The paper focuses on how to ensure sustainable bioindustries within the MIW region through a circular economy approach.

Thinking

The Circular Economy: the bioprecinct approach and showcase on the Mackay Isaac Whitsunday region

This paper provides an overview of sustainable economic development strategies across the Mackay Isaac Whitsunday (MIW) region in Queensland. We discuss the opportunities that can take advantage of the region’s natural resources through a circular economy approach. The focus of this paper is to stress the need to consider all elements in the value chains that are needed to ensure sustainable bioindustries can be established for many years.

We discuss potential bioprocessing pathways and key considerations that an economic development team should consider when contending with the circular economy approach. This paper provides examples of successful bioindustries within the MIW region, including sugar cane production enabling biomass to electricity generation, rum and tourism. We also discusses emerging economic development opportunities.[1]

Regional circular economies

Considerable work has been completed globally by a wide cross-section of industry stakeholders, technology providers, industry facilitators and project proponents, to define circular economy pathways for proven and emerging industries. Commercialising and realising circular economy require a solid understanding of the core market and cost drivers, including agricultural systems, processes, technologies, logistics, off-take agreements, energy, distribution methods and equipment design.

Community integrated facilities can include the sustainable processes of converting renewable feedstocks into a spectrum of marketable products and energy. A circular economy strategy needs to cover the development of a facility, a process, a plant, or even a cluster of facilities.

An integrated ‘bioprecinct’ could include the integral upstream, midstream, and downstream processing of renewable and recyclable feedstocks into a range of platforms and products. The products can be both intermediate and final products, and include food, feed, materials, and chemicals; whereas energy includes fuels, power, and heat.

MIW region’s bio-industries

The MIW region’s key economic drivers are mining, tourism, beef, sugar and horticulture. The region is also home to a thriving Mining Equipment, Technology and Services (METS) sector and two State Development Areas – Galilee Basin and Abbot Point.

MIW region economic map

MIW region economic map

Source: RDA MIW 2016

The MIW region has a heritage sugar industry complemented with emerging bioproduct feedstocks:

Heritage sugar industry
  • Five sugar mills:
    • three Mackay Sugar mills operated at Racecourse, Farleigh and Marian
    • two Wilmar owned mills at Proserpine and Plane Creek
  • Wilmar BioEthanol in Sarina, Australia’s largest producer of molasses-based ethanol, liquid fertilizers and animal feeds
  • Sugar Australia’s White Sugar Refinery co-located at the Racecourse precinct
  • Mackay Renewable Biocommodities Pilot Plant, a pilot scale research and development integrated biorefinery at the Racecourse precinct
  • The Sarina Sugar Shed tourism facility
Emerging bioproduct feedstocks
  • The Thomas Borthwick & Sons abattoir at Bakers Creek with potential tallow and wastewater by-products
  • Various prawn and barramundi farms
  • Potential horticultural waste from approx. 150 fruit and vegetable producers (tomatoes, capsicums, mangoes and macadamias) within the Bowen area
  • Potential municipal solid waste and industrial waste

The bioeconomy is, and will continue to be, a substantial part of the sustainable use of bio-feedstocks in the MIW region. By accelerating the sustainable production and use of ‘bioprecincts’, the economic and environmental impacts will be optimised, resulting in more cost-competitive sharing of infrastructure, utilities and services. Using a bioprecinct concept approach may increase the attractiveness, benefits and synergies of co-locating biorefineries into mutually beneficial ecosystems.

This approach will facilitate the commercialisation and market deployment of environmentally sound, socially acceptable, and cost-competitive bio-based systems and technologies, and to provide jobs and growth for the local communities.

Biofutures industries are intrinsically connected with the growing demand for food, feed and fibre to meet emerging markets. Co-locating processing facilities is a key factor to make bioproduct production feasible given capital cost constraints in developing new processing facilities.

Additionally, locating facilities near to feedstocks will reduce logistical costs. Co-location fosters technological innovation to commercialise bio-based products by linking technology companies with partners with operational expertise. Potential bioprecincts in the MIW region may offer advantages to future projects with quick-to-market site selection, supply chain, feedstock logistics, by-products and value adding opportunities.

Importance of understanding the entire value chain

Primary industries, value-adding processes and manufacturing facilities can be classified based on where they fit in the circular economy value chain, technology lifecycle or commercial readiness:

  • Technological implementation status: conventional and advanced feedstocks, bioenergy or biofuels (1st, 2nd or 3rd generation manufacturing)
  • Type of raw materials used: agriculture operations, whole crop biorefineries, recycling operations, waste management facilities, and aquaculture or marine processors
  • Type of main intermediates produced: natural product, recycled products, waste-based by-product, chemical feedstock or value-added final product
  • Main type of conversion processes applied: natural, thermochemical, biochemical, mechanical or renewable processes

The key to commercial success for emerging circular economy projects relies on the ability to gain the maximum intrinsic value out of feedstocks, bioproducts, coproducts and waste streams. There are many inter-related value chains that need to be established for the development of successful bioenergy sites, biorefineries or bioindustries.

