The Federal Government’s much-anticipated “Aviation White Paper – Towards 2050” landed on 26 August 2024. The White Paper charts a course for the long-term policy vision for the Australian aviation sector, prioritising safety, competitiveness, productivity and sustainability. In this article, we unpack the White Paper’s strategies to promote sustainable aviation fuel and support a nascent domestic industry.
Key takeaways:
- The Federal Government views sustainable aviation fuel (SAF) as a long-term catalyst to decarbonise aviation but change is not expected overnight. SAF mandates (if any) aren’t expected to get off the ground any sooner than mid-2028, being the earliest Government predicts it will deliver a complimentary SAF certification scheme.
- SAF mandates have already been introduced in the European Union (2% in 2025, 6% in 2030 and 70% in 2050) and Singapore (1% in 2026 and 3-5% in 2030). However, there is more consultation to come to iron-out how demand-side measures to promote SAF in Australia (if any) could be responsibly introduced. Government recognises that implementing SAF mandates, non-binding targets or low-carbon fuel standards before we have robust production and refining capacity in place may cause the price of SAF to soar.
- Access to SAF will be essential for major domestic airlines to meet emissions reduction obligations under the Safeguard Mechanism. Any SAF mandates would need to be balanced against the risk of incentivising uptake and supply of low-quality SAF or working against existing emissions reduction frameworks, such as the Safeguard Mechanism or the Carbon Offsetting and Reduction Scheme for International Aviation. Use of SAF can already be used towards Safeguard Mechanism obligations, as the NGER Scheme was amended to enable market-based reporting of scope 1 emissions from renewable liquid fuels when they are co-mingled with their fossil fuel equivalents and supplied through shared infrastructure.[1]
- The $1.7 billion Future Made in Australia Innovation Fund will be available for the development of innovative technologies, including those linked directly to low carbon liquid fuel production.
SAF: why and what it is?
Australia has one of the highest per capita CO2e emissions for international and domestic flights.[2] This is due to our high propensity to travel and geographic isolation. As a hard-to-electrify sector, a key focus for aviation sustainability is the uptake of low carbon SAF - a “drop-in fuel” which can replace traditional jet fuel and be deployed without altering existing aircraft infrastructure.
SAF is a mature technology made from non-petroleum-based renewable feedstocks which can reduce emissions by ~18% to ~99% compared to conventional jet fuel on a lifecycle basis (depending on the creation method and feedstock).[3] It is poised to slash emissions significantly, though it currently carries a premium price tag. As the prime contender for decarbonising our medium to long-haul journeys as we look ahead to net zero by 2050, SAF’s role is pivotal.
Recognising Australia’s needs & benefits
On the sustainability front, the White Paper represents much to be hopeful about. Against the backdrop of Paris Agreement targets and the International Civil Aviation Organization’s aspirations of a net zero international aviation industry by 2050, the White Paper stresses the need for meaningful sustainability changes and the use of SAF as a likely major contributor to this future. The Federal Government’s commitment to cultivating a homegrown SAF production industry has never been greater. Besides securing the in-demand fuel and associated emission reductions benefits, a robust domestic SAF industry promises a windfall of benefits:
- an enduring regional economic boost, fuelled by new jobs and market opportunities for feedstock growers;
- a ticket to fulfilling demand for eco-conscious air travel, from tourists to business flyers;
- greater liquid fuel security, improving Australia’s energy independence; and
- a solid step towards Australia’s ambition of becoming a renewable energy superpower.
The White Paper highlights that a failure to advance a domestic SAF industry will likely lead to the export of domestic feedstocks. This could see Australia squandering its natural assets, from our large land area, favourable climate and advanced farming techniques.
Key initiatives for net zero aviation
The White Paper lays out three key initiatives in pursuit of net zero domestic aviation. These initiatives directly and indirectly interact to empower a strong Australian SAF industry:
1. Demand side measures: consultation with industry and community “will take some time”
The White Paper signals that the Federal Government is ready to engage with industry and community to shape the future of eco-friendly flying. Blending mandates, targets and fuel standards are on the table, echoing the calls of stakeholders eager to rev up domestic demand and stimulate SAF supply.
