Budget 2024: Unlocking Australia’s Low Carbon Fuels’ Future

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May 14, 2024

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(Sustainable Aviation Fuel Alliance Australia and New Zealand (SAFAANZ)) Australia is set to become a key player in the development and deployment of low carbon liquid fuels, including Renewable Diesel and Sustainable Aviation Fuel (SAF) with renewable fuels forming a key component of the 2024-25 Federal Budget and the highest funded transport decarbonisation priority in this year’s budget.

The Sustainable Aviation Fuel Alliance of Australia and New Zealand (SAFAANZ) and Cleaner Fuels Alliance (CFA) welcomes today’s array of Budget announcements set to accelerate deployment of a viable domestic renewable fuels industry. The measures are the perfect signal to global investors that Australia is open for business.

The Federal Government’s Future Made in Australia initiative, the cornerstone of the 2024-25 Federal Budget delivers an unprecedented package of measures essential to stand up a domestic renewable fuels industry including:

Investing $1.7 billion over the next decade in the Future Made in Australia Innovation Fund, to support the Australian Renewable Energy Agency to commercialise net zero innovations including low-carbon liquid fuels.
$18.5 million over four years from 2024-25 to develop a certification scheme for low-carbon liquid fuels, including Sustainable Aviation Fuels and renewable diesel, in the transport sector by expanding the Guarantee of Origin scheme.
$1.5 million over two years from 2024-25 to undertake a regulatory impact analysis of the costs and benefits of introducing mandates or other demand-side measures for low carbon liquid fuels.
The Government will be undertaking targeted consultation to identify options for production incentives to support the establishment of a made in Australia low carbon liquid fuel industry.

Shahana McKenzie, founder of the Alliances and CEO of Bioenergy Australia, said the announcement is further recognition from the Albanese Government of the crucial role low carbon liquid fuels such as Sustainable Aviation Fuel and Renewable Diesel will play in achieving Net Zero, particularly in hard-to-abate sectors of the economy.

“The package of announcements tonight are dealing with crucial areas essential for deployment including certification to ensure Australia develops a sustainable liquid fuels industry, resourcing to support key demand side interventions such as a low carbon fuels standard and consultation on additional supply side measures such as production credits. We welcome this strategic and comprehensive package and look forward to working with the government moving forward”

“The allocation of $1.7 billion over the next decade in the Future Made in Australia Innovation Fund, to support the Australian Renewable Energy Agency to commercialise net zero innovations including low-carbon liquid fuels is essential. This will enable the crucial first step in standing up this new industry. It will send the signal to global project developers and investors that Australia is the place to do business. We are already considered a global hotspot given our vast agricultural might and industrial base, with the CSIRO reporting that Australia will have enough feedstock in 2025 to replace 60 percent of local jet fuel with SAF, growing to 90 per cent by 2050.’’

“The immense task of decarbonising Australia’s economy would be near impossible without this urgent focus on renewable liquid fuels, given 45 per cent of the nation’s total energy use is from liquid fuels. Sustainable Aviation Fuel and Renewable Diesel are vital to decarbonise cornerstone sectors of our economy beyond 2050 including aviation, marine, mining, heavy haulage, rail, construction, infrastructure and agriculture. These renewable liquid fuels are essential for Australia to reach Net Zero, they will create jobs in regional Australia, boost economic growth, bolster energy security, and future proof our tourism and transport industries. This commitment sends an important signal to the industry and private investors that the Federal Government is serious about low carbon liquid fuels, and ensuring we have the means to decarbonise hard-to-abate sectors of the economy in a cost-effect way that maintains our global competitiveness.”

Australia’s Bioenergy Roadmap (ARENA, November 2021) highlighted that $10 billion in GDP per annum could be added to the economy over the next decade with the development of mature renewable liquid fuels and gas sectors, along with 26,200 new jobs. The development of an Australian SAF industry alone could contribute more than 7400 jobs and an additional $2.8 billion to GDP annually by 2030, as highlighted in the Airlines for Australia and New Zealand’s Australian Roadmap to Sustainable Flying. By 2050, this could grow to more than 15,600 jobs and an additional $7.6 billion in GDP.

Tourism & Transport Forum CEO Margy Osmond says supporting the development of a local SAF industry is essential to safeguarding the future of Australia’s critical tourism and aviation sectors. “Other nations, from the USA and Canada, to Europe, Singapore and Japan, are prioritising both policies to support SAF and direct investment and Australia cannot afford to fall behind, especially as a long-haul destination,” said Ms Osmond.

Emma Wilson from the Airlines for Australia and New Zealand says Sustainable Aviation Fuel (SAF) will be the single largest facilitator of the Australian aviation sector reaching net zero by 2050.

“A local SAF industry will capitalise on Australia’s natural advantage, and provide a reliable and secure domestic fuel supply for Australia’s aviation and defence sectors – supporting Australia’s sovereign manufacturing capability, and unlocking high-paying, highly-skilled, sustainable jobs,” said Ms Wilson.

SAF is the key that unlocks that puzzle, giving companies the ability to decarbonise at scale and pace, whilst maintaining their global competitiveness without significant disruption to their operations.

