Australia invests AUD250 million in low carbon liquid fuels

The Australian Government has announced a AUD250 million (USD158 million) investment to accelerate the development of the domestic low carbon liquid fuels (LCLF) industry, reinforcing its commitment to clean energy and long-term fuel security.

The funding, part of the AUD1.7 billion (USD1.08 billion) Future Made in Australia Innovation Fund, will provide grants to support pre-commercial innovation, demonstration, and deployment of LCLFs. These fuels can be sustainably produced from waste, biomass such as agricultural feedstocks, or renewable hydrogen, reducing reliance on fossil fuels.

The initiative aims to supply sustainable aviation fuel and renewable diesel across key liquid fuel-dependent sectors, including transport (aviation, heavy vehicles, rail, and maritime), mining, agriculture, and construction.

Economic and environmental benefits

Australia’s LCLF industry could generate between AUD6 billion and AUD12 billion (USD3.80 billion and USD7.61 billion) annually in direct economic benefits, according to the Commonwealth Scientific and Industrial Research Organisation (CSIRO), the national science agency responsible for conducting research across various fields, including agriculture, energy, environment, health, manufacturing, and space. 

Additionally, regional communities stand to gain from diversified income streams, particularly in agriculture, through the use of excess feedstock from crops, sugarcane, and waste products such as tallow.

Minister for Climate Change and Energy Chris Bowen highlighted the importance of the initiative, stating: “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. Investing in a Future Made in Australia means delivering the industries that will provide high end jobs, many in the regions, for future generations.”

Minister for Infrastructure, Transport, Regional Development and Local Government Catherine King echoed this sentiment, emphasising the necessity of supporting industries that are crucial to Australia’s economic prosperity but remain carbon-intensive: “That’s why we’re investing hundreds of millions of dollars to develop – right here in Australia – the low carbon liquid fuels of the future that will reduce their environmental impact without preventing their operation or expansion.

“We have all the ingredients in Australia to be a global clean energy superpower, and the Future Made in Australia fund will help bring that potential to reality.”

Strengthening Australia’s clean energy future

This funding initiative builds on the momentum of the Sustainable Aviation Fuel Funding Initiative, which has already seen the Albanese Government invest AUD33.5 million (USD21.2 million) across five projects. These include LCLF production facilities in Bundaberg and Townsville and the supply of sustainable aviation fuel at Brisbane Airport.

The Future Made in Australia Innovation Fund is allocating an additional AUD500 million (USD316.8 million) to clean energy technology manufacturing, covering areas such as electrolysers, batteries, and wind towers. The goal is to maximise Australia’s economic and industrial benefits from the global transition to net zero, strengthening the nation’s energy resilience and strategic standing.

Funding under this initiative is managed by the Australian Renewable Energy Agency (ARENA) and adheres to the legislated Future Made in Australia Community Benefits Principles, ensuring that both public and private investments deliver tangible benefits for local workers and businesses.

With this strategic investment, Australia is positioning itself as a leader in the global clean energy transition, harnessing its natural resources and expertise to drive sustainable industry growth and economic resilience.