Bonza: Australia announces $1.1bn SAF support

opinion

by Fayaz Hussain

May 20, 2024

The Australian government has announced a A$1.7bn (US$1.1bn) package to support development of low-carbon liquid fuels with a focus on production of sustainable aviation fuel (SAF) and renewable diesel locally.

The country wants to produce about 2bn litres of SAF by 2030.

“As part of our Future Made in Australia plan, we will fast-track support for a low-carbon liquid fuel industry, with an initial focus on SAF and renewable diesel to support emissions reduction in the aviation, heavy vehicle, rail and maritime sectors,” said a statement issued by Catherine King, Minister for Infrastructure, Transport, Regional Development and Local Government.

What does the package include?

Around A$1.7bn, spread over a decade, will be managed by the Australian Renewable Energy Agency (ARENA) to develop and commercialise net zero innovations, especially low-carbon fuels.

Some A$18.5m has been allocated, over four years, to creating a certification scheme to ensure the sustainability of SAF and renewable diesel. The scheme will ensure that SAF produced in Australia meets sustainability standards and airlines’ emissions reduction criteria.

An additional A$1.5m has been earmarked over two years to analyse the most effective ways to encourage the use of these fuels. This includes exploring demand measures such as mandates to provide a roadmap for the industry. The government says it will explore further financial support through consultations for other incentives.

ARENA estimates Australia’s bioenergy resource potential, which includes forestry, agriculture, organic wastes and residues, to be over 2,600 peta joule (PJ) per annum, enough to increase current bioenergy production 10 times.

Australian tourism, transport and aviation sector industry group Tourism & Transport Forum Australia (TTF) said the package is in alignment with the tourism sector’s proposals to support the development of a local SAF industry in Australia.

“Consumers are increasingly demanding more sustainable options when they travel and want a greener future for aviation. This extra support will help Australia remain competitive in one of the toughest tourism markets our industry has ever faced,” said Margy Osmond, CEO, TTF.

“As a long-haul destination, Australia cannot afford to be left behind other developed countries which are prioritising support for SAF, like the USA, Europe, UK, Singapore, Japan and Canada.”

Qantas and Virgin Australia have also welcomed the budgetary support.

SAF Investor data shows six SAF projects already under development in Australia. Sponsors include bp, Eneos, Ampol, Jet Zero Australia and LanzaJet. Once completed, these projects are expected to have combined SAF production capacity of 972,000t per annum.

Australian airlines have also shown their willingness to use SAF in operations – wherever they can source it.

Currently, Qantas Group, with a commitment to use 10% SAF in its overall fuel mix by 2030, is sourcing SAF overseas, including 15% of its fuel use out of London. It will also source 20m litres each year for flights from Los Angeles and San Francisco to Australia from 2025.

“This has been a collaborative effort across industry and government, and we’ll continue to work closely with industry and governments, including through our A$400m climate fund, to make sure that Australia remains globally competitive and can take capitalise on its natural advantages for biofuels,” Qantas Group told SAF Investor.

Beyond airlines, Australian corporates have already begun adopting SAF to reduce their Scope 2 and 3 emissions.

Earlier in April this year, Accenture, Fortescue and McKinsey & Company joined Commonwealth Bank, ING Australia, Deloitte, IMC and Raytheon Australia to reduce carbon emissions through Qantas’s corporate sustainable aviation programme.

With government, industry and end-customer backing, Australia is set to be one of the most exciting pioneer SAF markets. It can expect a lot of other northern hemisphere companies to plan projects there, especially if they can visit between say, October and March.