The Australian Government has released two significant consultation papers that aim to support the development of a domestic low-carbon liquid fuels (LCLF) industry and to help shape the nation’s future fuel security – including possible volumetric mandates or carbon-intensity standard to boost demand for LCLFs.
The first, Securing Australia’s Cleaner Fuels Industry, explores options for a demand mechanism to accelerate the uptake of low-carbon liquid fuels and support investment in domestic production.
The paper specifically recognises heavy transport as a key sector where low-carbon liquid fuels can help reduce emissions while supporting fuel security.
The Government is signalling that grant programs and production incentives alone will not be enough and is therefore exploring a demand mechanism that would create a guaranteed market for low-carbon liquid fuels and provide investors with greater confidence to build production capacity.
The primary demand mechanisms require being examined are:
> Volumetric mandates (which requires a specified amount of LCLF to be supplied to the market such as through fixed blending requirements or market-wide volume targets). For example, under a blending requirement, suppliers may be required to replace 20 per cent of their total fuel supply with LCLF.
> A carbon-intensity standard which sets a target for the average emissions intensity of fuel supplied to the market, rather than requiring a specific volume of LCLF. Obligated entities can choose how they achieve the target, including by using different types and amounts of LCLF and, where permitted, credits generated or purchased within the scheme.
Separately, the Australia’s Fuel Security and Resilience Package, seeks feedback on a proposed Australian Fuel Security Reserve, increased minimum fuel stockholding obligations, and ongoing support for domestic refining capacity.
These consultations are of particular interest for HVIA members in relation to fuel security, strengthening supply chain resilience and in reinforcing the role that low-carbon liquid fuels can play in decarbonising heavy transport.
Both consultations close on September 15, 2026 and HVIA will be seeking member feedback over coming weeks to ensure the policy directions reflect the practical needs and priorities of Australia’s heavy vehicle industry, particularly possible impacts on fuel availability, costs, technology choices and fleet decarbonisation pathways.
For further information or to participate in HVIA’s consultation process, contact HVIA Chief Advocacy Officer Aaron Johnstone on a.johnstone@hvia.asn.au.