Can Australian financial backers seize the $36bn potential in sustainable energy sources?
In the rapidly evolving world of energy, low carbon liquid fuels (LCLF) are emerging as a key player, particularly in sectors that cannot be easily electrified, such as aviation and mining. According to Ian Learmonth, the CEO of the Clean Energy Finance Corporation (CEFC), LCLFs are a necessity for these sectors.
The demand for LCLF is on the rise, with over a third of liquid fuel demand coming from road transport, where electrification is underway, and nearly a third from mining and aviation, which are harder to electrify. By 2050, the demand for LCLF could be worth $36bn in Australia.
Scaling up Australia's LCLF industry, however, is a task that requires cautious, optimistic navigation of risky and rewarding waters. The market is still relatively immature, requiring complicated supply chains, steady feedstock suppliers, and offtake partners. Uncertainties in the LCLF market add to risk premiums, making capital more expensive.
To de-risk private investments, the report identifies seven 'market accelerators', including the use of concessional finance. The CEFC's executive director, Rupert Maloney, also emphasises that exporting raw materials for LCLF production is a missed opportunity for building the industry domestically.
While specific investors funding sustainable aviation fuels (SAF) in Australia are not yet widely known, the region is actively involved in the development and promotion of SAF. The SAF APAC Summit 2025 held in Melbourne aims to advance the adoption of sustainable aviation fuels across the Asia Pacific region. Individuals like Rahman Daiyan and Xiaoxuan Lou have secured funding for their sustainable aviation fuel projects, indicating a growing interest in this area.
Companies like Macquarie Asset Management, known for their global support of green investments, could potentially be involved in future Australian SAF initiatives. For more detailed information on specific investors in Australia, further research or updates from local industry reports would be necessary.
Policy accelerators, including mandates, certification schemes, and offsets, are key components to help the industry reach scale. The report also includes an analysis of production costs and Australia's LCLF cost curve. The largest ever commercial import of sustainable aviation fuel in Australia was 2 million litres, made in May this year.
The report cautions that scaling up Australia's LCLF industry would require careful navigation, as the market itself is fragmented and the cost gap between LCLFs and traditional alternatives needs trimming. However, with the right strategies in place, Australia could position itself as a leader in the global LCLF market.
Renewable-energy industries, such as low carbon liquid fuels (LCLF), are drawing increased finance for their development, with the potential for Australia's LCLF market to be worth $36bn by 2050. To de-risk private investments in this sector, the use of concessional finance and domestic raw material production are being highlighted as important strategies, with companies like Macquarie Asset Management potentially involved in future Australian LCLF initiatives.
The demand for LCLF is growing, particularly in sectors like aviation and mining that are harder to electrify. However, scaling up the LCLF industry requires careful navigation through complex supply chains, uncertainties in the market, and a trimming of the cost gap between LCLFs and traditional alternatives for Australia to position itself as a leader in the global LCLF market.
