WHAT'S NEXT FOR AUSTRALIA
With fresh government funding and policy momentum, Australia has the opportunity to build a world-class low carbon fuels industry
GOVERNMENT SUPPORT
Australia has laid strong foundations for a low carbon fuels industry.
With recent government investment and evolving policy frameworks, the next steps will determine how quickly we scale, how much domestic production we unlock, and how deeply we reduce emissions.
RECENT ANNOUNCEMENTS
2026-27 FEDERAL BUDGET COMMITMENT
The Federal Government has committed $1.1 billion to help unlock a homegrown low carbon fuels industry under its new Cleaner Fuels Program. This funding is designed to support renewable fuels like renewable diesel and sustainable aviation fuel (SAF) using feedstocks such as canola, sugar, sorghum, and various waste oils. The move reflects the broader national push to strengthen energy security and build a $36 billion industry by 2050. Read more
ARENA'S LOW CARBON LIQUID FUELS FUND OPEN
ARENA has allocated up to $250 million to the Future Made in Australia (FMA) Innovation Fund to support pre-commercial innovation, demonstration and deployment of renewable energy and low emission technologies across the Priority of Low Carbon Liquid Fuels (LCLF).
The fund is open for application and information available here.
BIG INVESTMENT BOOST
The Federal Government has committed $1.1 billion to help unlock a homegrown low carbon fuels industry under its new Cleaner Fuels Program. This funding is designed to support renewable fuels like renewable diesel and sustainable aviation fuel (SAF) using feedstocks such as canola, sugar, sorghum, and various waste oils. The move reflects the broader national push to strengthen energy security and build a $36 billion industry by 2050.
NATIONAL BIOENERGY FEEDSTOCK STRATEGY
The Australian Government announced a commitment to developing a National Bioenergy Feedstock Strategy, a landmark plan to harness the nation’s vast untapped resources - from crop residues and tallow to used cooking oil and organic waste - to fuel the next generation of low-carbon fuels.
Read more
WHAT'S NEEDED TO KEEP SCALING
To turn this momentum into real production and clean energy benefits, several pieces will need to line up:
-
Production incentives to reduce risk and support early-stage supply-side projects
-
Demand-side measures, such as mandates or blending standards, so there’s reliable market pull for low carbon fuels
-
Strong, enforceable sustainability standards, including feedstock verification and life-cycle emissions accounting
-
Investment in infrastructure, such as refining capacity and storage, to support local production and reduce import dependency
URGENT POLICY COMMITMENTS
The Future Made in Australia Innovation Fund is investing in low carbon fuel innovations, including SAF and renewable diesel, over the coming decade.
At the same time, an expanded Guarantee of Origin scheme is under development to ensure fuels are produced from sustainable, verifiable feedstocks and that emissions intensity is rigorously assessed.
The government has allocated funding to conduct regulatory impact analysis for demand-side policies and mandates targeted at accelerating uptake of low carbon fuels.
ECONOMIC & ENERGY SECURITY OPPORTUNITIES
Scaling government support has multiple benefits beyond climate:
-
It could create thousands of jobs in regional agriculture, refining, and transportation
-
It will reduce Australia’s dependence on imported fuels, improving resilience and stabilising costs
-
It positions Australia to compete globally in sustainable fuel production, especially in nearby markets with growing demand for low carbon fuel demand
The government’s recent investment and policy signals show Australia is moving from planning to action. With industry, agriculture, and communities aligned, we have the opportunity to build a resilient low carbon liquid fuels sector - one that delivers clean energy, regional prosperity, and energy security.
Low carbon fuels are not reliant on a single source. They can be produced from:
-
Waste oils (used cooking oil, tallow)
-
Energy crops (canola, sugarcane)
-
Crop and forestry residues
-
Captured carbon with green hydrogen
Much of Australia’s potential lies in agricultural residues and waste streams - fuels made from materials that would otherwise be discarded.