The Albanese government will consider mandating the partial use of low carbon fuels at the bowser as part of a plan to decrease Australia’s dependence on foreign fuel, create new agricultural industries and slash carbon emissions.
The proposed mandates, which would require a certain amount of low-carbon products to be blended into traditional fuels like petrol, diesel and jet fuel, are needed to create enough demand to get several early-stage Australian green fuel projects off the ground.
The projects create “drop in” fuels out of agricultural feedstocks such as canola and sugar and are backed by aviation giants including Airbus and BP, who have been lobbying the government for demand-side policies for several years.
Transport Minister Catherine King on Tuesday said the government would consult on demand-side options for low-carbon fuels as part of a broader fuel security package that also includes the creation of a $10 billion government-owned reserve of traditional fuels.
“We want to see the benefits [of low carbon fuels] here in Australia right the way through the feed chain,” King said. “It’s estimated that it’s $5 billion currently that we’re exporting – we’d like to see the industry be able to grow.”
Pressure to address Australia’s huge reliance on imported fuels has increased significantly since the US-led attacks on Iran in February shocked global oil markets and led to price spikes and localised shortages at the country’s petrol stations.
The government has since announced it will buy and own a new billion-litre reserve of diesel and jet fuel, and will force private operators to increase their stocks of the critical fuels by an additional 10 days by 2030.
However, it has also introduced policies to decrease demand for the fossil fuels in the medium to long term, such as subsidies to boost the uptake of electric vehicles and a $1.1 billion package to support early-stage low-carbon fuel projects.
King said the impacts of low-carbon mandates to aviation fuel in the European Union had a small impact on prices, but this needed to be weighed against the continued costs of relying entirely on imported fuels.
“Experience overseas is that [increases to airfares] are very small. They are small impacts overall,” she said.
“[But] what do you do if you do nothing? We are already so heavily reliant on imported fuel. Already you’ve seen Qantas and Virgin, for example, start to look at sustainable fuel. Our defence forces are using it. The fact that we’re not producing here is a significant loss.”
King said demand-side low carbon fuels measures could include mandates based on a percentage of the fuel used at the petrol pump, or requirements based on its overall carbon intensity.
The Clean Energy Finance Corporation, the government’s green bank, has estimated that an Australian green fuel industry could cut carbon emissions by 230 million tonnes by 2050 – equivalent to the annual emissions from 86 million cars.
Airbus Australia chief representative Stephen Forshaw said the aviation industry needed more access to fuels made in Australia.
“If we get this right, we create a new fuels industry in Australia that will employ thousands in regions where we grow the feedstocks. We improve our fuel security,” he said.
“Perhaps most importantly, we reverse the trend of us exporting our valuable raw materials to others, who derive the benefit from processing and then sell it back to us as fuel.”
Extracted in full from: https://www.afr.com/policy/energy-and-climate/government-will-consider-mandates-for-green-fuel-in-cars-20260818-p60p9g
