Australia Invests $1.1 Billion to Boost Cleaner Fuel Production
Image Credit: Dawn McDonald
Media Release: The Hon Catherine King MP, Minister for Infrastructure, Transport, Regional Development and Local Government; The Hon Jim Chalmers MP, Treasurer; The Hon Chris Bowen MP, Minister for Climate Change and Energy; The Hon Julie Collins MP, Minister for Agriculture, Fisheries and Forestry.
The Australian Government has announced a landmark $1.1 billion investment to accelerate the domestic production of low carbon liquid fuels, marking a major step towards cleaner energy and stronger fuel security.
The funding will support the new ten-year Cleaner Fuels Program, designed to stimulate private investment in onshore production of renewable diesel and sustainable aviation fuel. These “drop-in” fuels are compatible with existing engines and infrastructure, with the first production expected by 2029.
Australia is well-positioned to lead in this space, thanks to it’s abundant feedstocks such as canola, sorghum, sugar, and waste, and access to reliable renewable energy. Currently, liquid fuels account for around half of the nation’s energy use. Replacing fossil fuels with cleaner alternatives presents a significant opportunity to reduce emissions and grow the economy.
The Clean Energy Finance Corporation estimates that a mature Australian low carbon liquid fuel industry could be worth $36 billion by 2050, with the potential to reduce cumulative emissions by 230 million tonnes CO₂-e, equivalent to the annual emissions of 86 million cars.
Funding will be awarded through a competitive process, with eligibility criteria to be shaped by public consultation. The initiative builds on existing government programs including the Sustainable Aviation Fuel Funding Initiative and the Future Made in Australia Innovation Fund.
To further support the industry, the Government is expanding the Guarantee of Origin Scheme to include low carbon liquid fuels and has introduced a fuel quality standard for renewable diesel.
This investment aims to strengthen Australia’s fuel supply chain, support regional jobs, and position the country as a key player in the global transition to net zero.