In order to develop example value chain scenarios, it is necessary to make many assumptions about what typical combinations of available technologies, processes and logistics would be viable to create viable energy and bioproducts that provide a return on investment.

The following infographic illustrates the overall interrelationship of the various circular economy value chains:

Circular economy value chains

Circular economy value chains

Barriers to development acceleration

Major barriers exist for the rapid development of demand and end-use markets in Australia, particularly for circular economy long-term projects.

These include the need to develop process pathways that can consistently meet nationwide feedstock specifications and performance standards for by-products. Certification of production processes and quality control systems to be able to blend renewable and recycled feedstocks into current and emerging manufacturing processes, needs to be well understood and developed at an industry basis to ensure feed compatibility, quality and performance.

Sometimes, there are too few willing retail outlets to ensure new entrant products will compete on a level playing field with conventional materials. Considerable work is needed on demand side marketing and lobbying, to ensure that early entrant circular economy innovators can lock in off-take agreements for their recycled or manufactured products.

A major barrier is that of financial risk and instability in the current world and political environments. The capital costs required for installing biorefineries include testing and developing new feedstocks; construction of production facilities for fuels, power, and products; and infrastructure costs. With significant uncertainty remaining in the viability of new feedstocks or conversion technologies, as well as uncertainty in end-use markets, many investors are averse to making the financial investment needed.

Specific barriers include the requirement to ensure there is adequate risk management techniques or risk sharing when forming bio-companies. Another challenge is Australia’s geographical size, the need for efficient logistics systems, which can leverage off existing infrastructure and locations, cannot be overstated.

One of the key areas of support needed is in providing mechanisms for funding to bridge the gap between successful demonstration of a new technology and commercialisation. In addition to the barriers facing manufacturing facilities construction, there are few long-term contract incentives or insurance policies for emerging sustainable feedstocks used to produce energy or renewable products. It is important that the development of feedstock supply is in pace with the processing capability development, as well as market demand and access.

The Sarina Sugar Shed located at the Field of Dreams Parkland, 35 km south of Mackay, is an award-winning agri-tourist attraction which features a miniature working sugar mill and small-batch boutique distillery.

The Sarina Sugar Shed opened in 2006 in a response to tourists wanting to tour the Plane Creek Mill. They offer daily tours showcasing the cutting and crushing process, ending with tastings of their rum and food products.

The Sarina Sugar Shed has strong relationships with local mills purchasing ethanol and premium sugar cane syrup. They also work closely with local farm producers to supply fruit and vegetables for their range of liqueurs, chutneys, sauces and relishes.

The Sarina Sugar Shed is a member of the Greater Whitsunday Food Network, and stocks locally-made produce as a distribution point for many home-based businesses.

Case study
Sarina Sugar Shed tourism

Sarina Sugar Shed rum

Source: Mackay Regional Council

However, the demand for bio-based products can change for the better very quickly, as public perceptions and purchasing preferences change, as can be seen since the COVID-19 pandemic. One of the key drivers and market movers will be when consumers begin to value and account for environmental benefits of these renewable technologies and products in consumer markets.

For example, the current low purchase price of coal makes it difficult for many alternative power generation technologies to compete on a cost basis, as does the lack of a framework or requirement for incorporating environmental factors and other externalities into purchasing decisions. Tax credits, procurement policies and other incentives could be implemented to incentivise locally produced fuel, power, and products.

The cogeneration at the Racecourse precinct is an example of a renewable energy initiative by the MIW region's sugar industry.

From the 6 million tonnes of cane are processed every year in Mackay, 1.8 million tonnes of bagasse fibre are left over from the milling process. The bagasse is burnt and processed into electricity which is used within the precinct, by the mill and sugar refinery, and exported. About 27 megawatts of electricity – a third of Mackay’s average needs – is exported to the grid continuously. This earns Mackay Sugar Limited additional revenue as well as savings on electricity.

Case study
Racecourse precinct cogeneration

Market segment approach to value chain analysis

There are many interrelated value chains that need to be established for the development of successful industries. It may be beneficial to look at the overall value chains across seven related market segments, to help identify potential building blocks for the overall bioindustries.

