Australian factory that turns rubbish into petrol will be world's first

The Melbourne factory that will do the automotive equivalent of turning water into wine -- turn household waste into fuel-grade ethanol -- will be a world first if it gets the go-ahead.

The Australia consortium which includes the Victorian government, fuel company Caltex, car maker Holden and waste management company Veolia, is expected to take another year to raise the required capital -- said to be close to $400 million. The factory itself will then take a further three years to complete construction.

But, despite the high cost and long lead time, officials representing the project told Australian journalists in Detroit overnight that the Australian factory -- to be built on the outskirts of Melbourne at a location that is yet to be determined -- will be the first ethanol refinery of its type in the world.

Although there are two ethanol factories in North America that use similar technology -- with a third to be built in the coming years -- they are primarily powered by woodchips and other biomass. The Australian plant, however, will primarily be fuelled by household and municipal waste, from nappies to old car tyres, the first to do so in commercial quantities.

The new Australian joint venture factory plans to produce 200 million litres of ethanol annually from trash. The other three main ethanol factories in Australia, which derive the fuel additive from sugarcane, produce about 400 million litres annually, or about 2.2 per cent of Australia's fuel supply.

North American biofuel specialist Coskata, which invented the technology and is a lead partner in the Australian factory, says its revolutionary method of turning waste into ethanol is at least three times more effective than burning sugarcane to create the fuel additive.

A tonne of sugarcane crop waste typically produces about 85 litres of ethanol, according to figures supplied by the Shell oil company in Brazil, one of the world's biggest producers of ethanol. But Coskata says one tonne of municipal waste typically produces between 320 and 400 litres of ethanol, depending on the quality of the waste.

"When you make ethanol from sugarcane, you're only extracting the cellulose, the sugar, which at best is half of the crop," said Wes Bolsen, the vice president of Coskata based in Chicago, and a bio-fuels consultant to the White House. "But when we make ethanol from biomass or waste, we take the lot because we want the carbon, so we get a much bigger return from what we burn. That's what's so exciting about this technology."

Bolsen also said the Coskata process was much cheaper than creating ethanol from sugarcane.

"Our entire ethanol production cost is equal to or only slightly more than the cost to just get the sugars in some cases," he said. "It costs about 25 cents per litre just to extract the cellulose from sugarcane, not including all the other processes that have to take place afterwards. With our system, it costs between 25 and 40 cents to do the whole process. That's total cost, maintenance, everything, top to bottom."

He said the cost to produce ethanol could be even cheaper in Australia because the factory will get paid to take the municipal waste.

"In North America, we pay for the wood chips, but the brilliant part about the Australian factory is that it will get paid to take the waste, so that also brings the cost down."

In an attempt to increase ethanol production in Australia, the Federal Government has waived the 38 cents a litre fuel excise on ethanol while producers get established, but it is unclear how long this exemption will remain.

While E10 fuel -- regular unleaded blended with ethanol -- has been rolled out across Australia in recent years, oil company Caltex is in the process of installing up to 100 pumps across Australia that can dispense E85 fuel -- regular unleaded petrol that's been mixed with between 70 and 85 per cent ethanol (depending on the season). Until recently, there were fewer than 10 pumps across Australia dispensing E85.

For now, though, in Australia only a handful of cars are able to run on E85.

Swedish car maker Saab has had "Bio Power" E85 models available since 2008 (the 9-5 sedan and wagon with a 2.3 turbo engine, and the 9-3 sedan, wagon and convertible with the 2.0 turbo engine).

Since late 2009, the Dodge Journey 2.7 V6 people mover and Chrysler Sebring 2.7 V6 convertible have been able to run on E85 (as identified by their yellow fuel caps). The new Dodge Caliber small sedan and Jeep Grand Cherokee 4WD, both due later this year, are also expected to run on E85.

And on models made since October 2010, the Holden Commodore 3.0 V6 and 6.0 V8 -- in sedan, ute or wagon guise -- have been able to run on E85.

E85 cars are still able to run on regular unleaded, E10 and premium unleaded -- or any combination of the above, including any E85 that may be swilling around in the tank -- because the car's engine management computer constantly monitors the quality of fuel going through the system, and makes adjustments accordingly.

But E85 should not be used in cars not specially designed for it, and it is difficult to retro-fit the technology.

Holden's E85 expert Richard Marshall says: "[E85] won't cause an immediate engine failure like putting petrol in a diesel car would, but it is certainly not good. E85 in a car not prepared for it will damage the fuel system because the material is not compatible and, ultimately, the fuel pump and its ancillaries will fail. The hardware in the engine won't be harmed but the engine will run very rough, especially on a cold morning. If you accidentally put E85 in a car not prepared for it you will notice a rough idle. Stop the engine and drain the tank."

A statement from Caltex says: "At this stage, very few cars on Australian roads are capable of running on high ethanol blend fuels like [E85]. This fuel is not suitable for use in any motor vehicles other than those designed or modified specifically to use it. Caltex only endorses the use of Bio E-Flex in vehicles originally manufactured to use fuels containing up to 85 per cent ethanol."

There is one other issue with E85 -- the car will consume 33 per cent more fuel than when running on regular unleaded because, although it has a higher octane rating, ethanol has less energy density.

But, Holden says, there are environmental benefits: C02 tailpipe emissions are reduced by between 2 and 10 per cent depending on driving style and the fuel mix.

Holden spokeswoman Emily Perry said the Australian consortium was in the process of looking at appropriate sites for the local Coskata factory, but it was too early to speculate the likely location.

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