Jet zero? Govt invests $1.7bn in aviation biofuel

The Australian Government is ramping up efforts to create a sustainable aviation fuel industry, with $1.7 billion allocated in the federal Budget for development of the industry over the next decade.

As part of this push, the Department of Foreign Affairs and Trade (DFAT) has announced that aviation experts from the University of South Australia (UniSA) will be working with their Chinese counterparts over the next two years to develop an aviation biofuel industry in both countries.

UniSA Aviation Professor Shane Zhang has been awarded a $230,000 National Foundation for Australia-China Relations grant to lead the project, which will explore the commercial opportunities of using bio feedstock to replace conventional kerosene jet fuels with ‘green’ fuel. The federal Budget announcement follows the establishment of the Australia Jet Zero Council in 2023 to deliver net zero aviation in Australia, supported by a $30 million funding injection.

“Sustainable aviation fuels can potentially cut carbon emissions by up to 80% and are essential if we are to achieve net zero greenhouse gas emissions in Australia 2050,” Zhang said.

Currently, sustainable aviation fuels (SAFs) account for less than 1% of jet fuels worldwide, but the European Union, Singapore, the US and the UK are moving towards mandating them within the next few years.

While these renewable fuels are not yet produced in Australia, Jet Zero Australia is working with US biotechnology company LanzaJet to build a new SAF facility in north Queensland, while Wagner Sustainable Fuels and Boeing Australia are collaborating on a site in Toowoomba. The NSW Government is also getting involved, pledging up to $100 million to start local production.

In addition to the $1.7 billion, the Australian Government has allocated $18.5 million over four years to develop a certification scheme for sustainable aviation fuels and renewable diesel.

“There is a lot of potential to produce sustainable aviation fuels in Australia and China, as both countries have large quantities of bio feedstock and the market is untapped,” Zhang said.

“Australia is among a handful of countries globally to support the transition to SAFs, but the financial commitment to develop a local industry does not extend to a mandate at this stage.” The government has, however, committed a further $1.5 million towards a two-year analysis of the costs and benefits of introducing mandates.

Other countries are slightly ahead on mandates, with the EU mandating that 2% of all departing flights from Europe will use green fuels by 2025, up to 70% by 2050. Singapore has set a 1% SAF target for all departing airlines from 2026, increasing to 3–5% by 2030, and the UK has mandated that 10% of its airline fleet use SAFs by 2030.

Airservices Australia has set a target of reducing CO₂ emissions per flight by an average of 10% by 2030. At the moment, aviation accounts for approximately 3% of global emissions, but this could rise to 22% by 2050 as more people fly and other sectors decarbonise more quickly, Zhang said.

“Unlike ground transportation, there are limited alternative fuel options for the aviation sector. Sustainable fuels are one of them, but they are up to five times more expensive than traditional fuel and airlines are reluctant to invest in them until they become cheaper and more readily available,” he explained.

“Likewise, biotechnology companies need a guaranteed market from airlines before they commit to developing SAFs, so the hesitation runs both ways.”

Over the next two years, Zhang and his Chinese colleagues will bring industry, farmers and stakeholders together in both Australia and China to explore how sustainable aviation fuels can be commercialised.

“The technology is ready and mature, and the federal government has sent a clear signal about its support for greener aviation fuels. We just need to overcome the challenges and find the right path,” Zhang said.

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