Australia should incentivise renewable fuels: Lobby

Australia's growing dependence on oil product imports may continue if a domestic renewables fuels sector is not incentivised shortly, as feedstocks will increasingly become contracted elsewhere, domestic bioenergy lobby Bioenergy Australia (BA) said.

BA is calling for greater government direction for the sector, highlighting the A$6bn/yr ($3.7bn/yr) in feedstocks that the nation exports. BA released the Securing our Fuel Future report ahead of Australian Renewable Fuels Week in Sydney, which began on 4 March.

BA's report said a reliance on Singapore, South Korea and China for key product imports posed a risk to the economy and national defence, with 80pc of Australia's liquid fuel demand by 2050 to be concentrated in critical hard-to-electrify sectors such as aviation, heavy freight and mining, with major customers supporting domestic low-carbon fuel refineries to meet demand and ensure secure supply.

But Australia's government has been slow to progress incentivising renewable fuels, despite promising a certification scheme for low-carbon liquid fuels, including sustainable aviation fuel (SAF) and renewable diesel in last year's federal budget.

BA has said 60pc of Australian jet fuel demand could be met by turning locally-produced inputs such as tallow into SAF, providing a decarbonisation option for the hard-to-abate sector, but proposed projects remain in the development stage.

A pipeline of proposals to produce renewable diesel (RD) and SAF exist, which would help Australia build on its existing ethanol and biodiesel sectors, with the report contrasting this with the nation's declining crude production and the unsuitability of remaining local grades for Australia's refiners.

Australia's small biofuels industry is operating below capacity, based on 2022 figures of just 175mn litres/yr (l/yr) of ethanol produced. Output could rise to 436mn l/yr or about 2.7pc of Australia's 2024 gasoline consumption of 16.25bn l by utilising this capacity, the paper found. Similarly, just 1.5mn l of biodiesel was produced in 2023 despite capacity for 110mn l/yr, indicating the potential for rapid scale-up if fuel security interruptions occur.

Australia's feedstock capacity of agricultural products and residues, tallow, used cooking oil (UCO), solid wastes and forestry products represent 40 times its annual fuel requirements, compared to the US and Brazil at three times, meaning it could provide stable market supply.

New Zealand, which has lacked a domestic refining capacity since 2022, last week released two reports into its own fuel security. They found that increased storage and uptake of zero-emission vehicles would be preferable to reopening its shuttered 135,000 b/d refinery, while recommending further study into SAF and RD.

By Tom Major