Government backs renewable fuels with $250 million investment
The Australian Government is providing $250 million in grants to develop the country’s domestic Low Carbon Liquid Fuels (LCLF) industry.
Australia's Low Carbon Liquid Fuels (LCLF) industry has gained federal support with a funding burst, drawn from the $1.7 billion Future Made in Australia Innovation Fund, aiming to support early-stage innovation and deployment of low-carbon fuels.
With government backing and private sector involvement, Australia’s LCLF industry is positioned to support emissions reduction while providing economic benefits, particularly in regional areas.
LCLFs can be produced from waste, biomass, and renewable hydrogen. The industry focus is on supplying sustainable aviation fuel (SAF) and renewable diesel to transport, mining, agriculture, and construction sectors that rely heavily on liquid fuels.
Economic and Regional Benefits
According to the CSIRO, a mature LCLF industry could contribute between $6 billion and $12 billion annually to the Australian economy. Regional areas stand to benefit through job creation and diversified income for farmers, who can supply feedstocks such as sugarcane and tallow.
The government sees LCLFs as a way to enhance Australia’s fuel security while reducing emissions in industries that are difficult to decarbonise.
Minister for Climate Change and Energy Chris Bowen said, “The Australian Government is backing clean, green low carbon liquid fuels as an important part of our move towards net zero and long-term fuel security.”
Building on Previous Investments
The latest funding expands on previous government commitments, including the Sustainable Aviation Fuel Funding Initiative, which has invested $33.5 million across five projects. This has supported LCLF production facilities in Bundaberg and Townsville and enabled SAF supply at Brisbane Airport.
The Future Made in Australia Innovation Fund is also allocating $500 million to clean energy technology manufacturing, covering areas such as electrolysers, batteries, and wind towers. Funding decisions are managed by the Australian Renewable Energy Agency (ARENA) and must comply with the Future Made in Australia Community Benefits Principles, ensuring local workers and businesses see direct advantages.
Minister for Infrastructure, Transport, Regional Development and Local Government Catherine King said, “We know that industries vital to our national prosperity, like the transportation of people and goods across our vast land, are carbon intensive and hard to abate.”
Industry Involvement and Future Prospects
The funding announcement follows an industry-led initiative by Ampol, GrainCorp, and IFM Investors. These companies signed a Memorandum of Understanding in 2024 to explore an integrated renewable fuels industry, including a renewable fuels facility in Brisbane.
Under this partnership, Ampol and IFM are assessing the feasibility of producing 450 million litres of renewable fuel annually at Ampol’s Lytton Refinery, while GrainCorp is exploring ways to expand local feedstock supply.
Danny Elia, IFM Investors’ Global Head of Asset Management, welcomed the federal funding, stating, “This investment is a step in the right direction and moves the industry closer to take-off.”
The government has also allocated $18.5 million for a certification scheme and $1.5 million for an impact analysis on demand-side measures. Industry consultation on policy settings has been underway to ensure the right conditions for growth and investment.
