 ktpa

40 ktpa 100 ktpa

150 ktpa

200 ktpa

900 ktpa

&/or

400 ktpa50% MC

1490 ktpa

NB: Mass flow data may not add up exactly due to heat losses or MC variability


materials in parallel to the dairy slurries.

Node 3 Ditto – other materials that the East Gippsland Food Cluster might identify over time.

Nodes 4&5 To process so much wet waste, energy will be required to dry and process the digestates, and since fertilizer products have been identified as locally necessary and appropriate, finished “bio” products, carbon will be an essential ingredient.

Two locally available sources of such dry, lignocellulosic material (2.2 and/or 2.3 above) have been included as being readily available on an affordable costs and representing a fair HNRV if so applied.

Inputs – Pre-treatment and Processing

Node 6 The dairy slurries will only be 2-8% solids (depending on supplementary “scrappings” if collected) and actual AD digester tanks are very expensive as “bulk water processors” units, so the design approach that has been adopted, to process these slurries is to first pass them into a covered (to collect every scrap of CH4 available) settlement, baffled pond, whose primary function is to settle the bulk of the solids into a V shaped bottom of the tanks, where thickened slurries only are pumped to the primary AD vessels for maximum Biogas generation and extraction. The settled overflow from this pond would then pass through a propriety activated carbon filter system (Node 12) to remove any carry over solids or dissolved nutrients, with these reclaimed solids and nutrients also passing to the AD tanks or directly to Node 10.

Node 7 Dedicated AD digester system to optimise Biogas generation and digestate stability.

Node 8 Throughout the complex and integrated process plant, as proposed, there are multiple heat generating sections and multiple heating demanding sections and this Node 8 conceptualises the integrated systems that will:

Generate/recover heat where available;

Distribute heat to where and when needed; and

Provide a single gaseous emission point to atmosphere for the entire facility to facilitate licence compliance.

Node 9 This is the primary source of:

Heat to drive the entire process plant, especially drying the digestates and conditioning the poultry litter (Node 14); and

The source of the activated carbon (biochar) substrates, around which the finished fertilizer (prilled/pelletised) products would be formed.

Node 10 This specialist unit counter flows “hot” biochar product from Node 9 against wet or semi solid digestates/sludges to:-

a) Quench the biochar, whilst;

b) Drying and “coating” the digestate nutrients onto the carbon particles, ready for blending off as finished, tailor made products in Node 13.


Node 11 Receival of “wet” biogas and drying, conditioning and compressing the finished gas for:

a) Direct sale as CNG; or

b) Conversion into power for resale.

Node 12 This “dewatering” Node recovers maximum solids and nutrients from digestates and products:

a) Treated water for return to dairies for irrigation; and

b) “Thickened” solids for final drying and conditioning at Node 10.

Node 13 This is the final, tailor made finished fertilizer products blending and manufacturing Node. In here, the different ingredients are stored in hoppers around the plant and then blended to exactly suit the “recipes” that customers want for each paddock, for each season and for each vegetation type/crop.

NB: This facility is standard equipment, most frequently applied to supply the horticultural sector.

Node 14 Poultry litter only needs limited heat treatment to stabilize the material and retain its more volatile nitrogen component. This will be achieved via Node 10 without needing to be processed at Node 9.

Node 15 To make fully functioning finished products that exactly fulfil all the needs and requirements of a customer (macro, micro nutrients and trace elements) materials sourced from pre-treated bio wastes can provide much of the final nutrient value and specifications required. But the provision of the full suite of traditional synthetic products provides the capacity to “fortify” every product as required to ensure complete customer satisfaction.

Products

Nodes 16 & 17 CNG sales and/or power sales as determined during project feasibility assessments.

Node 18 The treated water flows are proposed for return as irrigation products, and in that capacity, the plant could upgrade such flows to fertigation flows if demand existed.

Node 19 Currently dairy farmers usually reapply stabilised manure solids to their paddocks from their settlement ponds as the ponds require emptying. Then (perhaps based on an agronomist’s report) additional fertilizer applications are obtained to achieve optimum pasture productivity.

