The Australian Government has announced an AUD $1.1 billion investment to develop local production of low-carbon liquid fuels, including renewable diesel and sustainable aviation fuel (SAF). The new ten-year Cleaner Fuels Program is designed to cut emissions, strengthen energy security and build new economic opportunities across transport and heavy industry.

The programme will use Australia’s access to feedstocks such as canola, sorghum, sugar and waste, alongside cheap renewable power, to accelerate production. First ‘drop-in’ fuels – compatible with existing engines – are expected by 2029.

Liquid fuels currently make up half of Australia’s energy use. A report by the Clean Energy Finance Corporation estimates that a mature low-carbon liquid fuels industry could reduce emissions by 230 million tonnes by 2050, while creating new markets worth up to AUD $36 billion.

The funding builds on initiatives such as the Sustainable Aviation Fuel Funding Initiative and the Future Made in Australia Act, with grants awarded through a competitive process to maximise community and economic benefits.