“The project is about the innovative and effective use of macroalgal biomass optimised for the generation of high energy biocrude that can form a future base for the production of fuels for use in the aviation, mining and marine industries,” said Bruce Grey, Managing Director of AMCRC.

Mr Grey emphasised two key aspects of the project, which involves MBD Energy Ltd, James Cook University and The University of Sydney with its commercial partner Licella.

“Macroalgae offer exceptional opportunities for the supply of biomass feedstock for biocrude,” said Mr Grey. “It is a substance produced using non-arable land and thus does not compete with food production. Carbon is also captured during the production process by photosynthesis.”

Mr Grey said the project was a great example of the AMCRC’s ability to support the development of advanced manufacturing outcomes that could be commercialised. The project will provide demand-driven research, development and demonstration of macroalgae biocrude.  He said two programs will deliver the R&D needed to optimise the project and its technology:

Program I – delivering the fundamental scientific R&D for optimising biomass productivity and critically, biomass organic yields for biocrude production using hydrothermal methodologies.

Program 2 – demonstrating commercial scale production and processing of macroalgal biomass.  This program will provide the blueprint to support and implement cost-effective, large-scale macroalgal production and for its development as a viable feedstock.

Project R&D Leaders Professor Rocky de Nys and Dr Nicholas Paul from James Cook University bring a strong background in algal biology and chemistry and biomass production and related key research covering more than 35 years to the project. Professors Thomas Maschmeyer and Brian Haynes from University of Sydney, together covering more than 30 years in the chemical process engineering and hydrothermal conversion space, will lead the biocrude research.

Industry partner MBD will provide engineering expertise for the project. Scott Grierson, MBD project champion has extensive experience in taking biomass systems to commercial scale. He has experience in planning and approval of concept plants, such as the Tarong Macroalgal Display Plant.

“We are optimistic about what this significant project can deliver in the conversion of macroalgal feedstock into biocrude,” said Mr Grierson.

Mr Andrew Lawson, Managing Director of MBD Energy Ltd said his company was committed to providing leadership in sustainable emissions reduction and commodities production.

“Our Algal Synthesis projects present a potentially game-changing new opportunity to emissions reduction policy makers,” he said. “The AMCRC Macroalgal Biomass project is about providing fossil fuel offsets plus potential increased energy, food and water security.”

About MBD Energy
More than half of the world’s atmospheric CO2 come directly from the chimneys of stationary industrial production facilities such as coal and gas-fired power stations. These emitters provide the current base of today’s energy and industrial production. They are also the businesses that support many of our jobs and the performance of our economy is dependent upon. What’s needed is a practical and affordable way to substantially cut industrial smokestack emissions. Our expert teams of scientists and engineers at MBD Energy Limited believe we are delivering one such solution.

Australia is not getting sufficient value from the $9.4 billion spent annually on publically funded research. The numbers tell the story, there is little return on investment and little collaboration with business.

At the same time, Australia needs to develop a world class university system that focuses on a broad range of universities, not just a handful of top universities. The chair of the Australian Technology Network of Universities, Professor Jeanette Hacket, says that the most recent studies indicate that 68 per cent of research rated at or world class was conducted across 31 of Australia’s universities and that Australia produces world class research at in 83 different research disciplines. Concentration of university funding ignores this fact.

“Australia needs research capacity in many areas which is beyond the possibility even collectively of a few universities, and we need a large network of researchers across Australia in a diverse range of fields,’’ Professor Hacket says.

The Australian Innovation System Report 2010 reveals that only 1.6 per cent of Australian businesses collaborate with universities and only 7.2 per cent were working with publically funded research agencies.

According to research by The Australian in February 2011, more than than two-thirds of Australia’s universities have an overall research performance that fails to reach international benchmarks. The research found that only 12 universities were performing research at or above international standard, with the top four performing at a rate that could be considered well above international standard. The report, which took three years to complete, assessed the research activity and quality in 41 institutions, across eight broad discipline clusters, broken down into 22 fields and 157 specific subject areas.
A 2005 report from the Department of Education, Science and Training says: “Around a third of universities provided inadequate support and incentives to their researchers to get involved in the commercialisation of their research outcomes.”