There are several key takeaways flowing out of this:
- The introduction of a mandate would offer clear demand certainty and is consistent with emerging international practices such as the European Union’s ReFuelEU initiative (2% in 2025, 6% in 2030 and 70% in 2050) and Singapore’s SAF mandate for departing flights (1% in 2026 and 3-5% in 2030). However, the White Paper notes that any measures must align with the 2023 Safeguard Mechanism reforms (our previous alert on those reforms is available here) and warns that the cost of SAF could soar without robust domestic production.
- The White Paper makes clear that a mandate must be complemented by effective SAF certification, suggesting the measure will stay grounded until Government delivers the certification arrangements in at least mid-2028 (considered further below).
- Government considers that a non-binding target may impose less of a regulatory burden for business but would not provide the same confidence to investors when compared to a mandate.
- A low-carbon fuel standard which allows fuel producers to choose how to lower the emissions intensity of their products was praised for being a flexible solution.
Overall, it is too early to tell what form the demand-side measures will take (if any). The White Paper re-iterates that an impact analysis of such measures will be undertaken, although consultation “will take some time”.[4]
2. Certification of SAF: where does it come from and how is it made?
Government announced in the White Paper that it will create a SAF certification scheme to offer assurances as to the environmental, safety and social credentials of a given quantity of SAF. It will do so by expanding the Guarantee of Origin Scheme, an assurance scheme being designed to track and verify emissions related to domestically produced hydrogen and renewable electricity.
The mechanism will focus on where the product has come from, how it was made and its life cycle carbon intensity. The expansion is slated for a mid-2028 release and is intended to be aligned with international standards.
Government will receive advice on the certification scheme from the Australian Jet Zero Council (Council), a group of senior aviation stakeholders created in June 2023 to spearhead net zero aviation domestically. The Council’s Workplan notes that international certification schemes could support SAF access while a guarantee of origin scheme is developed.[5] Accordingly, the Sustainable Aviation Fuel certificates (SAFc) framework developed through the World Economic Forum’s Clean Skies for Tomorrow initiative may fill the certification gap in the short-to-medium term while the domestic certification scheme is built out. The Council, as led by Qantas, will also advise on a framework for voluntary SAF purchasing to enable customers to procure a portion of SAF for their air travels.
3. Cash to flow from the Future Made in Australia Innovation Fund
The 2024-25 Federal Budget invests $22.7 billion to build a Future Made in Australia across the next decade. It seeks to forge a resilient and diversified economy underpinned by clean energy.[6]
The White Paper highlights that $1.7 billion of the fund will be available for the development of innovative technologies, including those linked directly to low carbon liquid fuel production.
Government is yet to release how this funding will be injected into or made available to industry and community.
What next for SAF at the Government level?
The White Paper advances the Federal Government’s actions to support the decarbonisation of the aviation industry. These measures will also form part of the Transport and Infrastructure Net Zero Roadmap and Action Plan (Roadmap and Action Plan), which itself is one of six sectors forming part of Australia’s broader Net Zero Plan.
The Roadmap and Action Plan is being developed by Government and industry, with a view to providing more detailed actions and policies which Government will commit to in order to guide Australia to net zero greenhouse gas emissions by 2050.
Further consultation ahead
The White Paper sets the stage for Australia’s aviation future, with a key focus on the adoption of SAF. It is clear that further consultation is needed between Government, industry and community to:
- determine which demand-side measures will best incentivise SAF uptake
- create a SAF certification scheme, including as informed by the Council and international standards, and
- consider how funding support will be delivered, with a view to driving growth in the domestic SAF industry.
For a summary of the changes to the NGER Scheme, see here.
See page 60 of the Transport and Infrastructure Net Zero Consultation Roadmap, available here.
See Figure 13 on page 113 of the White Paper.
See page 107 of White Paper.
See page 5 of the Workplan, available here.
See the factsheet for the Future Made in Australia, available here.
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