Australia looks to sustainable fuels to secure energy future

Australia is taking decisive action to build a low carbon liquid fuels (LCLF) industry to reduce its reliance on imported fuels and strengthen its fuel security. The move will also elevate its role in the global LCLF value chain and help meet global decarbonisation goals in the aviation, heavy transport and mining sectors.

With abundant feedstock, strong demand from industry, an established network of refineries and fuel storage terminals, and robust government funding, Australia offers strong investment opportunities for investors looking to secure future LCLF supplies.

The need for a domestic LCLF industry

Australia imports 80% of its fuel, with 65% coming from just 3 countries. Our domestic refining capacity has shrunk to 14 billion litres.

Bioenergy Australia’s Securing our Fuel Future: Resilience Through Low Carbon Liquid Fuels (PDF, 634KB) report confirmed that without strategic intervention and investment, sectors that rely on liquid fuels face the threat of total dependence on export markets and rising costs.

But it’s not all bad news. According to the report, Australia has the potential to produce 2 billion litres of LCLF – such as sustainable aviation fuel (SAF) and renewable diesel – based on the current project pipeline and investment.

With additional investment in refining and infrastructure to match Australia’s feedstock potential, the report notes Australia’s LCLF production could grow to displace 19% of imports required in 2040, and up to 47% by 2050.

‘The opportunities are immense given our agricultural strength and access to the feedstocks that will create the fuels of tomorrow, today,’ says Bioenergy Australia CEO Shahana McKenzie.

‘Australia is arguably better placed than any other nation to capitalise on its geography to become not only a global leader in low carbon liquid fuels, but to help our key industries decarbonise in a cost-effective way.’

Government support for a low carbon liquid fuel industry

The importance of fuel security is recognised in the level of government investment in its future.

The Australian Government has identified Australia’s LCLF industry (including domestic production of SAF and renewable diesel) as a priority sector under the Future Made in Australia (FMIA) plan.

Significant government funding announcements in the past 3 years include:

• A$250 million to accelerate the pace of Australia’s LCLF industry under the FMIA Innovation Fund. The grants will support pre-commercial innovation, demonstration and deployment, and will be administered by the Australian Renewable Energy Agency (ARENA)
• A$18.5 million to develop a certification scheme for LCLF, including SAF, in the transport sector by expanding the Guarantee of Origin scheme
• A$1.5 million to undertake a regulatory impact analysis of the costs and benefits of introducing mandates or other demand-side measures for LCLF.

The Australian Government is developing a Net Zero 2050 plan. It is also developing 6 sectoral-based decarbonisation plans to help major sectors, including transport, to transition to net zero. LCLF will be essential to support reduced emissions across the transport sector.

Australia’s SAF industry takes off

SAF is the most significant tool the airline industry currently has to reduce its impact on the environment. SAF has the potential to cut greenhouse gas emissions by up to 80% compared to conventional jet fuel.

It’s a cost-efficient solution to a pressing issue for the airline industry. SAF can be used in today’s jet engines with no modifications. Airports don’t have to change their fuel pipelines, tanks and other infrastructure to store and transport SAF.

SAF can be produced from biogenic feedstocks such as crops, vegetable oils and fats, agricultural and forestry residues and solid wastes. It can also be made using non-biogenic feedstocks such as waste gases, hydrogen and CO2.

In its Sustainable Aviation Fuel Roadmap, CSIRO reported that there is sufficient feedstock to supply almost 5 billion litres of SAF production in Australia, or about 50% of forecast Australian jet fuel demand in 2025.

Australian organisations are already using SAF. The Royal Australian Air Force (RAAF) is undertaking a 12-month SAF trial as part of Australian Defence’s plan to transition to the use of lower-carbon energy types.

Out west, Rio Tinto is exploring the potential of biofuels after trialling renewable diesel at its Pilbara iron ore operations.

Funding for SAF initiatives

ARENA has provided total funding of A$33.5 million across 5 projects to date under the Sustainable Aviation Fuels Funding Initiative launched in 2023. The funding supports innovation, commercialisation, pilot and demonstration projects and early-stage development.

ARENA’s SAF Funding Initiative has provided:

• A$8 million to Licella for the A$26.1 million ‘Project Swift – SAF from Sugarcane Residues Feasibility Study to assess the viability of establishing a biorefinery facility in Bundaberg, Queensland
• A$2.4 million to Viva Energy for the A$4.9 million ‘SAF infrastructure Solutions for the Future project’ to recondition a tank at its Pinkenba Terminal to enable blended SAF supply into Brisbane Airport for commercial use
• A$8 million to Ampol for the A$30.2 million ‘Brisbane Renewable Fuels Pre-FEED Study’. The study will investigate developing a renewable fuels facility at Ampol’s Lytton refinery
• A$6.1 million to GrainCorp for the A$19.8 million ‘SAF Oilseed Crushing Facility Pre-Deployment Study’ to investigate the establishment of an oilseed crushing facility
• A$9 million to Jet Zero Australia to advance SAF production in Townsville. The next stage of engineering activities for Jet Zero Australia’s project will include a A$36.8 million FEED study to determine the viability of its commercial-scale alcohol-to-jet LCLF production facility and progress towards a final investment decision.

