The Federal Government announced the investment package earlier this year as part of its $1.7 billion Future Made in Australia fund, to be put towards early-stage fuel innovations, demonstrations and deployment.
The eco-friendly fuel investment comes amid growing demand for sustainable aviation fuel worldwide, and a recent report by the nation's science agency, CSIRO, found Australia had the potential to lead the industry.
The $250 million fund would be divided into grants administered by the Australian Renewable Energy Agency in order to foster Australia's production of low-carbon fuels, Energy Minister Chris Bowen said.
“Australia has the know-how and the skills to meet the crucial task of decarbonising hard-to-abate sectors such as aviation, heavy transport and mining that rely on liquid fuels,” Mr Bowen said.
“(It's) an important part of our move towards net zero and long-term fuel security.”
Low-carbon fuels, such as sustainable aviation fuel, are made from agricultural feedstocks such as sugarcane, tallow, canola and cooking oils.
They have been shown to reduce emissions from aircraft by 80 per cent compared to traditional jet fuel.
A report into the biofuel released by the CSIRO and Boeing found Australia could play a leading role in its creation but, despite investments, had yet to begin producing the in-demand fuel.
The science agency also found Australia could generate between $6 billion and $12 billion a year in direct benefits from a low-carbon fuels industry, in addition to gains for farmers and regional communities that produce fuel feedstock.
The fuels are expected to be used in sectors including aviation, road transport, mining and construction in which emissions were difficult to reduce with electric vehicles or other renewable energy sources.
Bioenergy Australia chief executive Shahana McKenzie said the large investment in fuel projects would not only help it to launch, but would also send a message to Australia’s competitors.
“This is the perfect market signal to the global investment community that Australia is open for business in developing low-carbon fuel projects,” she said.
“Australia is arguably better placed than any other nation to capitalise on its vast agricultural might to become not only a global leader in low-carbon liquid fuel, but to help our key industries decarbonise in a cost-effective way.”
The nation was already exporting almost $6 billion in feedstock for other countries to refine and this investment could support its local production, Ms McKenzie said.
Australian sustainable aviation fuel projects under investigation include a refinery planned by Wagner Sustainable Fuels in Queensland, another headed by Ampol in Brisbane and plans to transform BP’s Kwinana Energy Hub in Western Australia.