This proposed all-in-one fertilizer application, based on a range of fortified biochar materials will have the primary benefits of:-

a) Cost less than existing practice operationally;

b) Reducing synthetic fertilizer costs;

c) Adding tailor made biochars to the soil to optimise existing mineral availability


and greatly increase soil carbon;

d) Minimise nutrient run off or volatilisation; and

e) Ensure optimally balanced pasture productivity.


Initial concept only, with reference to Attachment A – Stage 1.

4.4.3 Next Steps

This concept project (and the initial feasibility assessment – 5.3) now needs to be subjected to a detailed feasibility study (Attachment A – Stage 3, 2b or 3) depending on the confidence that such a project could succeed.

4.4.4 Summary

With a multi stakeholder project of this sort it is often advantageous to convene a forum of directly involved stakeholders as a crucial stage in nurturing a solid basis for a social licence in the region.

Such a forum can also double as a Community Reference Group as the feasibility work progresses and such a CRC could act as the primary interface between a more specialist project development group and the community in general, to ensure that everyone is receiving all the same information and opportunity to participate.

4.5 Drouin/Warragul Node

Status: LT – concept to be incorporated in future planning

4.5.1 Project Overview and Concept

To fully explore bio economy possibilities, geographic synergies are often a catalyst for viable projects.

As described 2.6, 2.7, 2.8 and 2.9 the Drouin/Warragul region has the long term potential to present as a food and fibre processing centre, with the red meat abattoir, two local piggeries and the prospective poultry abattoir and rendering plant an ideal potential addition.

In future planning, the use of the Gippsland Water system, or a dedicated commercial sewer could establish this area as an ideal location to attract compatible growth and investment.


Nascent

4.5.3 Next Steps

Consider proposition in relation to existing local SEPPs and any future changes to such SEPPs in the future.


4.6 Leongatha Node

Status: LT – concept to be incorporated in future planning

4.6.1 Project Overview and Concept

South Gippsland hosts a dairy herd of some 126,000 cows on 438 separate farms and if the MID project proves to be successful, an adapted project may well prove to be viable in the region.

At such time, all other regional sources of biomass could be considered and evaluated to scope a BioHub project exactly tailored for the local circumstances.

At this time the Mirboo Community Energy project may have progressed from promoting energy efficiency to actually generating local energy and especially in relation to local cropping and horticultural (potatoes) production.

The approach and concepts proposed for the M.I.D. may well prove to be adaptable to a scaled down Mirboo concept and the surrounding horticultural sector (especially potatoes) may well b e in a position to provide reliable inputs and fully utilise potential outputs.

Such a project could have an added benefit in that the major supermarket chains place considerable value on retailing vegetables that can demonstrate a range of sustainability benefits and characteristics.


Nascent.

4.6.3 Next Steps

Closely observe progress and lessons learned from the MID and Bairnsdale projects and adapt such experience for the development of a related regional project.

4.7 Summary of Initially Identified BioHub Projects

Whilst the APM Bio Refinery announcement in a major development in the Gippsland region the proposed MID project offers considerable value to:

i) Provide a landmark opportunity to demonstrate a bio economy, HNRV project, using materials that are currently undervalued, unappreciated and currently managed for “least cost disposal” outcomes.

ii) Provides support and adds value to the existing Bairnsdale project.

iii) Demonstrate how by taking a HNRV, bio economy approach to what was previously considered a “least cost disposal” approach considerable investment and employment opportunities can be generated.

iv) The existing “commoditised” dairy sector can generate considerable value from wastes and residues and therefore improve the economy for the sector as a whole.


5. First Order Economic & Financial Analysis for Proposed M.I.D. BioHub Node

Since the Bairnsdale project is being advanced by the EGFC and the proposed Drouin/Warragul, Leongatha and Orbost nodes are concepts only at this stage, this section focuses on the potential MID BioHub node. This project not only demonstrates the economic and commercial potential of adopting a HNRV, bio economy approach, but also confirms this M.I.D. project as worthy of subsequent exploration and detailed feasibility assessment.

