Australian government invests AUD$1.1 billion in low-carbon liquid fuels production

The Australian government announced Sept. 17 that it is investing AUD$1.1 billion (USD$734.9 million) to help unlock the vast economic opportunities available from low-carbon liquid fuels.

“This is all about helping to maximize the economic and industrial benefits of the shift to clean energy and net zero,” the government stated. “This investment will help ensure we have strong supply chains for the more sustainable fuels that can power our trucks, cargo ships and planes into the future.”

The new 10-year Cleaner Fuels Program will stimulate private investment in Australian onshore production of low-carbon liquid fuels such as renewable diesel and sustainable aviation fuel (SAF).

The first production of these fuels in Australia is estimated by 2029.

The government said Australia has the ingredients needed to make cleaner liquid alternatives to fossil fuels, with ready access to feedstocks like canola, sorghum, sugar and waste.

“Thanks to our advanced farming practices and access to cheap and reliable renewable energy, Australia is in an enviable position to produce cleaner, low-carbon liquid fuels that jets, ships, construction machines and heavy trucks need to reach net zero,” the Australian government stated.

Liquid fuels make up around half of Australia’s national energy use.

Replacing those fossil fuels with cleaner alternatives would deliver a massive climate and economic opportunity, according to the government.

Australia already exports nearly AUD$4 billion (USD$2.67 billion) of suitable feedstocks like canola and tallow, but the Clean Energy Finance Corp. estimates an Australian low-carbon liquid fuel industry could be worth AUD$36 billion (USD$24 billion) by 2050—highlighting the untapped potential of developing local refining and value-adding capability.

“Funding to make cleaner fuel on Australian shores from Australian feedstock will help back Australian innovators from the farmer to the fuel bowser, make our fuel supply greener and more resilient and make low-carbon fuels available for early adopters,” the government said.

Details about eligibility will be considered through public consultation and design work to take place this financial year.

Grants will be awarded through a competitive process.

The new production-linked incentive builds on the government’s support through the SAF Funding Initiative and the Future Made in Australia Innovation Fund.

Recipients will also need to deliver benefits according to the community-benefit principles under the Future Made in Australia Act, the government stated.

The government is also supporting the market by expanding the “Guarantee of Origin Scheme” to include low-carbon liquid fuels and has established a fuel-quality standard for renewable diesel.

A recent report from the CEFC found that a mature Australian low-carbon liquid fuels industry could deliver around 230 million metric tons of CO2-equivalent in cumulative emissions reduction by 2050.

This is equivalent to 2.3 times Australia’s current annual transport emissions, or the annual emissions from 86 million cars.

“Across the nation we have 2 billion liters’ worth of projects in the pipeline, many of which are ready to scale up production,” said Chris Bowen, Australia’s minister for climate change and energy. “AUD$1.1 billion (USD$734.9 million) for low-carbon liquid fuels production here in Australia builds on the AUD$250 million (USD$167 million) we have already allocated to low-carbon liquid-fuels research and development through the Future Made in Australia Innovation Fund.”