Australian government providing AUD$250 million to grow low-carbon liquid fuels industry

The Australian government is delivering AUD$250 million (USD$157.6 million) to accelerate the pace of Australia’s growing domestic low-carbon liquid fuels (LCLF) industry.

This funding is part of the AUD$1.7 billion (USD$1.07 billion) Future Made in Australia Innovation Fund and will be provided as grants to support precommercial innovation, demonstration and deployment.

LCLF can be produced sustainably from waste, biomass such as agricultural feedstocks, or renewable hydrogen.

Australia’s domestic LCLF industry will focus on supplying sustainable aviation fuel and renewable diesel in liquid fuel-reliant sectors, including transport (aviation, heavy vehicle, rail and maritime), mining, agriculture and construction.

The development of low-carbon fuels will drive economic growth and jobs in regional areas, including supporting diversification in agriculture, making good use of excess feedstock from crops, sugarcane and waste products such as tallow.

Australia’s national science agency, the Commonwealth Scientific and Industrial Research Organisation, projects that a LCLF industry could contribute between AUD$6 billion to AUD$12 billion (USD$3.78 billion to USD$7.56 billion) annually in direct economic benefits, with greater gains from regional co-benefits including diversified income streams for farmers and regional communities.

LCLFs not only help decarbonize hard-to-abate sectors of the economy but provide Australia with sovereign capability and resilience at a time of increasing international uncertainty, the Ministry for Climate Change and Energy stated. 

Alongside the AUD$250 million for LCLF, the Future Made in Australia Innovation Fund is providing AUD$500 million (USD$315.15 million) for clean-energy technology-manufacturing capabilities including electrolyzers, batteries and wind towers.

The fund—a key element of the Future Made in Australia plan—will ensure Australia can maximize the economic and industrial benefits of the international move to net zero and secure Australia’s place in a changing global and strategic landscape.

Funding is administered by the Australian Renewable Energy Agency (ARENA).

The investment in a wider domestic LCLF industry builds on the momentum of the SAF funding initiative.

The SAF funding initiative has seen the federal government invest AUD$33.5 million (USD$21.1 million) across five projects to date, including LCLF production facilities in Bundaberg and Townsville, and enabling the supply of SAF at Brisbane Airport.

Funding from the Future Made in Australia Innovation Fund is subject to the legislated Future Made in Australia Community Benefits Principles.

The Albanese government established these principles to ensure public investment—and the private investment it attracts—has a direct and tangible benefit for local workers and businesses.

“The Australian government is backing clean, green low-carbon liquid fuels as an important part of our move towards net zero and long-term fuel security,” said Chris Bowen, the minister for climate change and energy. “Australia has the know-how and skills to meet the crucial task of decarbonizing hard-to-abate sectors such as aviation, heavy transport and mining that rely on liquid fuels. Investing in a Future Made in Australia means delivering the industries that will provide high end jobs, many in the regions, for future generations.”

Catherine King, the minister for infrastructure, transport, regional development and local government, added, “We know that industries vital to our national prosperity, like the transportation of people and goods across our vast land, are carbon intensive and hard to abate. That’s why we’re investing hundreds of millions of dollars to develop—right here in Australia—the low-carbon liquid fuels of the future that will reduce their environmental impact without preventing their operation or expansion. We have all the ingredients in Australia to be a global clean-energy superpower, and the Future Made in Australia fund will help bring that potential to reality.”