To address this issue, The Market Driven Collaborative Innovation Working Group, chaired by AMCRC managing director Bruce Grey, has proposed bringing in a system of new KPIs. It notes that KPIs for universities and publically funded research institutions like the CSIRO is all about inputs – publications, grants and patent applications. What’s needed is a system of KPIs focusing on the creation of new companies achieving acceptable returns over time and also focusing on new products and processes that create sales, exports, profits and manufacturing jobs.

According to Professor Goran Roos, chairman of VTT International, the biggest barriers to them working with universities included potential intellectual property conflicts, researchers obsessed with rapid publication, universities being oriented to just science and not commercial application and lack of information about what a university actually does. He says there is also a need to encourage more investment in manufacturing and business services such as R&D, ICT, organisational structures, design, brand equity and education and training.

There is clearly a lack of collaboration between publically funded research institutions and SMEs. The Market Driven Collaborative Innovation Working Group, notes: “As a consequence, the results yielded from research in terms of national benefits from government investment in research have been suboptimal.”

At the same time, the publically funded research institutions keep getting funded by taxpayers.

Despite increases since 2008 on research and development, Australia’s OECD ranking has hardly changed, at 12th and 14th respectively of thirty countries.  Much of the research is done by government and higher education but even that is inadequate. According to the OECD, Israel spends over 4 per cent of its annual economic output on research and development and 80 per cent of that comes from business.  But data from the Department of Innovation, Industry, Science and Research shows that Australia’s research and development from universities accounted for 0.54% of GDP ($6.7 billion) in 2008, which ranked Australia 11th among OECD countries. Australia’s government backed R&D was $3.4 billion, representing 0.27% of GDP in 2008, ranked 10th out of 30 OECD countries. According to the 2010, Excellence in Research for Australia (ERA) initiative, 68 per cent of research rated at world class standard was conducted across 31 of Australia’s universities.
Unlike countries like Israel, Australian business spends little on R&D. At 1.35 per cent of GDP, R&D spending by Australian businesses in 2008-09 was below the OECD average of 1.63 per cent. But it ranked 12th out of 33 nations, which was two places better than a year earlier but still too low. According to the second annual Australian Innovation System report released by Innovation Minister Kim Carr, the percentage of Australian businesses bringing genuine innovation to the domestic market is weak by OECD standards, at 9.6 per cent. Japan sits at 25.3 per cent, South Korea at 23.6 per cent, Britain at 14.5 per cent, the Netherlands at 12.5 per cent, and Sweden at 15 per cent. Even New Zealand beat us with 15.4 per cent.  Intangible investments – in people, technology, R&D and so on – ran at 5.9 per cent of GDP, well below investment in plant and machinery’s 13.2 per cent share. The United States has intangible investment of 12 per cent of GDP, and plant and equipment investment of 7.5 per cent, while the British number is 9.7 per cent versus 5.9 per cent, in favour of intangibles. According to the Global Competitiveness Report 2010-11, Australia ranked 16th among 139 countries, ranking lower than South Korea, Belgium, Austria and Israel. The Atlantic Century – Benchmarking Innovation and Competitiveness ranks Australia 19th out of 40 countries, lower than Singapore, Sweden, Denmark, South Korea, Belgium, Canada and Austria.

The problem is that if Australia is dependent on the universities, they are not creating sufficient intellectual property and they are not close to the customer. Customers are global, universities do not understand market need. Nor do they understand path to market.

Australia has no tradition of university-industry collaboration but experts say it is an area we need to develop.  This country is very unlike, for example, Germany where manufacturers also enjoy a key advantage in research and development with close links with universities, a tradition that goes back to the Kaiser Wilhelm institutes of the 19th century and that has the support of the German government through incentives like those, for example, that allow universities to patent and license innovations. Australia’s situation is also very unlike America, where academics are driven to work with industries as much of the funding for universities there come from the private sector.

Universities are massive store houses of technical skills and expertise. Potentially, they can provide businesses with cost-efficient R&D. The challenge is bringing the two together. Doron Ben-Meir, the chief executive of Commercialisation Australia, says the level of university-business collaboration we’re seeing now in Australia is “the tip of the iceberg.” “It’s really a case of universities opening themselves up to the opportunity in the first place and wanting to engage with industries and marketing themselves in that regard,’’ Ben-Meir says. “Unfortunately to date, universities have been a little bit opaque to traditional industries and they need to open up.

