The Australian government has earmarked A$1.1bn ($740mn) to support biofuels and e-fuels under a 10-year incentive programme.
The Cleaner Fuels Program aims to incentivise production of biofuels, e-fuels made by combining renewable hydrogen and CO2 and low-carbon fuels made from waste materials, the federal government said on 17 September.
Small amounts of biodiesel and ethanol are already produced in Australia, but the first outputs of "drop in" biofuels supported by the programme are expected by 2029. A public consultation will take place this financial year to confirm details of the programme, and grants will be awarded through a competitive process.
Producing cleaner fuels from Australian feedstocks will aid emissions reduction in hard-to-abate sectors, such as mining and aviation, climate change and energy minister Chris Bowen said. Transport is expected to be the largest single contributor to CO2 emissions by 2030 under government modelling.
Australia exports about A$4bn/yr worth of feedstocks, including canola seed and tallow to biofuel producers in Singapore, the EU and the US. An Australian low-carbon liquid fuel industry could be worth A$36bn by 2050, federal agency the Clean Energy Finance (CEFC) estimates.
An established Australian low-carbon fuels industry could reduce cumulative CO2 equivalent emissions by 230mn t by 2050, according to the CEFC. This is equivalent to 2.3 times Australia's current annual transport emissions, or the annual emissions from 86mn cars.
Several e-fuel projects are planned in Australia, including initiatives by Abel Energy and HIF Global in Tasmania.
Industry body the Australian Hydrogen Council welcomed the government's announcement, saying that the funds "can have a significant impact on industrial decarbonisation". Developing low-carbon fuels "simultaneously to hydrogen capability is critical," AHC's chief executive Fiona Simon said. "We need to build capacity for hydrogen to reach scalability of low carbon liquid fuels, as hydrogen will be needed to process biomass and produce methanol for shipping or sustainable aviation fuels."
