Renewable Developments Australia (RDA) will use the funding to construct the business case for a renewable biofuel production facility at Pentland, near Charters Towers in North Queensland.

The funding will support increasing and irrigation trials, due diligence activities needed for financial close and preliminary work to support the procurement of engineering and construction services.

If construction goes ahead, it is anticipated to create 500 jobs during construction and about 200 permanent positions upon completion.

The business case is expected to be completed by November this year. ARENA can recover its funding amount if the plant proceeds.

The plant is designed to produce nearly 350 million litres of fuel grade bio-ethanol per year, increasing Australia’s production by 80%.

The fuel will be sold under a proposed off-take agreement with a global agriculture and energy firm and export via the Port of Townsville

ARENA CEO Ivor Frischknecht said the ambitious project had the potential to be a landmark development for Australia’s bioenergy industry.

Frischknecht added that the project would offer knowledge on the commercial viability of innovative second generation ethanol production technology, which would be shared with the bioenergy industry.

The plant’s ‘lignin’ by-product will be used to fuel a 32MW co-generation power plant. The excess lignin will be sold as biofuel pellets.