IFM Investors propose SAF mandate in Australia to spur production
Melbourne-based global investment firm IFM Investors published its “Infrastructure Horizons 2025” report in which it said Australia’s sustainable aviation fuel (SAF) industry would benefit immensely from a suite of supply and demand side incentives including a mandate.
“We believe this could spur significant private sector investment and enhance Australia’s long term regional economic development and fuel security. It could also play a key role in supporting the decarbonisation of Australia’s aviation industry,” said Timothy May, investment director infrastructure at IFM Investments.
IFM said that it has been working with Australian government to advocate for a domestic SAF industry.
In July 2024, it announced that it was working with leading agribusiness and processing company GrainCorp and Australia’s largest transport energy provider Ampol to explore the establishment of an integrated renewable fuels industry in Australia.
“At present, we are engaged with GrainCorp and Ampol in a preliminary feasibility process to assess the infrastructure and operational requirements of building an end-to-end SAF supply chain. This will include a greenfield GrainCorp canola crushing facility to supply a purpose-built renewable fuels refinery on the site of Ampol’s existing refinery in Lytton, a suburb of Brisbane,” said IFM Investors.
The Graincorp-Ampol project is expected to be capable of producing over half a billion litres of SAF annually. Targeting a commencement date of 2030, the refinery would have a capacity of over 450m litres of renewable fuels a year.
“We were pleased to see the feasibility study supported by the Federal Government’s Australian Renewable Energy Agency (ARENA), which has awarded a combined A$14m to GrainCorp and Ampol to progress their respective components of the study,” it said.
However, IFM Investors warned that the success of projects like these is dependent upon a suitable renewable fuels regulatory framework being introduced by the Australian government.
It also recommended the Australian government to implement a time-limited production tax incentive in line with the success of supply-side support measures implemented in the US.
Similarly, drawing on policy mechanisms that have demonstrated success in Europe, we would also encourage the Australian government to consider how an appropriate and achievable domestic SAF mandate may be implemented. This could increase market certainty for early investors in Australian SAF whilst being conscious of the price impacts on travellers.