Australian industry and government stakeholders are urging clearer policy targets to support the development of domestic green refining capacity, amid growing concerns over dependence on imported low-carbon liquid fuels. Feedstocks such as crops, waste oils and animal products, used to produce biofuels like ethanol, biodiesel and sustainable aviation fuel (SAF), currently remain costlier than conventional petroleum-based fuels and are not yet produced at scale in Australia.
The majority of low-carbon liquid fuels consumed in the country are imported. However, proponents anticipate that with targeted investment in refining infrastructure and supportive policies, domestic production could replace up to 19 percent of imports by 2040 and 47 percent by 2050. The federal government’s $1.1 billion Cleaner Fuels Program, a decade-long initiative, aims to stimulate private sector investment in renewable diesel, SAF and other advanced biofuels.
Industry participants caution that mandates focused on biofuel consumption have previously faced criticism for increasing fuel costs, particularly within the aviation sector. Sustainable aviation fuels often cost between two and five times more than fossil-based jet fuel, impacting airline operating expenses and fares. Virgin Australia has expressed support for the government’s commitment to cleaner fuels but warned against replicating what it describes as “the mistakes of mandate-oriented solutions in Europe,” where compulsory procurement of SAF reportedly led to higher costs for carriers and passengers.
Energy and agricultural companies including Ampol, IFM Investors and GrainCorp emphasize that Australia’s reliance on imported liquid fuels leaves the nation vulnerable to external supply disruptions and geopolitical tensions, exemplified by recent turmoil around the Strait of Hormuz affecting oil and diesel markets. These groups advocate for a domestic production multiplier within policy frameworks that accounts for additional benefits such as enhanced fuel security, supply chain resilience, and economic gains from locally produced fuels, while preserving access to imports.
The ongoing government consultation process will explore details on how the Cleaner Fuels Program would be implemented, including identifying which segments of the fuel supply chain will be subject to mandates, the timeline for introducing blending requirements, and the extent to which these blending targets will increase over time. The outcome is expected to shape Australia’s strategic approach to reducing carbon emissions in the liquid transport fuels sector and bolstering energy security.