Australia invests $1.1b to boost low-carbon fuel future

Australia is set to become a global player in sustainable fuels after the Federal Government announced a $1.1 billion investment package to accelerate the supply of low-carbon liquid fuels.

The funding, unveiled in Brisbane on September 17, is designed to strengthen energy security, support jobs, and help decarbonise key industries including aviation, marine, manufacturing, transport, mining and construction.

The Low Carbon Fuels Alliance of Australia and New Zealand (LCFAANZ), representing more than 300 stakeholders across the fuel value chain, welcomed the investment as a turning point for energy security and emissions reduction.

Bioenergy Australia chief executive and LCFAANZ founder Shahana McKenzie said the announcement was a major breakthrough for the sector.

“This investment changes the game for Australia’s homegrown low-carbon fuel industry and our energy security. It sets the foundation for a cleaner, more resilient economy – supporting jobs, sparking innovation and providing hard-to-abate sectors with the affordable, sustainable fuels they need to reach net zero,” she said.

“It sends a clear signal to global investors that Australia is open for business in the development and deployment of Low Carbon Fuels.

“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.”

McKenzie said Australia’s vast agricultural and industrial base created an opportunity to become a world leader in sustainable aviation fuel (SAF) and renewable diesel.

“With our vast agricultural and industrial base, CSIRO reports that by 2025 Australia will have enough feedstock to replace 60 percent of local jet fuel with SAF, growing to 90 percent by 2050. Low carbon liquid fuels will create jobs in regional Australia, boost economic growth, strengthen energy security, and future-proof our tourism and transport industries.

“This commitment signals to industry and investors that the Federal Government is serious about providing the foundation to decarbonise key sectors cost-effectively while maintaining global competitiveness.”

The package includes a new ten-year Cleaner Fuels Program to attract investment for domestic production, alongside funding for innovation from “farm to fuel bowser.” It builds on existing initiatives such as the Sustainable Aviation Fuel Funding Initiative and the Future Made in Australia Innovation Fund.

The move follows warnings in Bioenergy Australia’s Securing Our Fuel Future report, which found Australia’s reliance on imported fuel and declining refining capacity had left the nation increasingly exposed to global supply shocks.

The report noted that even with strong electrification, Australia will need about 30 billion litres of liquid fuel by 2050, underscoring the importance of alternatives such as SAF, renewable diesel, biodiesel, bio-methanol and ethanol.

A new website, cleanfuel.org.au, has also been launched to provide accessible information for Australians on how low-carbon fuels work, their benefits, and their role in achieving a net-zero future.