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									       Genesis and Development of the Pilot Plant Project


Ethanol produced from biomass is traditionally produced from the sugar or starch
content of crops such as sugarcane, sugarbeet, corn and wheat. The cost of such crops,
coupled with the use of conventional ethanol production technology, results in the
cost of ethanol in Australia being in the range of A$0.55-0.75 per litre. In the absence
of government subsidies for ethanol used as fuel, this cost renders ethanol
uneconomic for use in blends with petroleum fuels if crude oil prices are less than
approximately US$60 per barrel (A$ = US$0.75).

It is also commonly perceived that there is insufficient land available in Australia to
produce ethanol in the quantity required to meet demand for liquid fuels. This
perception is based on ethanol production being only from the sugar and starch
content of sugar cane and wheat crops.

However ethanol can also be produced from lignocellulose, the woody or fibrous
content of biomass. By comparison with sugar and starch crops, lignocellulosic
biomass is abundant and low cost.

New technologies being developed by and/or under the technical direction of Apace
Research (Apace) potentially enable the energy efficient production of ethanol from
lignocellulosic biomass at a cost in the range of A$0.20-0.44 per litre of ethanol. This
corresponds to a crude oil equivalent cost in the range of from approximately US$12
to US$40 per barrel, when the ethanol is used in blends with petroleum fuels. This
cost of ethanol is, without government subsidies, competitive with the current cost of
crude oil.

Internationally it is recognised that an ethanol fuel industry with the capacity to
produce ethanol in the quantities required to make a significant contribution to liquid
fuel demand can only be based on lignocellulosic feedstocks. Various studies have
shown that all of Australia’s transport fuel demand could be met by ethanol produced
from domestically grown lignocellulosic biomass and that this could be achieved
without interfering with food production or causing land or other environmental

Development of a large-scale market for lignocellulosic biomass as fuel would
overcome the longstanding economic disincentives for re-afforestation. These
disincentives arise due to the lack of markets for silvicultural thinnings and are a
problem of equal importance for the management of farm woodlots, plantations and
natural regrowth forests. A biomass fuels industry would be a major driving force for
the treatment of land degradation via the creation of sustained yield farm woodlots
and plantations.

Since 1978 Australian federal and state governments, under a range of different
programs and departments/agencies, have separately and in some cases jointly funded
a large number of research projects and consultancy studies by a wide variety of
organisations and individuals relating to the production of ethanol from
lignocellulosic feedstocks.
Consistent conclusions from the published reports on that work are that production of
ethanol from lignocellulosic feedstocks using conventional technologies is not
economically viable and that development of new technologies is required for all
stages of the lignocellulosics to ethanol conversion process.

The conversion process proposed for demonstration in the ethanol from
lignocellulosics Pilot Plant Project has evolved from a “distillation” of the results
from the research projects and studies conducted since 1978.

A chronology of the Federal and New South Wales Government decisions, projects
and studies that have directly lead to the current stage of the Pilot Plant Project

Several past conference proceedings and other publications that are also directly
relevant to the development of production of ethanol from lignocellulosic materials in
Australia are then listed.

1.    The National Energy Research, Development and Demonstration Program

      In 1985 the Federal Government published a report titled “Review of the
      Production of Ethanol Subprogram – National Energy Research,
      Development and Demonstration Program”. The Energy Research and
      Development Division of the Department of Resources and Energy
      conducted the review.

      The report stated: “possibly the most important remaining technical/
      environmental problems related to a biomass fuels industry concern the
      disposal of ethanol distillery effluent. Effluent disposal techniques
      currently in use would not be acceptable for a large-scale biomass fuels

      The report concluded: “further funding under this subprogram should be
      restricted to any particularly promising proposals in the areas of
      lignocellulose conversion and effluent treatment.”

      Support under NERRDP for the work and new technology development
      by the University of New South Wales (UNSW) and Apace in these two
      specific areas was cited in the report.

