The Australian government has announced a $1.1 billion investment to accelerate the production and supply of low-carbon liquid fuels, marking a major milestone in Australia’s clean energy transition and fuel security agenda.
The 10-year Cleaner Fuels Program aims to stimulate private investment in domestic production of renewable diesel and sustainable aviation fuel, positioning Australia as a leading global producer while helping decarbonise key industries including transport, mining and aviation.
Treasurer Jim Chalmers highlighted the national opportunity, stating: “Low carbon liquid fuels are an enormous economic opportunity for Australia.
“It’s about making Australians and our economy big beneficiaries of the global net zero transformation.”
He further emphasised the potential impact: “From the farm to the refinery, from primary production to processing, this will create more jobs and more opportunities for Australian workers and businesses.”
The Cleaner Fuels Program will leverage Australia’s agricultural strengths and established refining capability, supporting value-adding from feedstocks such as canola, sugar, and waste products.
Australia currently exports nearly $4 billion of suitable feedstocks like canola and tallow, but Clean Energy Finance Corporation (CEFC) analysis suggests a domestic low-carbon liquid fuel industry could be worth $36 billion by 2050.
Minister for Climate Change and Energy Chris Bowen noted: “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.”
He added: “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.”
Supporting the new program, the government has expanded the Guarantee of Origin Scheme to include low-carbon liquid fuels and established a fuel quality standard for renewable diesel, demonstrating unified policy backing.
Acting Minister for Infrastructure Murray Watt stated: “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.”
The announcement has been broadly welcomed by industry groups and stakeholders.
Shahana McKenzie, founder of the Low Carbon Fuels Alliance of Australia and New Zealand (LCFAANZ) and Bioenergy Australia CEO, called the investment “a game changer”, stating: “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 added: “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.”
International equipment suppliers also welcomed the move.
Airbus Chief Representative Stephen Forshaw commented: “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.
“SAF before 2029 is achievable, indeed needed.”
The Australian Workers’ Union (AWU) hailed the announcement as “a once-in-a-generation opportunity to secure Australia’s fuel sovereignty, create thousands of secure jobs, and future-proof key industrial sites like Ampol’s Lytton refinery”.
AWU Acting National Secretary Chris Donovan said: “This project will help secure more than 500 existing jobs at Lytton, while laying the foundation for thousands more in advanced fuel production across the country.”
He added: “Australia has the resources, the workers, and the know-how to be a global leader in clean fuel.
“With this funding, we’re finally putting fuel security and skilled jobs back on the national agenda.”
Supporting research from the CEFC and Deloitte highlights the urgency and scale of this opportunity.
Australia imports 80 per cent of its fuel, with domestic refining capacity declining, and will still require around 30 billion litres of liquid fuel by 2050, even as electrification expands.
A mature renewable fuel sector could generate tens of thousands of jobs, deliver over 230 million tonnes in cumulative CO₂-e emissions reductions by 2050, and inject $10 billion in GDP annually through biofuels and renewable gases.
Details of project eligibility and grants will be finalised following industry consultation, with assessments focused on community benefit and value for taxpayer funds.
The government and industry partners, including the LCFAANZ, will work together to ensure funding drives domestic innovation, expands refining capacity, and secures Australia’s leading place in the global market for cleaner, low-carbon liquid fuels.
