New report finds Australia could build a $36b low carbon fuel industry, cut emissions by 230m tonnes, and strengthen fuel security

7 July 2025

Australia has a $36 billion opportunity to establish a world-leading low carbon liquid fuel (LCLF) industry, reduce emissions by 230 million tonnes by 2050, and lessen reliance on imported fuels - but only if it acts promptly, according to a landmark report from the CEFC and Deloitte.

The report, Refined Ambitions: Exploring Australia’s Low Carbon Liquid Fuel Potential, finds that LCLFs are crucial to Australia’s net zero future, particularly for sectors such as aviation, mining, heavy freight, and defence, where electrification is challenging.

CEFC CEO Ian Learmonth said: “Low carbon liquid fuels are a present-day necessity for sectors that can’t electrify. If we get the settings right, Australia can lead in clean fuels innovation and production - not just supply the feedstocks.

With the right market signals and collaboration, Australia can build a globally competitive clean fuels industry and lead our region in climate-era innovation.

Rupert Maloney

CEFC Executive Director

“Australia has all the ingredients to be a clean fuel superpower – abundant feedstocks, world-class research, and growing demand. Policy accelerators, including mandates, certification schemes and offsets, are key components to assist the industry reach scale. The first movers will reap the rewards of this global market."

Key findings

• $36 billion market opportunity by 2050: A domestic LCLF sector could contribute significantly to Australia’s economic growth and clean energy exports.
• 230 million tonnes CO₂-e savings: Cumulative abatement over the next 25 years, equivalent to nearly half of Australia’s annual emissions.
• Fuel security risk: 80 per cent of Australia’s liquid fuel is imported, costing $50.7 billion in 2023 - exposing the nation to supply chain shocks.
• Untapped potential: Australia exports $3.9 billion in LCLF feedstocks (e.g., canola, tallow) but lacks local refining capacity to realise full value.
• Persistent demand: Even with rapid electrification, large quantities of liquid fuel could still be needed by 2050.

Strategic and economic imperative

The report warns that without domestic LCLF production, Australia remains vulnerable to geopolitical disruptions and misses a significant economic opportunity, particularly for regional areas. Earlier CSIRO modelling indicates that Australian feedstock could produce billions of litres of LCLFs annually by 2050, utilising existing land and practices without impacting food production.

The report aligns with the Federal Government’s Future Made in Australia agenda, showing how clean fuel production can bolster sovereign capability, create regional jobs, and meet climate targets.

CEFC Executive Director, Rupert Maloney said: “We export the raw materials but miss the opportunity to build the industry here at home. This is about regional development, national resilience, and emissions reduction, all at once.”

Barriers to scale

Despite the growing momentum and a pipeline of more than 2 billion litres in proposed projects, the report states that Australia’s low carbon fuel industry faces significant structural, financial, and regulatory challenges. The cost of production remains higher than that of conventional fuels, while the lack of national mandates has limited investor confidence and demand certainty. Additionally, emerging fuel technologies require further R&D and de-risking before they can be commercially deployed at scale. The report identifies key hurdles:

• Cost gap: LCLFs remain more expensive than fossil fuels without policy support.
• Policy potential: By introducing targeted policies, such as mandates, national procurement programs and low carbon fuel certification, Australia can provide the demand certainty and price signals needed to scale a local clean fuel industry.
• Investment risk: Next generation fuel technologies (e.g., Fischer-Tropsch and synthetic e-fuels) need R&D support and commercial de-risking.

Roadmap for action

To close the gap between potential and reality, the report outlines a clear and actionable framework to help scale Australia’s LCLF industry. This roadmap focuses on enabling market demand, lowering investment risk, supporting innovation, and coordinating the value chain, drawing on proven models from clean energy and international biofuel markets. With the correct settings in place, Australia can unlock a globally competitive and sovereign clean fuels sector. To take advantage of this opportunity, the report details seven key steps:

1. Improve market access (e.g., trade relationships)
2. De-risk investments (e.g., concessional finance to de-risk private capital)
3. Reduce transaction challenges (e.g., standardised contract terms)
4. Consider credible demand signals (e.g., SAF and freight fuel blending mandates)
5. More transparent data on demand, supply and feedstocks
6. Leverage innovation to reduce costs and support for advanced fuel technologies (e.g., hydrogen-based e-fuels)
7. Better coordination and alignment across the value chain (e.g., from feedstock supplier to fuel producer to end user).

“With the right market signals and collaboration, Australia can build a globally competitive clean fuels industry and lead our region in climate-era innovation,” Mr Maloney said.

"Clean fuel plants could revitalise manufacturing hubs and create skilled careers in some areas hit hardest by the decline of fossil fuels. But we need investment commitments this decade to avoid missing the window."

About the Report

Refined Ambitions: Exploring Australia’s Low Carbon Liquid Fuel Potential was commissioned by the CEFC and developed by Deloitte, in consultation with industry participants, investors, researchers and government stakeholders.

It highlights the strategic role LCLFs can play in reducing emissions, creating regional jobs, and enhancing Australia’s energy sovereignty.