Similarly, the CSIRO does create IP but either sits on it or does not adequately commercialise it. Wireless IP is a good example. CSIRO is at the forefront of wireless research. In recent years, CSIRO had engaged in legal battles over the use of patented wireless network technology, which the CSIRO patented in 1996, by some of the biggest names in the technology industry including Microsoft, Nintendo and Hewlett Packard. The reality is that the CSIRO invented WiFi and others used it. CSIRO only got $200 million from that deal when the market for WiFi chips was $3 billion in 2008. A better option would have been to spin companies out of the CSIRO to develop products. If an appropriate strategy had been developed Australia could have created its own Intel spun out of the CSIRO.  The CSIRO’s most successful spin off was Radiata.  CSIRO’s sustained trans-disciplinary capability-building efforts in radio-astronomy produced electronic engineers, experts in cutting-edge integrated circuit design. Better still, many were able to work effectively in commercial environments. There was extensive collaboration between radio-astronomers and engineers through a joint CSIRO-Macquarie University venture examining wireless Local Area Network solutions based on mathematical techniques used in radio-astronomy and utilising state-of-the-art chip design methods. This work culminated in the formation of Radiata.  But more of that needs to happen. A 2002 report, Australian University Spin Off Companies – Attitudes, Policies and Companies notes: “To achieve the target of 100 spin-off companies per annum, suggested by the Chief Scientist, the large research profile universities sector overall and the CSIRO will have to double or even treble their present rate of spin-off generation. Equity returns from spin offs also need to be lifted substantially.”

The challenge is two fold: getting a bigger return on investment in publically funded research and getting more business investment in R&D.

The Market Driven Collaborative Innovation Working Group has proposed a number of radical changes to increase intellectual property in the market.

First, it advocates KPIs in a number of areas.

Human Resources

1. New doctorate graduates per 1000 population aged 25-34,
2. Percentage population aged 30-34 having completed tertiary education.
3. Percentage youth aged 20-24 having attained at least upper secondary level education.

Open, excellent and attractive research systems

1. International scientific co-publications per million population.
2. Scientific publications among the top 10% most cited publications worldwide as % of total scientific publications of the country.
3. Non Aust doctorate students as a % of all doctorate students.

Finance and support

1. Public R&D expenditures as % of GDP.
2. Venture capital (early stage, expansion and replacement) as % of GDP.

FIRM ACTIVITIES

Firm investments

1. Business R&D expenditures as % of GDP.
2. Non-R&D innovation expenditures as % of turnover.

Linkages & entrepreneurship

1. SMEs innovating in-house as % of SMEs.
2. Innovative SMEs collaborating with others as % of SMEs.
3. Public-private co-publications per million population.

Intellectual assets

1. PCT patents applications per billion GDP.
2. PCT patent applications in societal challenges per billion GDP (climate change mitigation, health).
3. Community trademarks per billion GDP.
4. Community designs per billion GDP.

OUTPUTS

Innovators

1. SMEs introducing product or process innovations as % of SME’s.
2. SMEs introducing marketing or organisational innovations as % of SME’s.
3. High-growth innovative firms.

Economic effects

1. Employment in knowledge-intensive activities (manufacturing and services) as % of total employment.
2. Medium and high-tech product exports as % total product exports.
3. Knowledge-intensive services exports as % total service exports.
4. Sales of new to market and new to firm innovations as % of turnover.
5. License and patent revenues from abroad as % of GDP.

It has also proposed a system where a portion of ARC grants are assessed for “impact” which would be quantified and risk adjusted, where competitive grants are awarded through vouchers that sets up a network of approved suppliers to work with SMEs and having innovation advocates working as intermediaries between various research institiutions, with each advocate focusing on a specific sector. It also suggests setting up a web based organisation to encourage collaboration between researchers and SMEs. It has also proposed tax breaks on income derived from patents and getting more industry leaders on university boards.

These are among suggestions which would radically transform the landscape and create a more innovative business culture, much in the same way that Silicon Valley has transformed the United States and Germany’s culture of collaboration between industry and research institutions has turned northern Europe into a manufacturing powerhouse. Australia, with its educated workforce and research institutions, has enormous potential.

The opportunity is there for the taking.