Despite mounting pressure to decarbonize, Australia’s mining industry remains hooked on diesel. The sector currently guzzles 41 percent of its half-a-billion petajoule consumption each year while pocketing half of the nation’s annual $10 billion fuel tax credits.
Ashwin Mankodi - Hatch Regional Director. Image Credit: Hatch
As the sector scrambles to meet rising international demand for more minerals and metals, global engineering giant Hatch is pushing for stronger renewable fuel policies and targeted investments to help the sector break its diesel addiction. And the renewable replacements, they say, are used cooking oil (UCO), oilseeds like canola, tallow (rendered fat of cattle and sheep) and agricultural and forestry waste.
Across Australia the uptake of biofuels remains limited, leaving the nation trailing behind global leaders such as the US. Traditionally, almost all mobile mine equipment across the country has been diesel powered, despite accounting for 25 percent of mines’ Scope 1 and 2 emissions.
But Australia is brimming with potential, says Hatch Regional Director Ashwin Mankodi, and its abundance of agricultural and forestry waste streams could be transformed into renewable fuels that won’t just slash emissions, but create thousands of jobs and revitalize the manufacturing sector.
“But to get there, we need stronger mandates and targeted investments to unlock this potential,” says Ashwin. He recommends federal government subsidies, tax credits and mandates supporting the production and increasing uptake of biofuels like renewable diesel.
In the US, Hatch is playing a key role in transforming agroforestry derived biomass into renewable fuels at the ground-breaking Louisiana Green Fuels Project, which will produce up to 33.7 million gallons of biofuel for per year.
Ashwin says the project offers a top model for transforming waste into sustainable fuel that could be adapted in Australia, but he argues a lack of cohesive federal policies and sufficient financial incentives for developers remain barriers.
“We have some good biofuel programs that have been rolled out on a state level, but as the Australian Renewable Energy Agency has pointed out in their report, we need a federal framework to unify it.
“We produce 4.1 million metric tonnes of sugar each year which makes us a top 10 global producer. Sugar cane waste, or bagasse, is therefore a major resource that can be processed into valuable energy here with a framework and investments to support it.”
In Canada, Hatch’s work on the Bécancour Green Hydrogen Plant highlights how government-backed funding can catalyse clean energy transitions, offering valuable lessons for Australia.
Ashwin says that replicating these models requires bold action: “We need to build systems that make renewable fuels economically competitive.
“There is a case to be made that renewable fuel subsidies and blending quotas coupled with government subsidies could support more jobs in Australia as well as improve energy security.
“This will need clear national targets, incentives for developers, and public-private collaboration. If we can replicate the success of projects overseas, we have a once in a generation chance to position Australia as a global leader in sustainable fuels.”
Ashwin adds that another challenge in the nation’s renewable fuel sector lies in infrastructure and supply chains, with renewable fuels requiring processing facilities capable of converting diverse feedstocks. In the US, substantial federal incentives such as the Renewable Fuel Standard – which requires a minimum volume of renewable fuels - and tax credits de-risk these capital-intensive projects.
“In comparison, our fuel tax credit system heavily subsidises diesel use and that’s left our sector in a chicken-and-egg scenario. Without demand, there’s little incentive to build infrastructure, and without infrastructure, demand remains low.”