5.1 Approach and Methodology

In reaching a position on the economic viability of any of the potential projects identified in this GBP scoping study and of the MID node in particular, some previously discusse d issues, principles and opportunities have been adopted.

i) The potential input materials (Table 1-1 and Table 1-2) are currently presenting in a “least cost disposal” scenario.

ii) That recovering the full potential value of such materials requires focusing on the specific needs of the identified end uses/markets, which inevitably will be best served by products manufactured from a range of inputs, perhaps from a range of wastes, residues and by-products (and often supplemented with virgin resources) and this necessitates the adopting of a “de-siloed” approach across a range of existing industry sectors.

iii) That as depicted Table 1-3, the optimum value that can be realised from currently generated biomass materials is seldom just energy/power. Table 1-3 demonstrates that many other “clean” or low carbon technologies compete in the energy market, and energy is all they can provide, whereas biomass has the unique property of being able to be converted to sustainable “bio” gas, “bio” oil or “bio” coal (charcoal) and from that platform can then access markets and end uses that are as deep and prevalent as any current applications of “fossil” resources. And that where such biomass is applied the GHG “problem” in the atmosphere is incrementally addressed, since such biomass represents carbon extracted from the atmosphere (solar powered photosynthesis) and converted into readily understood vegetative forms (batteries) that remain ready to be “harvested” as the need arises. The adoption of this principle represents the crucial difference between “least cost disposal” of this material, usually as a by-product of some other primary activity, and the fulsome adoption of bio economy concepts and principles.

5.2 Criteria for Success

If the lofty concepts (5.1 above) are really practical and sustainable, any resultant BioHub project should be able to demonstrate tangible benefits to all potential project stakeholders, including: -

i) Waste biomass generators; ii) Final “bio” product producers; iii) Final “bio” product customers; iv) Relevant Government agencies and regulators; and v) The host community for any particular project where a net economic benefit should accrue.


5.3 Proposed M.I.D. BioHub Project – First Order Commercial Viability Assessment Node

This assessment is based on the author’s experience in consultation with the Macalister Demonstration Farm, and limited enquiries from potential equipment vendors and generic assessments of operational costs. However, biomass input costs are based on the consultations (Section 2) and the final market values are based on a nominally discounted value for the same or similar product or service being provided from traditional “fossil” or virgin resources.

Cost at Gate of Proposed

Plant

INPUTS Node 1 – Dairy Slurries (as 2.5.1) Node 3 – Chicken litter 40,000t @$35 – delivered Nodes 4&5 – Lignocellulosic 50,000t @$50 – delivered Node 15 – Supplementary MPK amendment 100,000t @$600 Node 2 – EGFC food waste 2,000tpa @$???

Sub Total

Nil

1,400,000 2,500,000

60,000,000 TBA

$63,900,000 OPEX Assumption 8% of Capex ($70M)

Sub Total C.O.S.

5,600,000 5,600,000

$69,500,000 CAPEX - Commercial Sewer System - AD, ponds and tankage - Gas clean-up and Power plant - Pyrolysis plant - Fertilizer blend/manufacturers

CAPEX

25,000,000 20,000,000

8,000,000 18,000,000 10,000,000

$81,000,000 REVENUES - Sale of Power 8MW @$100MW/hr - Blended finished NPK fortified biochar fertilizers 250,000tpa @ $450 average

Sub Total Less C.O.S.

Profit Contribution Or simple ROI

6,400,000

112,500,000

118,900,000 69,500,000 49,400,000

61% NB: This preliminary assessment needs a further and very detailed feasibility study, but without the opportunity to undertake such research in this current project, this initial summary does at least seem to demonstrate that such subsequent feasibility work would be well worthwhile .


5.4 Overview of Potential Economic Benefits

If 5.3 above can serve to demonstrate that the concept developed in Section 4 has a strong chance to be commercially viable, it is also valuable to review how such an operation in Gippsland generally, and the MID in particular would contribute to the economic wellbeing of the area.

5.4.1 Starting Conditions

Currently dairy sector commercially “challenged” by market forces, mostly out of the individual producer’s direct control.

Traditional manure/effluent management practices, “least cost disposal” in nature and not apparently embracing of latest “precision farming” techniques.

