Australia has taken a major step toward diversifying its liquid fuel supply and supporting the nation’s decarbonisation ambitions. With the introduction of new national fuel quality standards for paraffinic diesel, including renewable diesel, Australia has officially opened its fuel market to these low-carbon alternatives. This regulatory milestone clears the way for broader commercial adoption of renewable diesel, enabling immediate emissions reductions in the heavy vehicle, mining, rail, and marine sectors.

The release of these standards, effective from 24 February 2025, follows more than 12 months of intensive consultation led by the Australian Government. Industry stakeholders, including the Australasian Convenience and Petroleum Marketers Association (ACAPMA), have played an active role in shaping the regulatory framework that has now been implemented.

A Comprehensive Legislative Package Enabling Paraffinic Diesel Supply

On 24 February 2025, Minister for Climate Change and Energy, the Hon. Chris Bowen MP, formally approved a Paraffinic Diesel Standard package. The comprehensive legislative suite was registered on the Federal Register of Legislation and is now in force.

The package consists of four key legislative instruments:

These instruments enable the legal supply of paraffinic diesel, including renewable diesel, in the Australian market. Importantly, the regulations permit blends of conventional diesel and paraffinic diesel to be supplied at any blend ratio, offering fuel suppliers and consumers unparalleled flexibility under a world-first approach to diesel blending regulation.

This legislative reform provides the long-awaited regulatory certainty required to support the commercialisation of renewable diesel in Australia, allowing fuel suppliers and fleet operators to consider these fuels as a practical, low-carbon alternative to conventional diesel.

ACAPMA’s Role in Shaping the New Standards

Over the past 12 months, ACAPMA has actively participated in the Australian Government’s consultation process on paraffinic diesel standards. While many of the broader market and supply chain issues were championed by the Australian Institute of Petroleum (AIP), ACAPMA’s focus remained firmly on ensuring the safe, practical, and economically viable integration of renewable diesel into the existing Australian fuel infrastructure.

In ACAPMAs formal submission to the Department of Climate Change, Energy, the Environment and Water (DCCEEW) in February 2024, it supported all reasonable efforts by Australian governments to increase the supply of low-carbon liquid fuels. The Association identified renewable diesel as a critical near-term solution to reducing emissions in hard-to-abate sectors such as road freight, mining, agriculture, and rail—particularly in light of the limited availability of battery-electric vehicles (BEVs) and fuel cell electric vehicles (FCEVs) for these applications in the immediate future.

However, ACAPMA’s support was contingent on two fundamental principles:

  1. that renewable diesel delivers a significant reduction in greenhouse gas (GHG) emissions compared to conventional diesel, and
  2. that renewable diesel can be readily integrated into the existing national fuel transport, storage, and retail infrastructure without necessitating expensive adaptation or augmentation.

A key focus of ACAPMA’s advocacy was ensuring the new fuel standard prescribed minimum physical and chemical properties that would align with the operational parameters of the current diesel supply chain. Specifically, ACAPMA argued that paraffinic diesel and any blends with conventional diesel should maintain a minimum flashpoint of 60 degrees Celsius.

This flashpoint threshold is critical under the Australian Dangerous Goods Code, which distinguishes between combustible liquids (flashpoint above 60°C) and flammable liquids (flashpoint below 60°C). A classification as a flammable liquid would have imposed substantial operational challenges and additional compliance costs across the Australian fuel industry’s transport and storage infrastructure.

In its submission, ACAPMA made the point that:

“Any new standard for renewable diesel in Australia – including that for paraffinic diesel – should stipulate minimum physical and chemical properties that ensure consistency with existing national diesel supply chain infrastructure. This is particularly important in terms of observing the flashpoint threshold between the transport and storage of diesel as a ‘combustible liquid’ (i.e., flash point above 60 degrees Celsius) and a legislated standard that results in a diesel or diesel blend being deemed a ‘flammable liquid’ (i.e., flash point below 60 degrees Celsius) under the Australian Dangerous Goods Code.”

ACAPMA’s advocacy on this issue was successful.

The Fuel Quality Standards (Paraffinic Diesel) Determination 2025 mandates a minimum flashpoint of 60°C, ensuring that renewable diesel and its blends can be transported and stored using the existing diesel infrastructure. This outcome removes a major potential barrier to the early adoption of renewable diesel and protects industry participants from unintended regulatory and operational consequences.

Balancing Market Development with Economic Fairness

ACAPMA also raised concerns about how the early stages of renewable diesel market development might impact downstream fuel suppliers and consumers. In its February 2024 submission, the Association noted the significant cost premium currently associated with renewable diesel (approximately 150% of the average price of conventional diesel) and synthetic diesel (around 250% of the average diesel price).

ACAPMA advocated for market-push policy mechanisms—such as production incentives and capital investment support for renewable diesel producers—as the most equitable and effective strategy for early market development. The Association cautioned against market-pull mechanisms that impose compliance obligations or costs on downstream wholesalers, retailers, and end consumers at this early stage of the market’s maturity.

As ACAPMA stated in its submission:

“Given the infant state of the market with respect to renewable transport fuels, Market Pull mechanisms that impose a liability on downstream fuel market participants (i.e., wholesalers, retailers and end-consumers) are considered to be economically and socially unjust.”

While the current legislative changes focus on establishing the standards necessary for market access, ACAPMA has made it clear that the next step will be to work with government and industry stakeholders on the development of fair and effective policy measures to accelerate renewable diesel supply at competitive prices.

A Major Milestone for Australia’s Energy Transition

The introduction of Australia’s Paraffinic Diesel Standard package is a significant milestone. It provides the regulatory certainty and product quality assurances necessary to support the market entry of renewable diesel, offering an immediate and practical solution for emissions reduction in the heavy transport and industrial sectors.

As ACAPMA CEO Mark McKenzie noted, “The new standards not only create opportunities for renewable diesel but ensure that its introduction is both safe and practical. Our focus has been on making sure these fuels can be adopted without disrupting existing supply chains or imposing unnecessary costs on the industry.”

The recognition of paraffinic diesel under Australian law—and the flexibility to blend it at any ratio with conventional diesel—is a world-first approach. It is expected to drive early market activity, foster investment in renewable diesel importation and blending infrastructure, and help position Australia as a competitive player in the global renewable fuel landscape.

Building Supply Chains and Scaling Adoption

With the regulatory framework now in place, industry stakeholders are turning their attention to supply chain development. Securing sustainable and certified sources of renewable diesel will be critical, as will investments in import terminals and bulk storage facilities.

The involvement of Original Equipment Manufacturers (OEMs), many of whom have already approved EN 15940-compliant renewable diesel in overseas markets, will also be essential to de-risk the transition for fleet operators in Australia.

While there are still hurdles to overcome—particularly regarding price competitiveness and feedstock sustainability—the pathway for renewable diesel in Australia is clearer than ever before.

Conclusion

The Australian Government’s approval of the Paraffinic Diesel Standard package represents a pivotal moment in the country’s energy transition. Thanks to ACAPMA’s targeted advocacy and industry collaboration, Australia now has a world-leading regulatory framework that ensures renewable diesel can be safely integrated into the nation’s fuel supply chain.

With regulatory barriers removed, Australia’s transport and industrial sectors can now leverage renewable diesel to achieve near-term emissions reductions—without waiting for zero-emission vehicle technologies to mature.

The road ahead is open, and the journey towards a lower-carbon transport energy future has well and truly begun.

More Information

For a copy of the ACAPMA Submission on the Paraffinic Diesel Standard click here.

For more ACAPMA Submissions visit; https://acapma.com.au/submissions/

ACAPMA

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