Government Announces $1.1 Billion Cleaner Fuels Fund for Low-Carbon Energy Production
Fund targets aviation, shipping sectors as part of net zero transition strategy
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The Australian government announced a $1.1 billion Cleaner Fuels Fund Wednesday to support domestic production of low-carbon liquid fuels, targeting hard-to-decarbonize sectors including aviation and shipping.
Treasurer Jim Chalmers and Climate Change Minister Chris Bowen unveiled the initiative at the Ampol refinery in Lytton, Brisbane, describing it as a key component of Australia's transition to net zero emissions.
"The Cleaner Fuels Fund, a $1.1 billion fund, to support the production of Australian cleaner fuels," Bowen said during the announcement. "We want to see this refinery, this facility work for another 60 years. We want to see Geelong work into the future as well."
The fund will be open to bids from Australian manufacturers of lower carbon liquid fuels, with production required by 2029. Officials said the timeline represents the fastest achievable deployment of major industry infrastructure in Australia.
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Agricultural Feedstock Utilization
The initiative aims to convert Australian agricultural products including canola, tallow and waste materials into cleaner liquid fuels for domestic use rather than export.
"At the moment, around 70% of Australia's canola, for example, is exported. And exports are great. But even better, we'll be taking that canola and turning it into lower carbon fuels here in Australia," Bowen said.
Industry representatives highlighted the significant potential for renewable feedstock utilization. Shahana Abdulla, representing the biofuels sector, said current Australian feedstock could supply 60 percent of the nation's aviation fuel market immediately.
"Our feedstock at the moment in Australia, we could be delivering 60% of Australia's aviation fuel market right now from renewable feedstocks. In 2050, that could be 90%," Abdulla said.
She projected the industry could generate "billions of extra dollars in GDP and tens of thousands of new jobs in the regions," describing it as "a regionally exclusive industry."
Economic and Employment Benefits
Chalmers emphasized the fund's role in creating jobs while reducing emissions, linking it to the government's broader economic strategy.
"Low carbon liquid fuels represent a very big economic opportunity for Australia. Scaling up a low carbon liquid fuel industry is a really important way that we maximise the industrial benefits of the shift to net zero," Chalmers said.
The treasurer described the initiative as exemplifying the government's "Future Made in Australia" agenda, connecting primary production to processing across the country.
"From the farm to the refinery, primary production to processing, this will create more jobs and more opportunities for more Australians right around the country," he said
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Agricultural Sector Response
Sue Middleton from the National Farmers' Federation welcomed the announcement, highlighting benefits for agricultural producers and supply chains.
"Australian agriculture already produces a huge amount in terms of export into the EU, for example, canola, sugar, and of course agricultural by-products into the biofuels sector. This will actually enable diversification," Middleton said.
She emphasized the strategic value of domestic fuel production for agricultural operations.
"Critically sovereign fuel capability. And I think when you look at energy security, along with food security, these are critical things to the agriculture sector," Middleton said.
Climate Target Development
While unveiling the fuels fund, officials addressed ongoing work on Australia's 2035 emissions reduction target, though no specific figure was announced.
Bowen confirmed Treasury modeling was being conducted to inform cabinet deliberations on the target.
"The Treasury modelling will be released alongside the announcement that we make about our climate targets. As Chris rightly pointed out, that target has not been determined yet. It will be determined by the Cabinet," Chalmers said.
The modeling examines outcomes within the range the Climate Change Authority consulted on during its review process.
"The Treasury has modelled an outcome within the range that the Climate Change Authority was consulting on. I don't think that's especially controversial or especially surprising," Chalmers said.
Bowen emphasized the target would be "responsible and considered" when announced.
"When we release our targets for 2035, they will be responsible and considered. It will be all about an orderly transition because that's what's best for our economy and for the environment," he said.
Science-Based Policy Framework
The ministers defended their climate approach following release of a National Risk Assessment prepared by 200 scientists consulting with 2,000 others.
"This is a report to government. Our government didn't write a word in this report. We didn't interfere. This was an independent report provided to me, which I released," Bowen said.
He criticized political opponents for dismissing scientific evidence.
"I've been disappointed to send a response from our political opponents. Whenever they're presented with an opportunity to embrace science, they dismiss science," Bowen said.
Chalmers linked climate action to economic opportunity, rejecting opposition to net zero policies.
"Climate change poses an extreme economic risk and net zero provides us with a very substantial economic opportunity," he said.
Political Tensions
During the press conference, Chalmers launched pointed criticism of the Liberal Party's internal divisions over climate policy.
"The Liberal Party is run now by this weird collection of cookers and crackpots and nowhere is that more obvious than when it comes to net zero," Chalmers said.
He referenced a speech by Opposition Leader Sussan Ley scheduled for the same day, comparing it to previous Liberal policies.
"The speech that Susan Lee is giving today is the exact same speech that Joe Hockey gave before the Liberals last came after pensions and Medicare when they were last in office," Chalmers said.
Mining Industry Developments
The ministers addressed BHP's decision to cut 750 jobs in Queensland, which the company attributed partly to state mining royalties.
"Our primary concern is for the BHP workers who are losing their jobs on this occasion. And we know that this is a commercial decision," Chalmers said.
He noted the company cited state policies in its decision while declining to criticize state government mining royalty arrangements.
"BHP has nominated some of them. They're in discussions with the state government about it. Our thoughts are with the workers," Chalmers said.
Despite the job losses, Chalmers emphasized the resources sector's ongoing importance.
"Our resources sector is really important to our economy, state economy, the national economy as well. Also when it comes to the clean energy transformation, the mix of resources is changing over time," he said.
International Relations
When questioned about President Donald Trump's criticism of an ABC journalist, Chalmers defended media independence.
"I respect the ABC and I respect its independence, and that extends to not second-guessing the questions asked legitimately by journalists at press conferences," he said.
He noted Prime Minister Anthony Albanese and Trump have maintained positive communication.
"President Trump and Prime Minister Albanese have had a number of very warm conversations already, I think four conversations at last count, and they'll meet in due course," Chalmers said.
Implementation Timeline
The Cleaner Fuels Fund operates similarly to existing government programs including the Solar Sun Shot initiative under the Future Made in Australia framework.
Industry participants must demonstrate capability to begin production by 2029, which officials described as an aggressive but achievable timeline for major industrial development.
The fund specifically targets liquid fuels for sectors difficult to electrify, including aviation, shipping and heavy transport, where alternative energy sources remain limited.
Officials indicated the fuel fund announcement represents part of broader climate policy developments leading to the 2035 target release.
"Part of the achievable end is showing Australians what our plans are. And this is part of that today, showing Australians how we can create jobs and lower emissions at the same time," Bowen said.
The government plans to release comprehensive documentation alongside the 2035 target, including Treasury modeling and implementation strategies.
The timing of the fuels fund announcement underscores the government's emphasis on demonstrating practical pathways for emissions reduction while maintaining economic growth and employment opportunities across regional Australia.
Local member Cara Cook attended the announcement at the Ampol facility, which officials described as crucial infrastructure for both the regional economy and Australia's energy transition strategy.
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