Key facts
- Australia is consulting on mandating low-carbon liquid fuels.
- The government aims to boost domestic fuel production and reduce import reliance.
- A $14.8 billion package includes a strategic reserve of one billion litres of diesel and jet fuel.
- Mandatory fuel stockholding requirements will increase by 10 days by 2030.
- Support for domestic refineries beyond 2030 is under consideration.
The Australian government is actively seeking public feedback on its strategy to enhance fuel security and promote the development of low-carbon liquid fuels (LCLF). As part of the $14.8 billion Fuel Security and Resilience Package, announced in the 2026-27 Budget, the government is exploring mandates for the partial use of these cleaner fuels at the pump. This initiative aims to decrease Australia's dependence on foreign fuel supplies, stimulate new domestic industries, and contribute to carbon emission reductions.
Two key consultation papers have been released: one focusing on strengthening fuel security and resilience, and the other on securing Australia's cleaner fuels industry. The former seeks input on establishing a government-owned strategic reserve of one billion litres of diesel and jet fuel, increasing mandatory industry stockholding requirements by an additional 10 days for diesel, petrol, and jet fuel by 2030, and supporting the continued operation of the nation's two remaining domestic refineries beyond 2030. The latter paper is gathering views on a potential demand mechanism for LCLF, including its implementation and ambition level.
These measures are intended to create jobs, attract investment, and bolster regional economies. Low-carbon liquid fuels are particularly important for sectors where electrification is challenging, such as aviation, heavy transport, mining, and agriculture, supporting Australia's transition to net zero emissions while maintaining economic competitiveness. GrainCorp has indicated the potential value of these policies for the agricultural and renewable energy sectors.