Existing pasture soils represent a “reservoir” of mineralised macro and micro nutrients that could be of direct commercial benefit if converted to “bio available” in a controlled and measured way.

Existing manure spreading and occasional synthetic fertilizer application often results in nutrient loss in run off into channels.

Energy potential from manures entirely lost to atmosphere, often as CH4 (a GHG some 21 times more potent than CO2).

Current operation of anaerobic/aerobic pond stabilization – labour intensive and prone to unplanned environment impacts.

M.I.D. consists of some 400 family farms, with an average of 275 cows each, which mitigates against strategies needing certain economies of scale.

5.4.2 Proposed Solution

Look to develop systematic regional infrastructure that would receive primary wash down slurries from the majority of MID farms such that:

Optimising biogas potential was recovered/generated for conversion to power and/or CNG (as the market determined);

Tailor made fertilizer products would be manufactured using digestate from the AD system and a range of other macro, micro and trace nutrients to deliver a fully balanced finished product, exactly suited to each paddock and application; and

Provide a facility that could receive other compatible biomass resources to supplement and improve the primary process, whilst generating collateral logistic and economic benefits within the region.

All as generally described, Section 4.4.

5.4.3 Potential Outcomes of Proposed BioHub Project

If the project is established as proposed Section 4., dairy farms will have access to:

i) Cheaper power; ii) Lower fertilizer costs; and


iii) Reduced manure management costs.

The region will benefit by:

i) Jobs and growth (some $80M in local investment and at least some 20 full time jobs); ii) Reduced run off; iii) Improved GHG impacts; iv) Regional biomass processing facilities to support other regional food processors; and v) Specialist fertilizer manufacturing capabilities to service Gippsland generally and further

afield as demand is proven.

In summary, these criteria i) to v) could be adopted to establish the “Criteria for Success” in any subsequent feasibility study and if and when introduced to the community generally.

5.4.4 Strategies Adopted to Achieve These Outcomes

Locally generated bio wastes, residues or by-products treated to release their inherent HNRV, rather than as currently managed for “least cost disposal”.

Applying the “shandy principle” (Attachment B-4.4).

“De siloing” existing Agricultural/Forestry sector to develop an outcome not possible if explored by anyone sector or “silo” alone.

Benchmarking the specifications, performance and price of all “bio” products proposed to the currently available “fossil” equipment and offering a “discount” to the fossil alternative as well as all the “sustainability” characteristics available.

In particular, this MID project provides the economic, commercial and social evidence that adopting Bio Economy strategies can generate considerable additional value for all primary Agricultural and Forestry activities and thus improve the viability and competitiveness of sectors, many of which are facing the impractical pressures of commoditisation.


6. First Order Completion Risk Assessments for the Various Nodes and Discussion of Primary Mitigation Measures

Since only the MID project (4.4) is proposed as a short term project proposition, worthy of immediate feasibility assessment, this section refers to this project only.

6.1 Main Completion Risk Factors

Since this MID BioHub project could be considered as a “first of type”, there is some merit in considering the key project elements to assess the prospects of such a project proceeding to successful completion in something like the structure and format as outlined in Section 4.4.

6.1.1 Dairy Farmers Participation

The benefits as summarised Section 5.2, would seem to be convincing reasons to participate, especially if the capital cost of the project is provided by expert, third party project developers, perhaps with and/or on behalf of a farmers co-operative or similar. Perhaps the Macalister demonstration farm could be encouraged to lead a project specific “Community Reference Group” process to facilitate transparency and accurate information provision.

With sensitive negotiations at least the provisional support of farmers should be achievable until the proposed feasibility study is completed.

6.1.2 Supplementary Biomass/Ingredient Supply

This proposal anticipates being able to process some 40k/tpa of chicken litter, which represents approximately 50% of the volume generated that is surplus to existing markets and beneficial end uses, and has been accounted for (Section 5.3) on existing “as delivered” commercial terms.

As discussed 2.7(iii) above this MID BioHub proposal could address many of the VCMC’s(Victorian Chicken Meat Council) concerns and requirements for growing the sector in Gippsland.

“Dry” lignocellulosic supplies to the project as forest residues and/or APM sludges would represent a more beneficial outcome than current practice and would seem to represent a firm position to negotiate from.

