Government announces $1.1bn for cleaner fuel production

The federal government has announced it is investing $1.1 billion to develop economic opportunities from low carbon liquid fuels. The government says the investment will help ensure strong supply chains for the more sustainable fuels that can power transport into the future.

The new 10-year Cleaner Fuels Program aims to stimulate private investment in Australian onshore production of low carbon liquid fuels, such as renewable diesel and sustainable aviation fuel. The first production of ‘drop-in’ cleaner fuels, which can be directly substituted for existing fuels and work in today’s engines, is estimated by 2029.

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

Due to 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, according to the government.

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.

Australia already exports nearly $4 billion of suitable feedstocks like canola and tallow. But the Clean Energy Finance Corporation (CEFC) estimates an Australian low carbon liquid fuel industry could be worth $36 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.

Details about eligibility will be considered through public consultation and design work to take place this financial year, and grants will be awarded through a competitive process.

A recent report from the CEFC found that a mature Australian low carbon liquid fuels industry could deliver around 230 million tonnes of CO₂-e 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.

“Low carbon liquid fuels are an enormous economic opportunity for Australia,” said Treasurer Jim Chalmers. “It’s about making Australians and our economy big beneficiaries of the global net zero transformation.

“Developing this industry has potential to make us an indispensable part of growing global net zero supply chains.”

“Making cleaner fuels here, from Australian feedstocks, creates the path for emissions reduction in sectors that are hardest to clean up, like plane travel and construction machines,” said Minister for Climate Change and Energy Chris Bowen. “Across the nation we have 2 billion litres’ worth of projects in the pipeline, many of which are ready to scale up production. A new thriving domestic industry with more jobs in our regions, from farmers growing the inputs to workers refining the fuels of the future, is within our reach.

“$1.1 billion for low carbon liquid fuels production here in Australia builds on the $250 million we have already allocated to low carbon liquid fuels research and development through the Future Made in Australia Innovation Fund.”

Image credit: iStock.com/Fahroni