Labor commits $1.1bn to bolster domestic bio fuel industry ahead of 2035 carbon emissions target reveal

Australia will invest $1.1bn to help companies manufacture low-carbon liquid fuels, which have the potential to create a $36bn domestic industry. The biofuel – which is produced either from waste or agricultural products such as canola, tallow (rendered animal fat) and sugar – can be used by planes, ships and trains, and allows heavy-emitting industries to lower their carbon footprint. Australia is also considered to be in a good position to create the stock needed to manufacture the liquid fuels and already exports about $4bn of feedstock including canola and tallow. Treasurer Jim Chalmers and Energy Minister Chris Bowen will announce the creation of a 10-year Cleaner Fuels Program on Wednesday, which will offer grants to be awarded through a competitive process. Details of the program will be cemented through public consultation, with the first production of low carbon liquid fuels estimated to be in 2029. The Treasurer said creating the biofuels was another way Australia could profit through the global net zero transformation. “Becoming a world leading producer of low carbon liquid fuels is a really big chance for Australia to be part of a really important growing global supply chain,” he said. “This announcement is another way our government is grasping the jobs and opportunities of the energy transition – to help lift wages, grow living standards, create jobs and economic opportunity around the country.” Mr Bowen said there were currently “2 billion litres worth of projects in the pipeline,” with many already prepared to scale up production. He said a “thriving domestic industry” which benefits farmers and workers in refineries was “within our reach” and would create more jobs in the regions. “Making cleaner fuels here, from Australian feedstocks, creates the path for emissions reduction in sectors that are hardest to clean up, like plane travel and construction machines,” he said. The announcement has also been welcomed by the sector and producers. The Low Carbon Fuels Alliance of Australia and New Zealand, which represents 300 stakeholders including farmers, researches to customers said the domestic production of low-carbon liquid fuel would reduce Australia’s reliance on imported alternatives. Alliance founder and Bioenergy Australia chief Shahana McKenzie said it was a “turning point” for the burgeoning industry. “It sends a clear signal to global investors that Australia is open for business in the development and deployment of low carbon fuels,” she said. “With our vast agricultural and industrial base, CSIRO reports that by 2025 Australia will have enough feedstock to replace 60 per cent of local jet fuel with SAF, growing to 90 per cent by 2050.” National Farmers Federation’s interim chief executive Su McCluskey said creating a “strong domestic biofuels industry” would also create extra business opportunities for producers. “This isn’t just about cleaner fuels. It’s about creating jobs, diversifying farm businesses, and ensuring our regions remain at the forefront of Australia’s transition to net zero,” she said. The move comes as Labor is days away from handing down its 2035 emissions reduction target, with the figure expected to be between 65 to 75 per cent. The figure will build on the 2030 target which states Australia must reduce emissions by 43 per cent of 2005 levels, before it hits net zero emissions by 2050. During an inquiry into the doomsday Climate Risk Assessment treasury officials confirmed they had been asked, prior to the election, to model just one figure for the 2035 emissions reduction target, however, they would not share the figure. This comes after a report by the Australian Climate Service released on Friday said extreme weather events would result in a $571bn blow to property values by 2030, with that figure growing to $611bn by 2050. Heat-related deaths are also set to spike.