Airlines Face Potential Biofuel Mandates under New Government Plan

by Joseph Olbrycht-Palmer (Geelong Advertiser) Labor has flagged possible biofuel mandates for airlines amid global fuel supply chain turmoil, but warns doing nothing carries its own serious risks.

Labor is mulling biofuel mandates for airlines as part of a suite of possible measures aimed at nurturing Australia’s fledgling sustainable aviation fuel industry and guarding against havoc in the global supply chain.

The Albanese government on Tuesday released two discussion papers outlining “the next steps” in bolstering fuel security after months of global turmoil spurred by the war with Iran.

The first covers how it would make good on its pledge to “establish an Australian strategic fuel reserve” as well as “increase the minimum stock obligation of the fuel that has to be held in Australia by Australian companies”, Energy Minister Chris Bowen told a press conference.

The second discussion paper covers the Albanese government’s “two pronged approach” to boost both traditional fuels and Australian-made greener fuels, such as biodiesel.

Standing alongside her ministry colleague, Ms King (Transport Minister Catherine King) flagged possible SAF mandates for airlines but said “no decisions” had been made.

“Our defence force is using it. The fact that we’re not producing here is a significant loss.”

SAF mandates have been rolled out across Europe, with the UK and EU introducing 2 per cent obligations last year.

Those obligations are tipped to scale up to 10 per cent in the UK and 6 per cent in the EU by 2030.

Modelling from the Brussels-based Transport and Environment peak body found that ticket price and competitiveness concerns “are largely overstated” and that airfares in the EU would on average increase 4 per cent by the decade’s end.

Excerpt from Financial Review: The Albanese government will consider mandating the partial use of low carbon fuels at the bowser as part of a plan to decrease Australia’s dependence on foreign fuel, create new agricultural industries and slash carbon emissions.

The proposed mandates, which would require a certain amount of low-carbon products to be blended into traditional fuels like petrol, diesel and jet fuel, are needed to create enough demand to get several early-stage Australian green fuel projects off the ground.

The projects create “drop in” fuels out of agricultural feedstocks such as canola and sugar and are backed by aviation giants including Airbus and BP, who have been lobbying the government for demand-side policies for several years.

Transport Minister Catherine King on Tuesday said the government would consult on demand-side options for low-carbon fuels as part of a broader fuel security package that also includes the creation of a $10 billion government-owned reserve of traditional fuels.

“We want to see the benefits [of low carbon fuels] here in Australia right the way through the feed chain,” King said. “It’s estimated that it’s $5 billion currently that we’re exporting – we’d like to see the industry be able to grow.”

Pressure to address Australia’s huge reliance on imported fuels has increased significantly since the US-led attacks on Iran in February shocked global oil markets and led to price spikes and localised shortages at the country’s petrol stations.

King said demand-side low carbon fuels measures could include mandates based on a percentage of the fuel used at the petrol pump, or requirements based on its overall carbon intensity.

The Clean Energy Finance Corporation, the government’s green bank, has estimated that an Australian green fuel industry could cut carbon emissions by 230 million tonnes by 2050 – equivalent to the annual emissions from 86 million cars.

Airbus Australia chief representative Stephen Forshaw said the aviation industry needed more access to fuels made in Australia.

“If we get this right, we create a new fuels industry in Australia that will employ thousands in regions where we grow the feedstocks. We improve our fuel security,” he said.

“Perhaps most importantly, we reverse the trend of us exporting our valuable raw materials to others, who derive the benefit from processing and then sell it back to us as fuel.” READ MORE