The role of ACCUs and renewable fuels in Australia’s decarbonisation

This white paper explores Australia’s evolving decarbonisation landscape, highlighting the impact of the reformed safeguard mechanism and the growing importance of Australian Carbon Credit Units (ACCUs) and renewable fuels. In 2023–24, stricter emissions baselines under the safeguard mechanism led to a significant increase in ACCU surrenders, prompting industries—including mining and aviation—to invest in abatement and consider low-carbon liquid fuels (LCLF) such as Sustainable Aviation Fuel (SAF), Hydrotreated Vegetable Oil (HVO), and biodiesel. However, current ACCU prices and policy settings do not yet make LCLF cost-competitive, resulting in underutilised domestic biofuel production facilities.

The federal government’s Cleaner Fuels Program, SAF Funding Initiative, and guarantee of origin scheme aim to incentivise LCLF production and adoption, supporting Australia’s 2035 and 2050 emissions reduction targets. The paper notes that bridging the cost gap between ACCUs and biofuels will require further policy tightening, expanded mandates, and innovation in carbon sequestration—such as proponent-led ACCU methods and biochar credits.

Stakeholder feedback prioritises HVO and SAF for incentives, while the mining sector trials renewable diesel and battery-electric trucks. Ultimately, the transition to renewable fuels and effective carbon certification will be crucial for Australia to achieve net zero and foster a robust, competitive biofuels industry.

This insight paper has been created by Argus' carbon and biofuels experts using data and analysis from the Argus Carbon and Argus Biofuels services.