Taupo set to fuel NZ's bio future with willow

Taupo looks set to pioneer a biofuels industry that could significantly reduce New Zealand's dependency and spending on imported petrol, and create lucrative export sectors.

BioJoule - a spinoff from listed Genesis Research - is about to ask private investors for $5 million to help to take its biofuel technologies to pilot refinery stage.

The "biorefinery" will be fed by the cane willow plant, grown in trials at Taupo, and powered by local geothermal steam. BioJoule wants the pilot plant running by the second half of next year.

BioJoule head Jim Watson, founder and chief scientist of Genesis, said if the pilot plant attracted a buyer for a technology licence, the first commercial refinery - estimated to cost between $50 million and $100 million - would likely be at Taupo.

BioJoule's partner in the venture is the Lake Taupo Development Company, a ratepayer-funded economic development agency.

Its business plan says energy farming and biorefining in the Taupo district could generate $125 million to $175 million a year in net direct economic benefits for the region, including more than 400 new jobs.

Watson said BioJoule's goal was to commercialise technologies for ethanol generation for transport fuel to help make New Zealand energy-independent.

Last year New Zealand spent $4.5 billion on 3.4 billion imported litres of petrol and 3 billion litres of diesel. The annual bill is a big contributor to the ugly current account deficit.

The Government supports the introduction of biofuels, citing among their benefits lower net carbon dioxide emissions and a renewable energy source.

The process of turning cane willow, botanical name salix, into ethanol has also produced two bonus discoveries.

Scientists have extracted natural lignin, which can replace fossil fuels in paints, resins, glues and adhesives.

"We feel lignin has a huge opportunity in the market to replace many of the polymers used to make plastics and resins, from a renewable source. There is no factory producing the type of lignin we produce," Watson said.

Another opportunity from cane willow, a plant high in celluloses, was the natural sweetener xylose. Non-diabetic and safe for teeth, xylose was in short global supply, produced only by Scandinavia, he said.

The product had huge export potential, particularly to Asia, he added. The pilot refinery would make all of the products.

Watson is hopeful the salix willow will also power up the chequebooks of farmers on marginal or low-returning land, of which New Zealand has plenty.

He calculates that 2500ha to 3000ha of salix, a shrubby, self-generating willow harvested mechanically every year, will produce enough biomass annually to make 11 million litres of transport ethanol.

Around 76,000ha of Taupo land could suit energy farming, he said.

The Government's voluntary target for biofuel use is 65 million litres of biodiesel or bioethanol by 2012.

It has yet to mandate the percentage of ethanol to be blended with petrol at the pump, but 3 per cent and 10 per cent are common yardsticks.

At 10 per cent, the amount of ethanol needed to support last year's petrol consumption would be 340,000 million litres, according to the Government. At 3 per cent, it would be 102,000 million litres.

Watson calculates that importing a litre of ethanol, including transport, would cost NZ97c-103c. New Zealand ethanol would cost 67c-69c a litre.

Lake Taupo Development chief executive Barry Delany said to supply 3 per cent of current petrol consumption, Taupo would need to plant 21,000ha in salix.

The agency hopes energy farming can replace $50 million to $100 million likely to be lost in livestock revenues in the next decade as authorities cap fertiliser use to help Lake Taupo to recover from nitrogen overload.

Genesis chief executive Stephen Hall said several investors were interested in BioJoule's technology. But they would have more confidence when the Government committed to supporting biofuels at the pumps.

BioEnergy Association executive director Brian Cox said the group was greatly interested in BioJoule's research.

Watson said Northland and Kawerau were other geothermal sources that could host commercial biorefineries.