Stefan 4778

Flying high: Will sustainable airfuels provide further ‘take off’ for canola

Biodiesel in the US, Indonesia and Brazil over past years has shown massive growth and in 2023 the world produced another record volume of well over 55 million tonnes.

RaboResearch general manager Australia and New Zealand Stefan Vogel said almost 80 per cent of these renewable diesel substitutes is produced from vegetable oils – driving demand for this liquid gold up further and also benefiting prices of canola.

“This biofuel boom is far from over,” Mr Vogel said, “but with Australia’s key canola market Europe, several US states and also other countries in the world moving towards electrification of the car fleet, the amount of diesel consumed after 2030, or at latest after 2035, might be notably lower in those core biofuel markets compared to today’s volumes”.

“With this threat to the long-term demand for canola and to ensure a prosperous future for the beautiful yellow blooming crop, producers need to look for the next demand driver,” he said.

“Airlines might just be the ones that allow canola demand to stay sky high, but this requires both commitment from airline operators as well as the right policy framework.”

Mr Vogel posed the question, “Why would an airline even think about sustainable airfuels?” “Well,” he said “all planes currently commercially operating require such liquid fuels. Aviation in 2022 accounted for two per cent of global energy-related carbon emissions and this amount is growing. Even if there were to be electric or hydrogen or nitrogen-fuelled planes available, it will take decades to replace all the aircraft in the global aviation fleet. So, the solution to decarbonisation in the airline sector is by saving fuel and by changing the fuel mix to more sustainable airfuels.”

In many regions of the world, Mr Vogel said announcements are being made about building capacity for sustainable airfuel. “North America is leading the list of country’s announcing these new capacity requirements, followed by Asia, Europe and Latin America. By 2030, this capacity might surpass the size of the existing massive European biodiesel production and it appears it will become a key future demand driver.”

Mr Vogel said in good news for canola farmers, three quarters of the world’s newly-announced capacity will require vegetable oils, used cooking oils or tallow to produce the airfuel. “The remainder will use starches/sugar, biomass or co-processing.”

In Europe, he said the decarbonisation policy for the airline and shipping industries has been long published and food crops are not allowed as a feedstock for those fuels, but instead will require waste oils or other non-food feedstocks. “Our Australian canola therefore won’t benefit directly from any sustainable airfuel demand there. Other major countries – such as in the Americas or Asia – have not (yet) put such limitations on food crops.”

Mr Vogel said “Australia’s flight departures at our five major airports seem sizeable enough to allow for an efficient sustainable airfuel supply chain. The question, however, is which feedstocks would be preferred and with the rather volatile production levels of canola across Australia, in some years the industry could struggle to find sufficient feedstock.

“Still, the sustainable airfuel sector will remain an important demand driver for farm products in the future and the lower the carbon footprint of those feedstocks are, the more desirable they will be to the airline industry as it increases its potential of lowering emissions in line with government and airline emissions reduction targets,” he said.

To find out more about other Rabobank research, contact your local Rabobank branch on 1300 303 033 or subscribe to RaboResearch Food & Agribusiness Australia & New Zealand on your podcast app.

 

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