      The report stated: “support has been provided for an Apace Research
      project1 on ethanol recovery by induced phase separation. If the process
      proves to be technically feasible, it could significantly reduce the energy
      requirements for ethanol production by avoiding or minimising

2.    New South Wales Parliamentary Committee Of Enquiry Report and NSW
      State Energy Research and Development Fund (SERDF) Project
      “Recovery Of Ethanol From Ethanol/Water Mixtures Using Induced Phase Separation – An Evaluation Of A
      Process Which Uses Potassium Carbonate To Induce Phase Separation of Ethanol From and
      Simultaneously Waste-Treat the Aqueous Phase Of Fermented Biomass Media”, Apace Research Ltd.,
      NERDDP Project Number 80/0056, July 1986
     Following the 1985 review of the NERDDP ethanol production
     subprogram there occurred a hiatus in Federal Government funding for
     research and development of ethanol fuel.

     Interest in ethanol fuel re-emerged first in New South Wales. In October
     1990 the New South Wales Minister for Energy tabled a Parliamentary
     Committee of Enquiry Report titled “Investigation Into Ethanol and
     Alternative Transport Fuels In New South Wales, Report to the Minister
     for Minerals and Energy, August 1990.”

     Appendix E of the report comprised a New South Wales Government
     commissioned study report by Unisearch Ltd in association with Apace,
     titled “Review of the Status and Prospects of Processes to Convert
     Cellulosic Materials to Ethanol.”

     The main recommendation of the Committee was: “a major effort be
     made to support and co-ordinate the development of lignocellulosic
     resources and processes for their conversion to ethanol and other
     products, and a working party be established to co-ordinate this activity”.

     In March 1991, in accordance with the Committee’s recommendations,
     the NSW Office of Energy made a public call for projects under the
     SERDF. A project to further develop the conversion of lignocellulosic
     materials to ethanol and lignin co-product was subsequently awarded to
     UNSW in association with Apace.

3.   Feasibility Study of an Ethanol-From-Lignocellulosics Demonstration Plant

     Federal Government interest in ethanol fuel re-emerged in 1992. On 8th
     December 1992 the Federal Minister for Resources announced a
     feasibility study    “to assess the prospects for establishing a
     demonstration plant to produce ethanol from woody wastes.” The
     feasibility study was to “examine the viability of ethanol production
     technology being developed by UNSW and the research organization
     Apace Research.” Reference was made to the project being conducted
     by UNSW and Apace for the NSW Office Of Energy under the SERDF.

4.   Prime Minister’s 1992 Statement On The Environment

     In the Prime Minister’s 21st December 1992 Statement on the
     Environment, the Federal Government made a commitment, subject to
     the outcome of the above referenced feasibility study, to provide A$2
     million “to demonstrate new Australian technologies for the production of
     ethanol from woody fibres and simultaneous waste treatment.” The
     demonstration plant would be funded on a dollar-for-dollar basis with

     The principal objectives of the feasibility study were to prepare a
     preliminary process design, secure industry funding and recommend a
     site for the demonstration plant. The feasibility study Terms of Reference
     stated the following technical requirements for the demonstration plant:
     •      “it will be based on acid hydrolysis technology and will incorporate
            the new technologies developed by the University of NSW (xylose
            fermentation) and Apace (simultaneous ethanol recovery and
            effluent treatment);”
     •      “the design of the plant will be sufficiently flexible to incorporate
            and build upon the results of associated research projects";
     •      “although it is proposed that the work program should consider the
            UNSW/ Apace technologies, other technologies may be considered
            if a strong enough case can be made.”

5.   The Federal Government’s Feasibility Study

     In September 1993, following a public call for proposals, the Federal
     Department of Primary Industries and Energy (DPIE) commissioned the
     Gorton Timber Company (GTC) to conduct the above referenced
     feasibility study for an ethanol from lignocellulosics demonstration plant.2

     As the first phase of the feasibility study, GTC conducted a detailed
     international review of available and emerging technologies for each
     process stage in the conversion of whole lignocellulosics to ethanol,
     including integration of the individual process stages into an overall
     lignocellulosics to ethanol conversion process. Fundamental criteria
     applied by GTC in the review were:

     •      feedstock comprising whole lignocellulosics;
     •      harvested forest material as feedstock at a cost of A$50/dry tonne;
     •      conversion process to be self-funding of steam/electricity demand;
     •      nett consumption of process water to be less than 2L/L ethanol.

