Our special competitive advantage in mining new, carbon-neutral biomass - fuels, coals and regional jobs.
Biomass is at the core of the world's energy sector. Over the last two hundred years or so we have specialised in mining old biomass (biomass that has been fossilised by heat and pressure over millions of years).
This old biomass is mined from geographies that once had a natural advantage in growing it, and is extracted as crude oils, coals and gases. These have different 'flavours' or characteristics that require blending and refining to achieve the consistent quality products that we depend on.
An expert in a multi-national resource company neatly explained that at any one time around 1% of the natural process is fossilised biomass that can be extracted. The simple fact of the multi-million-year cycle means that it takes a long time for these resources to replenish.
So, the concept of converting 'new' biomass that is growing today and converting that into energy value, rather than leaving it to the slow natural process - isn't rocket science.
This also means that there is a present-day competitive advantage for those countries that are proficient at growing biomass - and of course New Zealand is in this category. In this we are the lucky country.
Focusing on new biomass is like switching from analogue (fossilised) to digital (real-time conversion). It is impossible for total substitution to occur as there simply isn't enough fresh biomass available, but there is, however, a great opportunity to make some dent in resource importation and allocation by growing a portion of our own energy.
When you start to look at the available new biomass opportunity it is clear that there are large existing waste streams that could potentially be used immediately, and then an opportunity to develop fast-rotating biomass plantations on under-utilised and marginal land. There is even the chance to compete directly for export logs - that may work for some of the high value/ strategic products.
Believe it or not, there are technologies that are getting close to market which offer the opportunity to directly substitute liquid fuels and quality coals on a basis that look to be economic today, even in New Zealand which has none of the 'soft' money - subsidies and the like - available in most other countries.
You will never look at a logging port the same way again - when you consider that this biomass could be used at home to create petrol or used to replace coal mined from the West Coast.
The drivers for switching the use of a log do not necessarily have to come from climate change mitigation but also flow from hard-edged pragmatic macro-economic risk analysis. The concepts of security of supply, vertical integration and quality control are issues that many of our trading partners and large multi-nationals are directly investing in. For some reason we are operating on the basis that someone else will solve the problem, but New Zealand - as an island nation - is exposed to resource volatility especially for liquid fuels, and increasingly for high-quality coals and high-value carbon products. It is a high-stakes game if we do nothing.
Using new biomass is still mining - it's just that you no longer have to dig it out of the ground - rather you mine it on top. There is a significant opportunity to create more jobs and more regional economic development - if we are able to open up to this much more common sense approach and break an old way of thinking.
It is a valid question to then ask: What is holding back the deployment of these new technologies -why aren't they in use today? The biggest impediment is simply capital. Whether it is angel, venture or private equity - our capital market is struggling to get its head around these strategic and highly defensible investment opportunities. It is easier to focus on property, dairy and cloud computing than concepts of growing our own energy.
There isn't any magic wand - the technological solutions have to be robust, smart and economic. This is actually the stuff that Kiwis are good at. The really exciting dimension is that these technologies can also be deployed offshore. So by acting domestically we can unlock a massive opportunity to engage in one of the great global commercial opportunities, and export our know-how.
New Zealand's biomass advantage
We are great at growing biomass.
This is an important competitive advantage for the future.
We can produce fuels and high-value coals to use here - without having to dig holes. Biomass cultivation and forestry is the 'new mining'.
We can trigger significant new regional economic development and jobs.
For weekly Element news sign up for our newsletter here
Nick Gerritsen is a Marlborough-based entrepreneur. He is a director of leading renewable fuel developer NXT Fuels (previously called Aquaflow), and Carbonscape. He is Chairman of The National Whale Centre Development Trust, and a Trustee of the Hikurangi Foundation. Nick graduated from the University of Canterbury, with a Bachelor of Laws (LLB) and is currently studying part-time at the Amsterdam School of Creative Leadership.