1. bree.gov.au The Australian Liquid Fuel Technology Assessment (ALFTA) November 2014 Presented by Arif Syed Program Leader: Research and Analysis Program Bureau of Resources and Energy Economics

2. bree.gov.au Outline I ALFTA Overview II Assumptions, Costs and Technologies III ALFTA Model IV Levelised Costs of Fuel Over Time V Key Findings

3. bree.gov.au I. ALFTA Overview: Previous Work International studies are not easily available on the cost of liquid fuel technologies (for transport use). In 2012-13, the Department of Resources, Energy and Tourism engaged the LEK consultancy to produce cost estimates of advanced biofuel production technologies. The study essentially remained inconclusive in producing the levelised cost of fuel estimates (production cost of liquid fuels for transport uses).

4. bree.gov.au Aim of ALFTA ALFTA provides the best available and most up- to-date estimate of current and future costs (component cost and levelised costs) of 18 liquid fuel technologies for transport use.

5. bree.gov.au Approach Component costs have been developed through a bottom-up engineering analysis of each of the technologies. These costs include, costs such as domestic capital costs, international capital costs, labour productivity, etc. Parameters provided for each fuel generation technology (thermal efficiency, O&M costs, fuel costs, capacity factors, etc.

6. bree.gov.au ALFTA Report and Model (1)ALFTA Report: Details the technologies and methods. (2)ALFTA Model: Available upon request: www.info@bree.gov.au www.info@bree.gov.au

7. bree.gov.au II. Key Assumptions Key assumptions include: (1) economic growth of 2.5%; (2) AUD moving to 0.86 USD/AUD by 2031-32. Capital costs are provided on the basis of an Nth-of-a-kind (NOAK) plant in Australia and at a utility-scale.

8. bree.gov.au Component Costs Capital Costs (local & international components) Operation & Maintenance (fixed and variable) Feedstock-input costs (provided by ACIL Allen) Owner’s costs

9. bree.gov.au 18 Fuel technologies covered: 1. Conventional petroleum fuels 2. Liquid petroleum gas 3. Compressed natural gas 4. Liquefied natural gas 5. Gas to liquids 6. Coal to liquids 7. Biomass to methanol 8. Solar dissociation 9. Conventional bioethanol 10. Advanced lignocellulose bioethanol 11. Advanced bioethanol - synthesis gas fermentation 12. Biodiesel by transesterification 13. Hydrothermal upgrade 14. HEFA/HVO 15. Algal biomass via HEFA/HVO 16. Methanol/DME/MTG 17. Fast pyrolysis 18. Alcohol to jet

10. bree.gov.au Levelised Cost of Fuel (LCOF) LCOF=KC + O&M fix + O&M var + FC + SC + PC Where, the LCOF =$/GJ

11. bree.gov.au III. ALFTA Model Values of more than 17 cost parameters can be altered by users to explore the LCOF estimates’ sensitivity to the user’s input.

12. bree.gov.au ALFTA Regional Costs F. Coal to Liquids100.00%105.00% 120.00% Biomass to Methanol100.00%105.00% 120.00% Regional Capital Cost Modifiers East Coast Metropolitan East Coast Regional West Coast Metropolitan West Coast Regional

13. bree.gov.au LCOF breakdown in cost components Select Technology: M. Advanced Bioethanol - Synthesis Gas Fermentation Select Region: East Coast Regional LCOF Component ($/GJ) 201320202025203020402050 Capital Cost#N/A2523211816 Fixed O&M#N/A55566 Variable O&M#N/A8891011 Feedstock Costs#N/A13 Cost of Emissions#N/A00000 TOTAL LCOF #N/A5250484746

14. bree.gov.au IV. LCOF over time

15. bree.gov.au LCOF comparisons 2013, real 2012-13 A$/GJ

16. bree.gov.au LCOF 2020, real 2012-13 A$/GJ

17. bree.gov.au LCOF 2050, real 2012-13 A$/GJ

18. bree.gov.au V. Key Findings There are several currently available technologies from which fuel production is already competitive with conventional petroleum fuels, i.e. have a lower LCOF. By 2020, multiple emerging technologies are expected to be available at a lower LCOF than petroleum fuels. -- eg. Coal to Liquids (CTL) and Gas to Liquids (GTL).

19. bree.gov.au Key Findings cont. Advanced bioethanol fuel technologies become cost competitive in 2020, and remain cost competitive out to 2050.

20. bree.gov.au Thank you bree.gov.au Thanks arif.syed@industry.gov.au