The Government has already stood up the Australian Jet Zero Council, along with the development of the Transport and Infrastructure Net Zero Roadmap and Action Plan, and the previously announced ARENA’s $30m Sustainable Aviation Fuel Funding initiative.

As outlined by industry in a joint letter to the Prime Minister, the Treasurer and Minister for Infrastructure, Transport, Regional Development and Local Government, a domestic SAF sector offers immense opportunities, including:

The potential to add A$13 billion to GDP annually by 2040.
Gaining nearly 13,000 jobs in the feedstock supply chain and 5,000 new high-value jobs for facility construction and operation.
Reducing liquid fuel importation from 90% to 61% in 2040 and just 21% in 2050, strengthening national fuel security and energy interdependence.
The ability to significantly reduce emissions from flying, with SAF estimated to contribute around 65% of the reduction needed for aviation to reach net-zero by 2050.
Capitalising on our domestic feedstock supply, which could meet 60% of local jet fuel demand and potentially grow to 90% by 2050.

The Sustainable Aviation Fuel Alliance Australia and New Zealand (SAFAANZ) was founded to fast-track the development, uptake and progression of SAF in the region. The SAFAANZ is a collaboration of more than 200 representatives across Australia, Asia, Europe and the USA. More information on SAF is available here and in Bioenergy Australia’s recent Bridging the Price Gap for Sustainable Aviation Fuel report.

The Cleaner Fuels Alliance (CFA)) was founded to fast-track the development, uptake and progression of low carbon liquid fuels in the region. The CFA is a collaboration of more than 150 representatives across Australia, Asia, Europe and the USA.

Bioenergy Australia is the national industry association committed to accelerating Australia’s bio economy. Our mission is to foster the bioenergy sector to generate jobs, secure investment, maximise the value of local resources, minimise waste and environmental impact, and develop and promote national bioenergy expertise into international markets. READ MORE

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Excerpt from Australian Aviation: The Tourism and Transport Forum (TTF), Airbus, and zero-emissions aircraft firm AMSL Aero have all backed the sustainability funding, which aims to promote domestic production of SAF and other green fuels like renewable hydrogen.

The Budget includes $1.7 billion over 10 years to support ARENA commercialising net-zero technologies including low-carbon liquid fuels; $18.5 million over four years to develop a certification scheme for these fuels, including SAF; and $1.5 million over two years for analysing costs and benefits of SAF mandates and other demand-side measures. Renewable hydrogen production was also granted a $6.7 billion production tax incentive.

It comes after the Government last year announced ARENA would distribute $30 million in grants to support domestic SAF production.

“As part of our Future Made in Australia plan, we will fast-track support for a low-carbon liquid fuel industry, with an initial focus on sustainable aviation fuel and renewable diesel to support emissions reduction in the aviation, heavy vehicle, rail and maritime sectors,” said Transport and Infrastructure Minister Catherine King, Regional Development Minister Kristy McBain, and their respective assistant ministers Carol Brown and Anthony Chisholm in a joint press release.

According to TTF CEO Margy Osmond, the funding for SAF “sends a strong signal to the industry and investors” that the Government is committed to domestic production.

“Consumers are increasingly demanding more sustainable options when they travel and want a greener future for aviation. This extra support will help Australia remain competitive in one of the toughest tourism markets our industry has ever faced,” she said.

“As a long-haul destination, Australia cannot afford to be left behind other developed countries which are prioritising support for SAF, like the USA, Europe, UK, Singapore, Japan and Canada.”

She added that developing a domestic SAF industry would support regional jobs.

“Australia has the potential to become a world-leading supplier of Sustainable Aviation Fuel, with enough feedstock to replace 90 per cent of local jet fuel with SAF by 2050,” she said.

“We applaud the Federal Government for making real progress and giving focus to this issue, initially through the establishment of the Jet Zero Council and by collaborating with industry.”

Stephen Forshaw, Airbus chief representative for Australia, New Zealand & the Pacific, said the measures are a “good first step”.

“Studying the introduction of mandates for the use of SAF is very important. This sends a signal to industry that mandates are coming to Australia like they are in other places like Singapore, Japan and Europe,” he said.

“If we are to achieve our ambition of becoming a renewable energy superpower, we need to move fast, before other countries entrench their first-mover advantage. We need to move SAF from plans today to planes tomorrow.”

AMSL Aero, which is behind the Vertiia electric vertical takeoff and landing (eVTOL) aircraft, has given a thumbs-up to the support for hydrogen, with CEO Max York saying it will “accelerate the country’s race towards sustainable aviation”.

“The Government’s tax credits for green hydrogen production, combined with its Future Made in Australia policy, could have significant positive flow-on impacts for the country,” he said.

“As the designer and maker of Vertiia, the world’s first long range hydrogen-powered vertical take-off and landing (VTOL) aircraft, we welcome any move that supports the proliferation of green hydrogen as a fuel source and makes zero emissions flight widespread.”

CSIRO in last year’s Sustainable Aviation Fuel Roadmap, developed in concert with Boeing, asserted that Australia has a “moment-in-time opportunity” to develop its own SAF industry, with domestic demand for jet fuel expected to surge 75 per cent by 2050. READ MORE