     The major findings of the GTC review were:
     •      acid hydrolysis based conversion processes, rather than enzymatic
            hydrolysis based processes, will be the first whole lignocellulosics-
            to-ethanol conversion processes to be successfully demonstrated
            on a commercial scale;

     •      the integrated simultaneous hemicellulose/cellulose concentrated
            sulphuric acid hydrolysis process utilising a twin screw extruder
            with   integrated   simulated    moving     bed    ion  exclusion
            chromatography for acid/sugars separation and acid recovery,
            being developed by the Tennessee Valley Authority and the
            University Of Southern Mississippi (TVA/USM) at USM is the most
            promising high sugars yield acid hydrolysis technology under
     •      organisms being developed by the United States National
            Renewable Energy Laboratory (NREL) and UNSW for

     “Ethanol-From-Lignocellulosics The Feasibility Of An Industrial-Scale Demonstration Of An Integrated
     Conversion Process", Gorton Timber Company Pty Limited, December 1994
     simultaneous pentose/hexose sugars conversion are the most
     promising high ethanol yield organisms under development; and,
•    the concentrated potassium carbonate induced phase         separation
     process for integrated simultaneous ethanol recovery       and liquid
     effluent treatment, being developed by Apace, is           the most
     promising low energy requirement ethanol recovery          and liquid
     effluent treatment process under development.

In April 1994, under the feasibility study, GTC sub-contracted Apace to
prepare a preliminary design for an Ethanol Pilot Plant (EPP) consistent
with the above review findings. The process designed by Apace included
the following stages:

•    integrated simultaneous hemicellulose/cellulose concentrated
     sulphuric acid hydrolysis utilising a twin screw extruder;
•    simulated moving bed ion exclusion chromatography acid/sugars
     separation with acid recovery/recycle;
•    simultaneous pentose/hexose sugars fermentation; and,
•    simultaneous ethanol recovery/effluent treatment.

The proposed design of the EPP was, under sub-contract and
confidentiality agreement, independently reviewed for the GTC feasibility
study by Raphael Katzen Associates International Inc. (RKAII), a United
States process engineering company internationally recognised as
expert in the field of ethanol production, including ethanol production
from lignocellulosic materials.

The review by RKAII concluded that the conversion process proposed
for the EPP has a higher ethanol yield and a lower energy requirement
than currently available and emerging technologies for the conversion of
whole lignocellulosic materials to ethanol. The RKAII review also
concluded that the capital cost of the proposed process should be similar
to other proposed lignocellulosics-to-ethanol conversion processes. The
RKAII review recommended that the proposed process design be
implemented and evaluated in the EPP. The Chairman of RKAII, Dr.
Raphael Katzen gave a presentation on the RKAII review findings to
DPIE, Department of the Environment and Energy Research and
Development Corporation (ERDC) officials in Parliament House,
Canberra, in September 1994.

The GTC feasibility study concluded that, based on lignocellulosic
feedstock costing A$50/dry tonne, an initial capital investment in plant of
A$70 million and a thirty year plant life, the estimated ethanol production
cost using the proposed process at the 50ML/annum scale was
A$0.44/L, yielding a 10% internal rate of return. The study noted that the
technical assumptions on feedstock to ethanol conversion efficiency
underlying the estimate were conservative and that it was reasonable to
expect that they would be improved upon early in the demonstration
     phase. Such improvements had the potential to lower the ethanol
     production cost to A$0.34/L.

     It was noted that the ethanol production cost is most sensitive to
     feedstock cost. Feedstock costing A$50/dry tonne represents harvested
     forest material. Other important lignocellulosic feedstocks such as sugar
     cane Bagasse, cotton stubble, sawmill residues and grain crop residues
     are significantly lower cost. The ethanol production cost from these
     feedstocks was estimated at around A$0.20/L.

     It was also noted that the above estimated costs are all significantly
     lower than estimated ethanol production costs from other available and
     emerging conversion processes.

