Govt Flags Options To Develop Renewable Diesel Industry

The Australian Government has released a discussion paper on options to assist development of a domestic low carbon liquid fuels industry, including production incentives and other demand-side measures.

LCLFs were identified as a priority policy consideration in the recently announced Future Made in Australia Act, particularly as their application relates to the heavy vehicle sector.

The consultation process was flagged in the Federal Budget and LCLFs feature heavily as an abatement option in the recently released Net Zero Roadmap, which HVIA is preparing a submission for with members of the LITE Committee.

The feedback received on the LCLF consultation will also go into further development of the Net Zero Roadmap.

On the supply side, the Government is seeking feedback on how to accelerate investment and incentivise efficient production of LCLFs; and exploring policy levers such as production incentive schemes (e.g. tax incentives, grants, or contracts for difference).

It is also focusing on how to combat competition from international jurisdictions for feedstock, with Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King, noting that almost 60 per cent of the canola Australia exports to Europe is being used in low-carbon liquid fuels which are then imported back into Australia for use in our transport sector.

Almost 60 per cent of the canola Australia exports to Europe is being used in low-carbon liquid fuels

“We need to manufacture low-carbon liquid fuels here in this country. It’s an issue in terms of security and sustainability of our fuel supplies, but also very much part of the road map towards decarbonising the transport sector,” she adds.

“We know in hard-to-abate sectors like aviation and heavy haulage, low-carbon liquid fuels are really going to be the short to medium and, in some instances, the long-term way of getting our carbon emissions down.”

Demand-side factors being explored include blending and volume mandates; carbon intensity standards; and reducing the cost of LCLFs, which the paper states is presently twice as costly as their fossil fuel counterparts.

In the 2024-25 Federal Budget, the Government announced a number of measures to support a domestic LCLF industry, including $18.5 million over four years to develop a certification scheme for these fuels.

It also committed $1.5 million over two years to undertake an impact analysis of the costs and benefits of demand-side measures for sustainable fuels, which will complement this targeted consultation.

“An Australian low carbon liquid fuel industry will make great use of existing resources, create new jobs in our regions, and provide the drop-in fuel solutions our transport sector needs to assist them on their decarbonisation journey,” King says.

HVIA is preparing a response to the consultation paper, which closes on July 12. If you have any data, analysis or thoughts on this topic, please don’t hesitate to send these through to Greg Forbes or Adam Ritzinger.