  1. Feedstock suppliers: businesses that provide renewable, replenishable or waste feedstocks for conversion to value-added products. For example: agricultural producers, used cooking oil collectors, animal fat manufacturers, green waste collectors, timber processors, municipal solid waste, wastewater treatment plants and algae producers.
  2. Product handlers, traders and processors: organisations that use natural, renewable or recyclable feedstocks and convert them to tradeable products and by-products.
  3. End product, energy, feedstock materials and by-product customers: industries who purchase intermediary and end-products, energy, recycled products and by-products. For example: electricity grid customers, ‘behind-the-meter’ customers, trucking companies, mining companies, fuel companies, chemical processors, manufacturing companies, stock feed manufacturers and fertilizer applicators.
  4. Supply chain logistics: business and authorities who are involved in the transport and distribution of feedstocks and by-products. For example, harvesting operators, trucking companies, rail operators, port operators and distributors.
  5. Research and technology providers: organisations that are involved in the development of technologies for commercial applications. For example, university, chemical companies, equipment providers, Original Equipment Manufacturers (OEMs), scientific and engineering companies.
  6. Industry facilitators: organisations, associations, bodies and panels that represent the waste management and by-products value chain, and who provide advocacy and facilitate development of the waste industry.
  7. Investors, entrepreneurs and innovation brokers: companies and entities that provide investment, and facilitation for emerging recycling and energy/by-products opportunities.

Establishing business cases for overall value chains

To establish circular economy opportunities, the following details will need to be investigated in order to prepare a business case:

  • An input/output flow (system) diagram showing all stages and components of the production process including potential by-products and known waste streams
  • A process flow diagram with assumptions on production scenarios
  • Demand and markets discussion including:
    • Likely customers
    • Potential demand, seasonality and demand drivers
  • Supply chain/feedstock discussion including assumed:
    • Example feedstocks
    • Tonnages required
    • Typical feedstock supply locations
    • Feedstock availability, seasonality and/or potential for supply including land area and infrastructure requirements
    • Potential feedstock aggregation points
    • Potential demand, seasonality and demand drivers
    • Transport and infrastructure requirements
    • Key supply chain drivers, supply uncertainties and challenges
  • Processing and distribution discussion including assumptions for scenarios of land and infrastructure requirements for plant
  • By-products and value adding discussion including:
    • By-products or co-products that could emerge from core bioproduct production processes
    • Processing/reprocessing of waste to produce useful by-products
    • Waste to energy opportunities
    • Processes and plant required

Bioprecinct benefits

Using a bioprecinct concept approach may increase the attractiveness, benefits and synergies of co-locating biorefineries into mutually beneficial ecosystems. This approach will facilitate the commercialisation and market deployment of environmentally sound, socially acceptable, and cost-competitive bio-based systems and technologies, and to provide jobs and growth for the local communities.

Some of the key considerations in selecting a suitable site for a proposed biorefining production facility would require year-round supplies of the following utilities and operational elements:

The key considerations

  • Sufficient available land for entire proposed integrated facility
  • Environmental licence to operate
  • Steam for processing heat and energy
  • Energy supply
  • Water for process, cooling and amenities
  • Effluent treatment systems
  • Road access
  • Access to agricultural feedstocks
  • Access to process chemicals
  • Proximity to logistics chain, skilled staff, labour and equipment suppliers
  • Access to a cargo port for export sales

Several regions in Australia are actively pursuing the development of bioprecincts, to create a cluster of synergistic bioprocessing facilities, including the New South Wales Government’s Special Activation Precincts. Co-locating and building a bio-based precinct can provide centralised facilities to take advantage of existing infrastructure and energy, create energy parks (steam and power) to support multiple processing facilities.

Anchor stakeholders can provide in-kind infrastructure to a bioprecinct (road, rail, electricity and water) resulting in capex reductions and additional revenue. Co-investment with industry (public-private partnerships) may assist to achieve an agreed investment payback period or lease of facilities arrangements.


About the Authors

Stephen Cutting is a Senior Mechanical Engineer and Engineering Manager based in Mackay. He has more than 35 years’ experience, including in sugar mills in the Herbert, Burdekin and Ord River areas. Steve was Chief Engineer through the establishment of the Ord River District sugar industry, Chief Engineer at the Sarina Distillery ethanol plant and is a keen advocate for the use of biofuels and renewable energy.

Steve has been involved in a large range of sugar, resources and bioenergy projects in design consultancies and acting as Owner’s Engineer.

Kate Large is a Senior Environmental and Uban Planner based in Mackay and has more than 15 years’ experience. Kate has provided advice on a wide range of developments in Queensland and the Northern Territory. She is a Registered Planner with the Planning Institute of Australia.

Kate has recently worked on several biofutures projects across Queensland. She has led a site selection assessment for a biofutures project and developed an investor brochure for the MIW region.


References

[1] This paper was first published in the Economic Development Journal, Issue 2020, Vol 13 No 2.

[2] RDA MIW (Regional Development Australia) MIW Mackay Isaac Whitsunday Agricultural Overview 2016.

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