The EGFC project at Bairnsdale has identified certain regional food processing wastes that are not immediately proposed for their EGFC/EGW project, and mutual advantage would seem to support a negotiated outcome at the next proposed feasibility study stage.

Again, subject to sensitive negotiations these materials should be readily available to the project as proposed.

6.1.3 Bio Product Off-Takes

As proposed Section 5.2, the power and fertilizer products should be attractive products for participating local dairy farmers, and the ability of the proposed facility to offer surplus products to other markets in the region on similar terms, would position any off take risks as enti rely manageable, subject to subsequent feasibility study proposed.


6.1.4 Technology Performance and Procurement

The main processing functions as outline Section 4.3 include:

i) The proposed “commercial sewer” piping system to collect and deliver all the slurries and return treated water is just a novel application of existing technology. Such a system will require a level of pre-engineering as a function of the subsequent feasibility study as proposed, but two local irrigation contractors were consulted in the production of this report and the concept and budgets seem reliable at this stage of the proposed project.

ii) AD system (Fig. 4-4 Nodes 6 & 7) in the duty proposed are now “off the shelf” technologies and there will be many suitable specialist vendors that can be approached for competitive proposals, once the finally determined input/output and functionality criteria have been established in a subsequent feasibility study. The provision of this functionality capability is not seen as a project implementation risk of any magnitude.

iii) The Biogas clean up and power generation function (Fig. 4-4 Node 11) is now also “off the shelf” technology and packaged units are readily available from many specialist vendors. Once the feasibility study has determined a functional specification for such a capability, provision of this equipment need not present as an implementation risk.

iv) The D/T/P technologies (Fig. 4-4 Nodes 8, 9, 10) all currently exist, but usually in slightly different duties and functions, however, with the oversight of an appropriately experienced and qualified EPC(m) contractor the maximum risk the provision of such equipment could pose to the successful completion of the project would be measured in “commissioning time” rather than as an absolute failure.

v) The fertilizer blending/manufacturing function (Fig. 4-1 Node 13 & 15) is again standard equipment and could be procured by competitive bids once the feasibility study has defined the proposed functionality.

6.1.5 Social Licence Issues

The satisfactory management and resolution of such issues invariably revolves around transparency and fulsome information exchange and attention to explaining the proposed project in as much detail as any particular enquirer requires.

The proposed “Community Reference Group” (6.1.1 above) may well be a solid platform to work from.


6.2 Summary

Prior to completing a detailed and costed feasibility study there seems to be no structural or inherent Completion Risks for the project as described 4.3 above , certainly nothing that would seem to counter the recommendation that a suitably scoped feasibility study should not be undertaken as the next logical step.

Referring to Attachment A, the proposed feasibility study (Stage 1 to Basic Project Definition – BPD) should then provide a platform from which any justified project procurement strategy and approach could be established.


7. Budget Estimates for Ongoing Work to Advance M.I.D. and Orbost BioHub Prospects

7.1 Introduction

With reference to Fig. 0-1, the following budget estimates have been developed, in consultation with key stakeholders for each project, to provide an “order of magnitude” assessment of the specific tasks and related cost structure that will be necessary to progress from Stage 1 – Conceptualisation to BPD and/or Stage 3 – Full Feasibility.

If the conclusions of this report can support stakeholder confidence to proceed with either or both of these projects, then both of these estimates should be refined and confirmed and developed into firm and immediately fundable project proposals for a nominal fee.

7.2 Proposed Orbost BioHub

To complete a commercially significant feasibility study to advance this potential BioHub project , the following scope of works and first order budget is provided for initial guidance and stakeholder assessment.

Table 7-1: Proposed Scope of Works to Advance This Potential Project

Task No. Task First Order Budget M/D or $

1 Identifying key stakeholders and consult, including EGSC, Vic Forests, 2 x local saw mills, local harvesting contractors, other as emerge.

