The Albanese Government has announced a $1.1 billion investment in the production of low-carbon liquid fuels, with private businesses and farmers the big winners.
The investment was announced by Treasurer Jim Chalmers and Climate Change and Energy Minister Chris Bowen in Brisbane on Wednesday as part of an expansion of Labor’s Future Made in Australia policy.
Low-carbon liquid fuels (LCLF) can be produced sustainably from waste, biomass such as agricultural feedstocks, or renewable hydrogen.
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“More Australian jobs, more profitable Australian farms and lower emissions — that’s the win, win, win the Albanese government is announcing today,” Bowen said.
The energy minister said liquid fuels make up a third of emissions in Australia and, while renewable electricity is important, “it’s not the answer for everything”.
“There are plenty of parts of Australian industry that will always rely on liquid forms of energy,” he said.
“Things like aviation and shipping, and to some degree heavy transport, are hard to decarbonise — a big part of the answer is low-carbon fuels, cleaner fuels.”
Earlier in the year, Bowen said an Australian domestic LCLF industry would “focus on supplying sustainable aviation fuel and renewable diesel in liquid fuel-reliant sectors”, these include transport — such as 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,” Bowen said at the time.
Wednesday’s announcement is part of a 10-year grants program to encourage private sector investment into local LCLF production.
Bioenergy Australia called the announcement a “ground-breaking investment” that will drive decarbonisation across the nation’s key industries, as well as help position Australia at the forefront of the global clean-energy transition.
Bioenergy Australia CEO Shahana McKenzie said the announcement was a “pivotal role” in achieving Net Zero.
“It sends a clear signal to global investors that Australia is open for business in the development and deployment of low-carbon fuels,” McKenzie said.
“For industry, this is more than a funding announcement — it is a turning point.
“It gives companies the confidence to invest, innovate and build here in Australia, using our enormous feedstock potential to build a clean energy future.
“With demand for low-carbon liquid fuels rising both at home and abroad, this investment positions Australia to play a leading role in meeting that need.”
Australia’s national science agency, CSIRO, projected that a LCLF industry could contribute between $6 billion to $12 billion annually in direct economic benefits.
However, the science agency said key questions remain around affordability and sustainability, as well as competition for feedstocks and economically efficient scales of production.
LCLF can be made into renewable diesel as well as sustainable aviation fuel (SAF). SAFs are already used in airports in Europe, the US, UK and some parts of Asia.
In May, Sydney Airport announced a partnership with Qantas and Ampol to import nearly two million litres of SAFs which would be mixed with conventional aviation fuel.
“The fuel could power the equivalent of 900 flights from Sydney to Auckland on Qantas and Jetstar’s 737 aircraft, reducing the resulting carbon emissions from those flights by a total estimated 3,400 tonnes,” the airport said.
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