The Australian government has committed AU$1.1 billion toward the production of low carbon liquid fuels (LCLF), including renewable diesel, sustainable aviation fuel and e-fuels.
The Cleaner Fuels Program will help to reduce emissions in hard-to-abate sectors such as aviation, heavy freight and mining, the government noted, and is expected to attract private investment.
LCLF can be produced sustainably from waste materials, biomass, and by combining renewable hydrogen with captured carbon dioxide, with Australia already producing large quantities of canola, sorghum, sugar and agricultural waste that can be converted into fuels.
‘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,’ a government statement read.
Cleaner Fuels Program
The government plans to finalise details of the Cleaner Fuels Program in mid-2026, ahead of opening applications in 2026/27.
It builds on previous government investment in the development of a domestic LCLF industry, including AU$33.5 million that was committed under the Sustainable Aviation Fuel Funding Initiative; AU$250 million committed through the Future Made in Australia Innovation Fund; the establishment of fuel quality standards to support renewable diesel; and the expansion of the Guarantee of Origin Scheme to track and verify emissions from Australian produced LCLF.
‘Enormous economic opportunity’
“Low carbon liquid fuels are an enormous economic opportunity for Australia,” commented 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. This is a downpayment on developing an entirely new industry in Australia.”
A recent report from the CEFC found that a mature Australian low carbon liquid fuels industry could deliver around 230 million tonnes CO2-e in cumulative emissions reduction by 2050. Read more here.