6.   The Federal Government’s Fuel Ethanol Research and Development

     In October 1993, as part of the lead abatement strategy, the Federal
     Government appropriated an additional A$3.94 million for applied
     research and development (R&D) of fuel ethanol. ERDC was directed by
     the Minister for Primary Industries and Energy to manage the
     Government’s investment in the program.

     The program was comprised of four parts. One part was entitled “Further
     technical improvement in the derivation of ethanol from lignocellulosic
     feedstocks”. This part of the program was conducted simultaneously with
     the GTC feasibility study and complemented the EPP.

     ERDC decided that the first task within this part of the fuel ethanol R&D
     program was to conduct an independent review of the topic.

     Following a public call for proposals, the review task was contracted by
     ERDC to the international process engineering company Davey John
     Brown Pty Ltd. The study had as its objectives:

     •      “To review and report on the results of past and present
            developments on the derivation of ethanol from lignocellulose-
            based feedstocks.”
     •      “To recommend a costed and prioritised work program which will
            complement the existing technology and resolve identified needs
            for further research in Australia.”

     The study by Davey John Brown was entitled “Technical Improvements
     in the Derivation of Ethanol From Lignocellulosic Feedstocks”.3

     The major findings of the study review were:

     •      “efficient xylose utilisation…. is essential if lignocellulose to ethanol
            conversion technologies are to become economic” ;

     Davey John Brown Pty Ltd., ERDC Report Number 231, September 1994
    •     there is a “need to improve the economics of the…. acid and
          enzyme hydrolysis routes – concentrated acid hydrolysis gives the
          highest conversion…… but the weak link in the concentrated acid
          hydrolysis process is acid recovery technology ”; and,
    •     the ethanol recovery and waste treatment process “developed by
          APACE has many attractions (compared to traditional technology –
          distillation) since it combines product separation, waste treatment
          and recycle of process water.”

    In 1995, following a public call for projects, the Federal Government
    announced funding for a number of the research projects “targeted at
    lowering the cost of deriving ethanol from lignocellulosic feedstocks”, as
    recommended by the Davey John Brown study.

    The principal projects were:

    •     “To develop strains of micro-organisms capable of fermenting
          hemicellulose      hydrolysates produced by   hydrolysis  of
          lignocellulosic feedstocks.“

    Most agricultural/forestry lignocellulosic materials contain 45-50%
    cellulose, 25-30% hemicellulose and some 15-25% lignin. The cellulose
    can be converted to C6 sugars (predominantly glucose) and the
    hemicellulose to C5 sugars (predominantly xylose).

    If a conventional micro-organism is used for fermentation of
    lignocellulosic hydrolysates, only the glucose sugar fraction is fermented
    to ethanol, with a yield of around 250 L/dry tonne of lignocellulosic

    However, if a genetically manipulated organism (GMO) is used both the
    glucose and xylose sugars can be fermented, with an ethanol yield of up
    to 410 L/dry tonne of feedstock (estimates assume 90% conversion of
    the higher level of cellulose and hemicellulose to glucose and xylose
    respectively; and 90% conversion of these sugars to ethanol).

    For lignocellulosic feedstock at a cost of A$50/dry tonne, the higher
    ethanol yields achieved with GMO’s are essential for a commercially
    viable conversion process.

    Economic modelling studies carried out by NREL and GTC have
    indicated that a commercially viable large-scale process could be
    developed with the higher ethanol yields achieved with GMO’s. With use
    of conventional organisms however, the major yield decrease would
    make it impossible to achieve economic viability.

    A major project was awarded to UNSW 4 to continue the development of
    micro-organisms capable of fermenting C5 sugars simultaneously with

    ERDC Project Number 2516
     C6 sugars. Several other smaller projects were awarded to other

     •      “To develop methods for recovering acid from concentrated acid
            hydrolysis processes.”

     The most robust and efficient method for converting lignocellulosics to
     sugars, for fermentation to ethanol, is by concentrated sulphuric acid
     hydrolysis. Yields of glucose from cellulose of 90% of theoretical are
     obtained using concentrated sulphuric acid hydrolysis.