$8,000

2 Assess and define available forest and saw mill residues by quality, quantity, conditions of supply and net cost to the proposed processing plant, including testing of certain input materials

$5,000

$15,000 3 Define HNRV product range available from such materials and

collate probably routes to market for each product type identified

$8,000

4 Develop initial P&IDs for ideal process plant to most cost effectively convert (2) and (3) above including the necessary structured vendor enquiries as required.

$40,000 5 Develop first order financial model for the concept as described in

(4) above, making iterative adjustments as even better quality information is received or generated.

$10,000 6 After conditionally “freezing” the emerging project parameters,

assess:-

Suitable sites for such a project and the conditions and criteria that securing such a site might involve;

Undertake an assessment of project approvals and licensing pathways and address any significant issues that may arise before arriving at a preferred strategy.

$5,000

$5,000

7 Develop summarized project profile and viability assessment for stakeholder review, input and comment.

$8,000

8 Produce final feasibility report to a standard that allows stakeholders to make informed decision to proceed or not, and/or understand the crucial issues informing such a decision

$8,000


Initial Budget Estimate $112,000

To progress this initiative we recommend a consultative project review process to ensure that the proposed scope of works will accurately reflect the needs, ambitions and concerns of the selected primary stakeholder group.

The project could be undertaken in the form proposed in Table 8.1 or could be completed in two iterative phases, whereby all tasks were completed to a “pre -feasibility” status initially (approx. $60,000) with final “full feasibility” status being achieved as a second stage (approx. $60,000) if Stage 1 demonstrated sufficient confidence to proceed with Stage 2.

These budget estimates provide stakeholder guidance and should be confirmed after sufficient consultation and independent review.

7.3 Proposed M.I.D. BioHub

To complete a commercially significant feasibility study, to advance this potential BioHub project, the following scope of works, and first order budget is provided for initial guidance and stakeholder assessment.

Table 7-2: Proposed Scope of Works to Advance This Potential Project

Task No.

Task First Order Budget

M/D or $

1 To Develop an informed “Issues Paper” to a sufficient level of assurance and detail as to present the concept project to dairy farmers (and other essential stakeholders) to gauge support and enthusiasm to proceed with the final full project feasibility process.

$5,000 1.1 Establish actual on farm (MDF) soil trial parameters and improved

productivity test protocols.

$10,000

1.2 Take “before” soil samples and analyse to identify barriers to optimize pasture productivity.

$5,000

1.3 Take actual manure samples and convert to biochar state. $8,000

1.4 Make trial “fortified biochar” samples to exactly meet specifications identified 1.2 above

$90,000

1.5 Apply trial product (a) injected and (b) surface spread $6,000

1.6 Analyse results (a) soil tests; (b) dry matter production and (c) change to “locked up” mineral profile.

$20,000

1.7 Field event and publish results. $3,000

1.8 Final report on trials $5,000

Field test and trials Budget Estimate

$152,000

2 Parallel feasibility study to advance the project concept to BPD Stage (Fig. 0-1)

2.1 Develop staged project implementation plan with stakeholders $10,000

2.2 Develop plant designs and produce initially engineered PFDs/ P&IDs. $80,000 2.3 Develop confirmed plant capex/opex estimates including selected

equipment vendor enquiries.

$20,000

2.4 Develop financial model for integrated project, informed by M&E balance data (2.2 above) and analyse all generated data.

$15,000


2.5 Prepare project feasibility report including field trial data (1) above

$25,000

Plant Design and Estimate

$150,000

Feasibility study budget estimate: (1) Field trial/testing estimate (2) Plant design and estimate TOTAL

$152,000 $150,000

$302,000

These budget estimates are provided for indicative purposes only. Final project budgets should be prepared in consultation with selected project stakeholders and proposed project developer/owner representatives, if known.

Eventually project preliminaries, pre-engineering, approvals and licensing and contractual structures and arrangements may represent some 10%-15% of the final project capex, which if the current estimates of some $81M is substantiated, will equate to some $8M to $12M, of which the basic feasibility and testing work above would form a part. Eventual grant funding for some 50% of this amount (say $5M) would greatly expedite the project and encourage suitably qualified project developers/owner groups to proceed on a “fast track” basis.


Attachments Schedule

A. Generic Project Development Process

B. Discussion Paper

C. List of Published Papers

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