The Australian Renewable Energy Agency (ARENA) has agreed to provide a funding of $11.9m for Ethanol Technologies (Ethtec), an Australian biofuel company to demonstrate its new biofuel technology.

Total cost of the demonstration project is estimated to be $48m and the company aims to construct a purpose built pilot-study facility at a cost of $30m, in Hunter Valley in New South Wales.

The new facility will partner with researchers from the Newcastle Institute for Energy and Resources at the University of Newcastle and is also receiving support from Muswellbrook Shire Council.

ARENA’s funding will help in completing the demo project which is expected to produce ethanol from a wide range of non-food waste plant matter left over from crop harvesting and forestry.

Ethtec has also secured $11.9m in matching funding from its partner Jiangsu Jintongling Fluid Machinery Technology.

Ethtec claims to have developed a new and cost-effective way to produce bioethanol from low-value products such as sugarcane bagasse, forestry residues and cotton gin trash known as lignocellulosic biomass.

ARENA CEO Ivor Frischknecht said: “Advanced biofuels provides an exciting opportunity for Australia to open up export avenues and also help reduce emissions from the transport sector.

“Ethtec’s facility in the Hunter Valley will demonstrate a new and innovative process for the production of bioethanol, gaining pivotal research and development experience that will lead to the commercialisation of the process and position Australia as a leader in advanced biofuels.”

According to ARENA, the demand for ethanol in the country is expected by about 500 million litres each year, until 2030. Presently, the country’s ethanol is first generation, sourced from wheat and sugarcane and second generation is derived from plant waste.

The next generation bioethanol, which is currently being developed is expected to be a viable option to support the country in reducing emissions from the transport sector.

Ethtec chief scientist Russell Reeves said: “An ethanol fuel industry based on lignocellulosic biomass can significantly reduce greenhouse gas emissions from the transport and industrial sectors, create opportunities for regional and rural communities, make crop and forest production more economical and assist in land rehabilitation.”