Fuel security and decarbonisation for Aviation

Building a resilient liquid fuels ecosystem:​ Recent geopolitical events have highlighted Australia's dependence on liquid fuels for transport, including in the aircraft we rely on for critical activities such as passenger transport, freight transport, emergency services and defence. International pressure is mounting on the aviation sector to decarbonise, while at the same time, Australia is facing critical questions including:​

• How can we strengthen our critical jet fuel supply chains?​
• What could we build and where will this have the most impact?​
• Is this an opportunity to the progress the decarbonisation of aviation?​

Infrastructure investment is required to improve the resilience of existing jet fuel supply chains, including local refining, increased tankage both on and off-airport, improved fuel logistics to regional airports and diversified supply to major airports.​

For Australia, perhaps more than any other country, a domestic Low Carbon Liquid Fuels (LCLF) industry offers the opportunity to reduce our dependence on jet fuel imports and build sovereign capability that secures our connectivity to the world.​​

The policy settings that are embedded today will determine investment appetite, project bankability, and shape the future of Australia’s aviation landscape.​

Building Australia’s fuel security – strategic fuel reserves and Low Carbon Liquid Fuels​

We welcome the Government’s recognition of the need for a new fuel agenda through the joint release of two important consultation papers that seek to find a balance between security of supply, emissions reduction, and industrial capability.​

• Strengthening Australia's Fuel Security and Resilience identifies jet fuel as a critical product and seeks feedback on an Australian Fuel Security Reserve (AFSR), a 10-day increase in minimum stockholding obligations, and maintaining domestic refineries beyond 2030. Important design questions remain around implementation costs, market impacts, and industry’s role. ​

• Securing Australia's Cleaner Fuels Industry proposes a demand-side mechanism to accelerate investment in domestic LCLF production, including for Sustainable Aviation Fuel (SAF). The framework proposes an initial volumetric requirement transitioning into carbon-intensity targets. Getting this balance right will be critical, as industry weighs investment certainty against flexibility, cost and long-term market efficiency.​

The costs of fuel security should be balanced not just against the value of domestic capability and economic opportunity it enables, but also the 'hidden' value of resilience and its structural costs.​

The measures proposed represent a significant infrastructure build-out​

The two policies together propose a 1BL AFSR, an estimated further 1.6BL in Minimum Stockholding Obligations, and storage to support minimum LCLF throughput volumes of about 1BL by 2030 and about 4BL by 2035. Future SAF markets alone will likely require additional segregated storage and blending infrastructure at critical supply points, capable of handling and certifying products from different origins. ​

Timelines require meaningful streamlining of approval processes​

The timing involved in this build-out is ambitious, with the AFSR build between 2027-2030 and MSO uplift starting in 2027-28. Meeting these timelines will require coordination and streamlining of approval processes across Commonwealth, State and Local Governments, with considerations of concierge offerings for project developers. ​

Open access principles will improve stakeholder support for new infrastructure​

Having access to a diversity of fuel supply sources proved critical to adapting to geopolitical disruption over recent months. Future resilience solutions should build on this, improving the ability of all fuel suppliers to access the local infrastructure needed to move product to market. ​

For aviation, this means ensuring that existing or new on and off airport fuel infrastructure arrangements are available to SAF suppliers, domestic producers and importers. Projects that enhance competition, transparency and access across the fuel supply chain are likely to deliver the most impact.​

New Australian refineries could crystallise self-sufficiency by producing Low Carbon Liquid Fuels​

In a convergence of opportunities, new production facilities to strengthen Australia’s fuel security and resilience could also act to decarbonise transport industries including aviation. Using Australian feedstocks, mature technologies and local demand, strategically placed refineries could deliver SAF to Australian and International airlines. ​

Aligning fuel security and decarbonisation objectives could help ensure government investment supports both near-term resilience and the future competitiveness of Australia's liquid fuel sector.​

Book-and-claim can avoid expensive infrastructure duplication​

Book-and-claim mechanisms could allow SAF to be produced where it makes the most economic sense, reducing costs and avoiding supply chain duplication by locating production close to feedstock, efficient energy generation and existing industrial infrastructure.​

For Australia, this could be particularly valuable during the early stages of market development, enabling SAF uptake before dedicated production, storage and distribution infrastructure is available nation wide. However, while book-and-claim can accelerate adoption where physical supply is constrained, overreliance on certificate-based pathways could weaken incentives for offtake agreements and the downstream infrastructure needed long-term. ​

ASFR brings the opportunity to build jet fuel resilience in critical locations for defence and tourism​

The proposed AFSR presents an opportunity to support additional jet fuel storage capacity in key defence, regional and tourism gateways, improving supply security for both national resilience and critical industries. If targeted effectively, the ASFR could not only increase national fuel stocks but also address geographic vulnerabilities within Australia's aviation fuel supply chain. As the strategic reserves will provide jet fuel throughput on a regular basis, location and allocation rules will be key for jet fuel customers.​