     Although producing high glucose yields, concentrated sulphuric acid
     hydrolysis has not been economically viable as the amount of acid
     consumed can exceed 4kg/L ethanol produced.

     A project was awarded to Apace in association with TVA and USM to
     design, construct and test equipment capable of economically separating
     and recycling sulphuric acid used in the concentrated sulphuric acid
     hydrolysis process.5

7.   State Forests Of New South Wales Proposal for the Ethanol Pilot Plant

     In August 1995 in response to a public call by ERDC for project
     proposals to construct an ethanol from lignocellulosics demonstration
     plant in accordance with the Prime Minister’s 1992 Statement on the
     Environment, State Forests Of New South Wales (SFNSW) submitted a
     project application.6

     The application was in association with Apace, UNSW, TVA, USM and
     the Manildra Group.

     The lignocellulosics to ethanol conversion process proposed to be
     demonstrated was based on the results obtained from the above
     referenced previous research projects as well as results from the in-
     progress research projects being conducted by Apace and UNSW under
     the Federal Fuel Ethanol R&D Program. The proposed conversion
     process was also consistent with the findings and recommendations of
     the GTC feasibility study.

     The R,D&D plant would have a lignocellulosics feed input/conversion
     capacity of 80 kilograms per hour and have the flexibility to incorporate
     new technology developments as they arise. The initial R,D&D program
     would require three years to complete.

     The application also contained explanations of the advantages of the
     proposed process over conventional ethanol production technologies as

     ERDC Project Number 2537 – “Recovery and Recycle Of Acid From Hydrolysates Using Ion Exclusion
     Chromatography”; ERDC Project Report Number 298, 1996
     Application For An ERDC Joint Venture Category Project, “Construction of a Research, Development and
     Demonstration Plant for the Conversion of Lignocellulosic Materials to Ethanol and Lignin”, State Forests of
     New South Wales, 29th August 1995, (revised 15th November 1995).
     well as over other innovative technologies for the conversion of
     lignocellulosic feedstocks to ethanol.

     In November 1995 a revised project application was submitted by
     SFNSW in response to Federal Departmental comments on the initial

     In February 1996 the Federal Government announced its acceptance of
     the SFNSW project application.

     In October 1999 the Australian Greenhouse Office (AGO), representing
     the Federal Government, released to Manildra Energy in association
     with Apace, UNSW, TVA and USM the funds required to prepare the
     detailed design and costing of the EPP, based on the assumption of
     locating the EPP on the Manildra site at Bomaderry, New South Wales.
     The broad cost implications of locating the plant at sites other than the
     Manildra site were also considered.7

     The above referenced study estimated the total cost of conducting the
     EPP project to be A$15.906 million.

     The Federal Government is currently seeking expressions of interest
     from industry to enable the project to proceed.

Past Conference Proceedings and Other Publications Directly Relevant To The
Production Of Ethanol From Lignocellulosic Materials In Australia

In addition to the technical, study and review reports referenced in the above
chronology, the following publications are also directly relevant to the production of
ethanol from lignocellulosic materials in Australia.

“Ethanol Production For Use As Diesel/Petrol Extender”, R.R. Reeves and E.J. Lom,
Apace Research Limited; Proceedings Ecologically Sustainable Development
Workshop On Renewable Energy, Canberra, April 1991.

The above referenced paper includes consideration of the production of methanol as
an alternative to the production of ethanol from lignocellulosic materials.

“Promising Products Derived From Woody Species”, J. Bartle, CALM, WA and R.
Reeves, Apace Research, NSW; Proceedings RIRDC/LWRRDC Planning Workshop
On Low Rainfall Agroforestry, Perth, August, 1992.

Appendix 1 of the above referenced paper presents a mathematical model for ethanol
production from lignocellulosic materials and highlights the technical requirements
for maximisation of economic returns.

     Ethanol From Cellulosics Pilot Plant Project – Milestone No.1 Feasibility Study (Detailed Design, Costing
     Study, Site Compatibility and Options) – Manildra Energy (Australia) Pty Ltd, October 2000

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