The new ten-year Cleaner Fuels Program will stimulate private investment in Australian onshore production of low carbon liquid fuels, such as renewable diesel and sustainable aviation fuel.

The first production of 'drop-in' cleaner fuels, which can be directly substituted for existing fuels and work in today's engines, is estimated by 2029.

Australia has the ingredients needed to make cleaner liquid alternatives to fossil fuels, with ready access to feedstocks like canola, sorghum, sugar and waste.

Thanks to our advanced farming practices and access to cheap and reliable renewable energy, Australia is in an enviable position to produce cleaner, low carbon liquid fuels that jets, ships, construction machines and heavy trucks need to reach net zero.

Liquid fuels make up around half of Australia's national energy use. Replacing those fossil fuels with cleaner alternatives would deliver a massive climate and economic opportunity.

Australia already exports nearly $4 billion of suitable feedstocks like canola and tallow. But the Clean Energy Finance Corporation (CEFC) estimates an Australian low carbon liquid fuel industry could be worth $36 billion by 2050 – highlighting the untapped potential of developing local refining and value-adding capability.

Funding to make cleaner fuel on Australian shores, from Australian feedstock will help back Australian innovators from the farmer to the fuel bowser, make our fuel supply greener and more resilient and make low carbon fuels available for early adopters.

Details about eligibility will be considered through public consultation and design work to take place this financial year. Grants will be awarded through a competitive process to ensure we get value for taxpayer funds.

The new production-linked incentive builds on the Government's support through the Sustainable Aviation Fuel Funding Initiative and the Future Made in Australia Innovation Fund. Recipients will also need to deliver benefits according to the community benefit principles under the Future Made in Australia Act.

The Government is also supporting the market by expanding the Guarantee of Origin Scheme to include low carbon liquid fuels and has established a fuel quality standard for renewable diesel.

A recent report from the CEFC found that a mature Australian low carbon liquid fuels industry could deliver around 230 million tonnes CO2-e in cumulative emissions reduction by 2050. This is equivalent to 2.3 times Australia's current annual transport emissions, or the annual emissions from 86 million cars.

Quotes attributable to the Treasurer Jim Chalmers:

"Low carbon liquid fuels are an enormous economic opportunity for Australia.

"It's about making Australians and our economy big beneficiaries of the global net zero transformation.

"Developing this industry has potential to make us an indispensable part of growing global net zero supply chains.

"This is a downpayment on developing an entirely new industry in Australia.

"From the farm to the refinery, from primary production to processing, this will create more jobs and more opportunities for Australian workers and businesses.

"It's another way we're helping Australians grasp the big benefits on offer in the transformation to cleaner and cheaper energy – to help lift wages, grow living standards, create jobs and grow our economy."

Quotes attributable to Minister for Climate Change and Energy Chris Bowen:

"Making cleaner fuels here, from Australian feedstocks, creates the path for emissions reduction in sectors that are hardest to clean up, like plane travel and construction machines.

"Across the nation we have 2 billion litres worth of projects in the pipeline, many of which are ready to scale up production. A new thriving domestic industry with more jobs in our regions, from farmers growing the inputs to workers refining the fuels of the future is within our reach.

"$1.1 billion for low carbon liquid fuels production here in Australia builds on the $250 million we have already allocated to low carbon liquid fuels research and development through the Future Made in Australia Innovation Fund."

Quotes attributable to Acting Minister for Infrastructure, Transport, Regional Development and Local Government Murray Watt:

"As demand for air travel grows, and more goods are moved by road and rail, it's essential we invest in future fuels that allow us to facilitate this increasing demand while meeting our net-zero targets.