Government commits $1.1bn over next decade to sustainable fuel

“As demand for air travel grows, and more goods are moved by road and rail, it’s essential we invest in future fuels that allow us to facilitate this increasing demand while meeting our net-zero targets,” said Acting Transport and Infrastructure Minister Murray Watt.

“Low carbon fuels have the potential to be a $36 billion industry here in Australia, and we have the opportunity to lead the way on the production of these new fuels.

“We have the renewable feedstocks, access to clean energy and a strong agriculture base, all of which will allow us to develop this new industry, create new jobs and power how Australians move for decades to come.”

Government figures show that Australia currently exports around $4 billion of suitable feedstocks like canola and tallow, with the Clean Energy Finance Corporation (CEFC) estimating a domestic low-carbon liquid fuel industry could be worth $36 billion by 2050 and deliver around 230 million tonnes CO2-e in cumulative emissions reduction.

According to Treasurer Jim Chalmers, the economic benefits of low-carbon fuels are 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,” he said.

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“From the farm to the refinery, from primary production to processing, this will create more jobs and more opportunities for Australian workers and businesses.

“It’s another way we’re helping Australians grasp the big benefits on offer in the transformation to cleaner and cheaper energy – to help lift wages, grow living standards, create jobs and grow our economy.”

The aviation industry has welcomed the announcement, with companies such as Jet Zero Australia, Airbus, and Qantas all offering their support.

“As a company focused on bringing the regions to the runway with SAF, we are extremely excited about this new funding support and what it means for our most advanced project, Project Ulysses,” said Jet Zero CEO Ed Mason.

“We have seen voices supporting SAF broaden to include Defence and agricultural bodies such as the National Farmers Federation, Canegrowers and Grains Australia.”

Stephen Forshaw, Airbus chief representative for Australia, New Zealand and the Pacific, said the government should also now look at demand-side policies, including a SAF blending mandate.

“We know Australia has the feedstock. The industry has been waiting for the right policy signals from the Government, and this very significant supply-side support package amounts to take-off clearance for producers and those who are weighing the opportunity to produce here,” he said.

“We welcome the Government engaging in an industry consultation process to determine how the scheme should be implemented, and hope this can be done quickly. We think SAF before 2029 is achievable, indeed needed, with the right will and sense of urgency.

“Australia will win from this policy. The creation of thousands of new jobs in regional Australia, and the improvement of our fuel security position as a nation are key reasons why this policy is good for the country.”

Qantas, which also backs SAF projects in concert with Airbus and has so far committed around $100 million, says it “looks forward to continued collaboration with Government and industry as part of further consultation processes”.

“A local Sustainable Aviation Fuel (SAF) industry has the potential to create significant economic benefit for regional Australia, enhance our domestic fuel security and support the decarbonisation of the aviation sector,” said Fiona Messent, Qantas’ chief sustainability officer.

“Qantas invests in a number of local SAF initiatives and projects, enabled by our $400 million Climate Fund, with this announcement another step toward establishing a thriving SAF industry in Australia and seizing Australia’s unique low carbon liquid fuels opportunity.”

Virgin Australia has also welcomed the news, with chief corporate affairs and sustainability officer Christian Bennett saying the move “recognises the critical role that sustainable aviation fuel can play in aviation’s decarbonisation journey”.

“As the policy landscape further develops, our focus remains squarely on least cost decarbonisation and ensuring that sustainable fuels, which are currently around 3-5 times more expensive than
conventional jet fuel, are accessible and affordable for airlines and, ultimately, the travelling public,” he said.

“As we continue our own sustainability journey, including our partnership with Qatar Airways and Renewable Developments Australia to establish a SAF production facility in Far North Queensland, we’re committed to working collaboratively with government and industry to establish viable, cost- effective pathways to decarbonisation.”

Airbus and Qantas earlier this year jointly invested $15 million into a climate-focused venture capital fund, Climate Tech Partners (CTP), which will work with corporate backers to develop solutions targeted at specific industry needs.

It marked the latest step in Qantas and Airbus’ wider US$200 million joint initiative launched in 2022, aimed at fast-tracking SAF production, with Qantas in 2023 also calling for SAF blending mandates.