Mallee plants have the potential to replace wheat in drought affected land. They can can be harvested for their carbon credits, eucalyptus oil and wood pellets

by Tina Perinotto

FAVOURITES – 4 June 2009 – As the rest of the developed world sheds staff and downsizes, global engineer MWH is on the expansion trail. The drivers are the emerging climate change industries ranging from carbon capture in Mallee eucalyptus plants to storm surge adaptation work for local councils in Australia and New Zealand.

In WA the company has recently signed a contract with a funds manager to help deliver native Mallee plants capable of producing a host of marketable products – from carbon credits to eucalyptus oil and even wood pellets for the booming European market.

The eucalyptus oil is a growth market, replacing petro chemical products such as industrial solvents.

In the pipeline is also a host of work in the so called “wet infrastructure” that the company deals in – water related engineering such as dam designs, water systems, major agricultural irrigation plants – dealing with the expected higher stress levels coming from storm surges and rising sea levels.

In Australia, the company, which numbers around 7000 people world-wide, recently announced a raft of senior appointments (posted recently in TFE’s People and Jobs section).

According to Peter Fagan, himself newly appointed as the company’s Asia-Pacific Sustainability Practice Leader, climate change is here and it will present challenges but also opportunities.

“The changes in my view are huge – they’re exciting and they offer a whole heap of opportunities and we want to be positioned at the forefront of those.

His background, both personal and professional, gives weight to his opinion.

Fagan is one of ten shareholders in a company involved in the Mallee tree project; he sits on two boards, one a water recycling company and another a renewable energy company, is a member  Warren Centre’s advanced technology and sustainability committee and has also been the general manager of Sydney Water’s environmental science and technology division.

Now, in his role with MWH he has the opportunity to be a key part of ramping up of climate change “cottage industries” into major economic sectors.

A big shift in the potential occurred about 18 months ago, he says.

“MWH has always been involved in the sustainability in an undefined sense, but about 18 months ago we started incorporating this into engineering in all our work because clients were becoming greener. They wanted triple bottom line accounting and so we are doing that as part of our projects,” Fagan says.

The company started developing a series of “specific offerings and specific services” targeted to organisations trying to deal with the implications of climate change.

“We see real value in adaptation projects. There’s a whole lot of mitigation things we do,” Fagan says.

“Drought is in large part a climate change impact and as a result of that we are seeing industry restructuring such as wetland farming shifting from the south-east, out of the Murray Darling basin to the north west, to the Ord River and places like that,” Fagan says.

“We’re seeing large scale agribusinesses shifting operations.”

Where MWH comes into the picture is to assist with reconfiguring major irrigation systems that are no longer efficient because they have less water to deliver, and dealing with the impact of that on farmers and whole regions, says Fagan.

The carbon capture potential of the humble Mallee will be part of one solution, he thinks.

The potential is large scale planting of Mallee plants that can be harvested in a number of ways. First, for their carbon credits generated by the carbon stored in their root balls. Then for the leaves that can be harvested and crushed to extract eucalyptus oil which is rapidly replacing petro chemical products such as industrial solvents ( Fagan says Australia currently is a net importer of eucalyptus oil – from China and Israel).

Even the twig and stem residue can be compacted for wood pellets that can be sold to Europe for fuel. The emissions from burning the pellets will be carbon negative for the plant because of the carbon capacity of the root ball, he says.

MWH is bringing together knowledge of plant species, soil types, rates of carbon capture, pest management and other environmental information into a research project that can eventually become part of a prospectus for investors.

Fagan thinks the potential income could match wheat farm incomes – before the drought.
By way of evidence he points to a WA company that has recently signed a $69 million contract for the export of wood pellets to Belgium, where pellets sell for $300-400 a tonne.

Peter Fagan: “We have a whole lot of people and smart technology. It’s going to cost but how we deal with those costs is the market and it will create enormous opportunities at the same time”

There are spinoffs in other ways. “In Belgium we’ve been involved in the delivery of two bio-mass power plants using municipal waste as the fuel source,” he says.

In wet infrastructure the work is mostly mostly local government clients upgrade infrastructure in water and sewerage to cope with greater storm surges and rising sea levels.

An emerging important market in this field is New Zealand where municipal agencies are particularly worried about vulnerability to rising water levels and storms because so much of the country is in low-lying land.

Whichever way you look at it, says Fagan, these industries, all generated by climate change, have they have huge potential.

Measures to combat climate change might slow emissions, says Fagan, “But they won’t stop the change that’s already happening and whether you believe [climate change] is man made or not is irrelevant. The science is in and the climate is changing and as a result of that we have a whole lot of impact on infrastructure.”

The Government’s white paper on renewable energy targets underpins an industry in renewable energy too, he says, regardless of an emissions trading scheme.

“The targets are 15-25 per cent of renewable energy and if that goes through it will be mandated that by 2012 it’s a 10 per cent target and by 2020 it’s a 25 per cent target.”

Renewable sources such as wind and solar will need to be supplemented, he says.

The challenges of climate change facing Australia are huge but among them are great opportunities, says Fagan.

“We have a whole lot of people and smart technology. It’s going to cost but how we deal with those costs is the market and it will create enormous opportunities at the same time.”

See Peter Fagan’s contributed article in Spinifex