This month, G7 nations agreed to release as much as 100 million barrels of diesel and crude oil from emergency stockpiles to ease the fuel price spike.
When the world’s largest economies are forced to raid their strategic reserves to keep their countries moving, Australia should treat it as another warning: our fuel security cannot be left to global markets.
Australia is not in the G7, and no one will be opening a strategic reserve on our behalf.
Today, liquid fuels, such as petrol and diesel, account for more than half of Australia’s energy consumption. For decades to come, aviation, freight, mining, agriculture and our defence force will continue to rely on them.
That dependence should sharpen the question about what Australia can produce here.
Renewable fuels are the next generation of transport fuels, made from crops and waste products, that can be used in today’s aircraft, trucks and machinery.
They give Australia an opportunity to build a new domestic industry, strengthen fuel security and reduce reliance on imported fuels.
About 80 per cent of Australia’s canola is exported for renewable fuel products overseas. In effect, we are shipping away a raw material and buying back a higher-value product, while the processing, skills and industrial capability stay overseas.
Infrastructure Minister Catherine King recently called the situation “nuts”.
Australia has a unique and timely opportunity to harness its agricultural base, existing supply chains and world-class infrastructure to create a new, low-carbon liquid fuels industry.
LCLF, including sustainable aviation fuel and renewable diesel, can be blended at high ratios into existing fuel systems and used in the aircraft, trucks and equipment already in service.
Other countries are already backing these fuels at scale, with governments playing their part in creating reliable demand for low-carbon liquid fuels because they recognise the potential economic, industrial and energy security benefits.
Many have done so despite lacking Australia’s feedstock advantages, including China announcing support for 16 new LCLF refinery projects in the first half of this year and governments including the United States heavily underwriting domestic production.
IFM Investors’ interest in LCLF comes from our experience as a long-term investor in Australian airports and the pipeline of more than $23 billion in planned capital investments across our portfolio in the next five years.
“The real risk is not that Australia moves too early. It is that we spend another decade debating perfection.”
This gives us a direct view of aviation’s continuing need for reliable liquid fuel at a time when fuel security is a national priority.
The missing piece Australia lacks is a simple and durable demand framework, and we believe a clear volumetric mandate would help provide certainty and preserve competition.
Importantly, a mandate would not guarantee returns or protect inefficient operators. Producers would still need to compete on price, reliability and emissions performance to win market share.
Together with Ampol and GrainCorp, we are proposing a refinery and canola crushing facility that could deliver the majority of Australia’s LCLF by 2032.
The project could produce up to 750 million litres of sustainable aviation fuel and renewable diesel annually, connecting Australian raw inputs with domestic processing, refining and distribution.
But the potential economic prize is much larger than one plant. Clean Energy Finance Corporation analysis estimates an Australian low-carbon liquid fuels industry could be worth $36 billion by 2050, and our recent government submission cited the potential for more than 18,000 high-value jobs, many of which are in regional Australia.
These projections show the scale of benefits Australia could capture for future generations. LCLF domestic production could also add resilience to a system overwhelmingly dependent on imports while keeping more processing value onshore.
Seizing this opportunity depends on each party playing its part, with government setting the rules, industry developing projects and capital following when the risks and returns are investable.
Get that balance right, and Australia can build an industry that strengthens our country’s ability to withstand the next disruption in global fuel markets while also seeking to strengthen the retirement savings of everyday Australians.
The real risk is not that Australia moves too early. It is that we spend another decade debating perfection while the rest of the world builds the industry, captures the jobs and secures the fuel supply chains of the future.
Extracted in full from: https://www.afr.com/companies/energy/fuel-security-can-t-be-left-to-global-markets-20261013-p6153e
