Australia is set to become a major global player in sustainable fuels, with the Federal Government investing $1.1 billion to accelerate the supply of low-carbon liquid fuels, to drive decarbonisation across the nation's key industries.
The ground-breaking investment will turbo-charge Australia's emerging low-carbon liquid fuels sector, strengthen the nation's fuel security and help position Australia at the forefront of the global clean-energy transition.
Drawing on Australia's vast agricultural base, the investment positions low-carbon liquid fuels as a key pillar of the government's Net Zero strategy, enabling hard-to-abate sectors such as aviation, marine, manufacturing, transport, mining, and construction to reduce emissions without major disruption or high costs.
The Low Carbon Fuels Alliance of Australia and New Zealand (LCFAANZ) welcomes today's announcement, which represents a clear signal to the world that Australia is open for business in the development and deployment of low-carbon liquid fuels.
Representing more than 300 stakeholders - from feedstock and fuel producers to project developers, customers, researchers and all levels of government - the LCFAANZ believes Australia's abundant feedstocks, established refining capability and strong policy support create a unique opportunity for the nation to secure a leading role in the global low-carbon liquid fuels market.
The LCFAANZ has been working closely with the Albanese Government to drive policy that will attract the investment required to build a vibrant low-carbon liquid fuel industry.
The investment follows the release of Bioenergy Australia's Securing our Fuel Future report, which warned that Australia's heavy reliance on imported fuel and shrinking domestic refining capacity left the nation increasingly exposed to global supply shocks and rising costs.
The report found that even with strong electrification, Australia will still need about 30 billion litres of liquid fuel by 2050, making low-carbon options such as Sustainable Aviation Fuel, Renewable Diesel, Biodiesel, Bio methanol, and Ethanol essential to cut emissions, maintain competitiveness and strengthen fuel security.
Today's announcement delivers an unprecedented package of measures, including the launch of a new ten-year Cleaner Fuels Program to attract investment for domestic fuel production, and funding that backs Australian innovation, from the farm to the fuel bowser.
These new measures build on existing initiatives, including the Sustainable Aviation Fuel Funding Initiative and the Future Made in Australia Innovation Fund - both requiring recipients to deliver benefits consistent with the Future Made in Australia Act's community benefit principles - as well as the Government's work to expand the Guarantee of Origin scheme to cover low-carbon liquid fuels and to establish a renewable diesel fuel quality standard.
Shahana McKenzie, founder of the LCFAANZ and CEO of Bioenergy Australia, said the announcement represented a major breakthrough in the building of Australia's low-carbon liquid fuels industry, reinforcing the Albanese Government's recognition of the pivotal role these fuels will play in achieving Net Zero.
"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."
"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."
"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 LCFAANZ looks forward to working with the Australian Government on informing the details of this funding package through the public consultation and design work taking place this financial year."
The Urgent Need For Investment In Low-Carbon Liquid Fuels
A number of recent studies, including Bioenergy Australia's Securing Our Fuel Future: Resilience Through Low Carbon Liquid Fuels report by Deloitte (March 2025) and analysis from the CEFC (July 2025), highlight the urgent need for Australia to invest in low-carbon liquid fuels. They emphasise the critical importance of strengthening fuel security, boosting production potential, supporting the decarbonisation of hard-to-abate industries, and outlining the economic and strategic risks of Australia's current fuel dependence.
Key findings include:
Fuel Security: Australia now imports 80% of its fuel, with 65% coming from just three countries. Domestic refining capacity has also shrunk to 14 billion litres, meaning sectors reliant on liquid fuels risk total dependence on imports and rising costs without urgent investment.
Demand Outlook: Even with electrification trends, Australia will require 30 billion litres of liquid fuel by 2050, with aviation, mining, and long-haul freight expected to account for 80% of demand.
Production Potential: Current low-carbon liquid fuel projects could produce 2 billion litres, with the potential to displace 19% of imports by 2040 and 47% by 2050 if matched with investment in refining and infrastructure.
Economic Opportunity: According to a joint CEFC and Deloitte report, developing a low-carbon liquid fuel industry could generate $36 billion in economic activity, reduce emissions by 230 million tonnes by 2050, and strengthen national fuel security.
Existing Capacity: Australia already exports $6 billion in feedstocks and produces 175 million litres of biofuels annually, with capacity for 546 million litres from existing facilities operating below potential.
Job Creation: Australia's Bioenergy Roadmap (ARENA, November 2021) highlighted that $10 billion in GDP per annum could be added over the next decade with the development of mature renewable liquid fuels and gas sectors, along with 26,200 new jobs. The development of an Australian SAF industry alone could contribute more than 7,400 jobs and an additional $2.8 billion to GDP annually by 2030, growing to 15,600 jobs and $7.6 billion by 2050.
To help Australians and industry better understand the role of low carbon liquid fuels, Bioenergy Australia has launched a new website, www.cleanfuels.org.au, providing clear, accessible information on how these fuels work, their benefits, and their role in achieving a net-zero future.