Australia has sufficient feedstock to supply almost 5 billion litres of SAF production.

Australian airlines building a local SAF industry

Qantas and Virgin Airlines are playing major roles in developing a local SAF industry. Both airlines are committed to net zero emissions by 2050.

Qantas signed a landmark agreement with Airbus in 2022 to invest up to US$200 million to establish a SAF industry. Qantas said it had entered the partnership with the aim of accelerating the use of SAF across its fleet. Qantas currently uses 1% per cent SAF, sourced from the US and UK. It has pledged to increase SAF use to 10% by 2030 and 60% by 2050.

In May 2025, Qantas, Sydney Airport and Ampol, supported by Qantas’ SAF Coalition partners, imported nearly 2 million litres of unblended SAF, the largest ever commercial importation of the fuel.

‘The creation of a domestic sustainable aviation fuel industry is key to our efforts towards the decarbonisation of aviation, increasing Australia’s fuel security and creating thousands of new jobs across our economy,’ says Vanessa Hudson, Qantas Group CEO.

‘Today’s announcement is a proud moment for Qantas and demonstrates the demand that exists for more sustainable travel. As the national carrier, we have a role to play in reducing the impact of air travel on the environment, but we can’t do it alone.’

Qantas is also working with the UK’s Zero Petroleum, Adelaide Airport and the South Australian Government on a feasibility study to develop a synthetic fuels (e-fuels, power-to-liquid) plant in South Australia. This plant would further the energy advancements of South Australia from its investments in solar and wind power, and future hydrogen plant development.

The Zero project would transform that hydrogen and carbon from CCUS into 100% fossil-replacing jet, gasoline and diesel. This will enable transport operators to reduce their fleet net greenhouse gas emissions, without requiring new vehicles and infrastructure.

The joint feasibility study is evaluating sites that will support Zero’s technological development through to a large-scale facility, producing up to 24 million litres of carbon-neutral fuel yearly. This has the potential to reduce emissions by up to 60,000 tonnes CO2e annually and stimulate the local economy by creating over 150 construction jobs and up to 30 permanent positions.

‘The Government of South Australia has transformed the region into a global hub of renewable solar and wind power development,’ says Zero CEO and founder Paddy Lowe. ‘Zero is excited by the prospect of joining its thriving green hydrogen economy.’

Meanwhile, Virgin Australia, Qatar Airways and Renewable Developments Australia have teamed up to build a SAF production facility in Queensland. The Ethanol to Jet (EtJ) facility will convert bioethanol derived from sugarcane grown onsite into 100% SAF. The facility is expected to produce up to 96 million litres of SAF annually.

‘Working together with industry partners and government to establish a domestic SAF industry in Australia will be essential,’ says Christian Bennett, Virgin Australia Chief Corporate Affairs and Sustainability Officer. ‘Not only to achieve shared emissions goals, but to strengthen Australia’s liquid fuel security by reducing reliance on global supply chains and creating new, secure, jobs for those living in regional Australia.’

This comes on top of Virgin’s MoU with Boeing in 2023 that pledged to prioritise joint advocacy for the development of an Australian SAF industry. Virgin has pledged to reduce emissions by 22% by 2030.

International collaboration on decarbonisation

Global collaboration is essential to achieve decarbonisation.

In May 2025, Macquarie Asset Management (MAM) announced it would increase its overall investment in SkyNRG from its initial investment of €175 million to approximately €225 million. In the same funding round, Dutch pension manager APG announced a further investment of up to €250 million in SkyNRG.

SkyNRG is a global leader in SAF, headquartered in Amsterdam. These investments support the development and operation of SkyNRG’s SAF production facilities in Delfzijl, the Netherlands, alongside its planned SkyKraft project in Sweden and the Wigeon project in the US. The production facilities are built in cooperation with strategic offtake partners, including KLM Royal Dutch Airlines and Boeing.

Maarten van Dijk, CEO and co-founder of SkyNRG, said: ‘The investment from APG, along with MAM’s existing equity commitment, will not only support SkyNRG as a company but also demonstrate the SAF market is ready for facilities dedicated solely to the production of SAF.’

Investing in Australia’s sustainable aviation fuel industry

The Australian Government and industry recognise the crucial role that Australia will need to play to support our neighbours in the Asia-Pacific region, in particular those countries that do not have the ability to develop LCLF.

Technology advancement, feedstock innovation, streamlining of carbon accounting and education to support investment will need to be progressed in a collaborative and global way.

Australia offers investment opportunities to boost upstream and downstream production capacity and export to global markets.

We have vast quantities of diverse biogenic and non-biogenic feedstocks, a network of refineries and fuel storage terminals, strong interest from the aviation and transport industry, and a supportive government committed to developing a thriving LCLF industry.

Learn more about opportunities in Australia’s LCLF and SAF industries.