Could Australia Make Enough Biofuel to Keep Us Flying?

Why It Matters

Domestic SAF could reduce Australia’s exposure to volatile jet‑fuel markets and support remote‑site logistics, while also influencing the nation’s decarbonisation targets. The scale of investment required makes policy and financing decisions critical for the aviation sector’s future competitiveness.

Key Takeaways

• Australia uses 10 bn litres jet fuel annually, projected 14 bn by 2050
• Domestic feedstocks could supply ~60% of SAF demand, about 5 bn litres
• Four SAF projects total 1.4 bn‑litre capacity; 60 refineries needed by 2030
• Building required refineries could cost ~$90 bn, double NBN expense
• SAF remains $2.80 per litre more expensive than conventional jet fuel

Pulse Analysis

Jet‑fuel price spikes have hit Australian airlines hard, prompting route cuts that threaten connectivity to remote mining and gas sites that underpin roughly 10% of the national economy. The surge underscores a strategic vulnerability: Australia imports virtually all of its aviation fuel, leaving airlines exposed to geopolitical shocks and currency swings. As airlines grapple with higher operating costs, the push for a domestic sustainable aviation fuel (SAF) industry is gaining political traction, positioning fuel security as a national priority alongside climate goals.

Australia’s agricultural bounty—canola, sugar‑cane residues, corn husks and municipal waste—offers a theoretical feedstock base capable of producing about 5 bn litres of SAF each year, roughly 60% of current jet‑fuel demand. The federal government’s $1.1 bn Cleaner Fuels Program and fast‑track approvals have cleared the way for projects like Jet Zero’s Townsville ATJ plant and Ampol’s HEFA refinery in Brisbane, together delivering 1.4 bn litres of capacity. However, analysts estimate that meeting the projected 14 bn‑litre demand by 2050 would require up to 60 Jet‑Zero‑sized facilities, an investment approaching $90 bn—about twice the cost of the National Broadband Network—making financing and long‑term policy certainty essential.

Even if the infrastructure materialises, SAF’s economics remain a hurdle. A Deloitte analysis puts the Australian‑made SAF premium at $2.80 per litre over conventional jet fuel, a gap that could be passed to passengers through higher ticket prices. Moreover, the carbon‑reduction claim varies widely; SAF from waste streams can cut life‑cycle emissions by up to 80%, while crop‑based SAF may only achieve a 30% reduction. Policymakers may need to mandate SAF blends or introduce price incentives to generate sufficient demand, ensuring that the substantial capital outlay translates into both fuel security and genuine emissions cuts for the aviation sector.