Nation’s reliance on fuel imports fuel a geopolitical vulnerability, report warns

Australia’s reliance on foreign imported liquid fuel is exposing it to ‘geopolitical risks’, a new report has warned, amid calls for the nation to invest in low-carbon liquid fuel production to shore up its supplies.

Air Vice Marshal John Blackburn speaks at the Safeskies 2007 conference in Canberra.

Australia’s reliance on foreign imported liquid fuel is exposing it to “geopolitical risks”, a new report has warned, amid calls for the nation to invest in low-carbon liquid fuel production to shore up its supplies.

With Australia importing 80 per cent of its fuel from overseas as domestic refineries shut their doors, a new Deloitte report has cautioned that supply chain disruptions could cut off the nation’s access to fuel, damage the economy and hamper its defence capabilities.

As the presence of Chinese warships off the nation’s coastline highlights the fragility of Australia’s supply chains, the report commissioned by Bio­energy Australia cautioned the country’s reliance on Asian refiners to supply 90 per cent of its liquid fuel left it vulnerable to “regional tensions”.

Amid warnings the electrification transition will still leave key sectors such as aviation, mining and long-haul freight reliant on liquid fuels such as petrol and diesel, the report predicted that those industries could account for 80 per cent of demand by 2050.

With the country spending $50bn a year importing liquid fuel, Bioenergy Australia chief executive Shahana McKenzie said the nation must act immediately before its “vulnerability becomes irreversible”.

“We are an island nation almost entirely reliant on imported fuel,” she said.

“Over the past 12 years, five refineries have closed, and today Australia imports 80 per cent of its fuel, with 65 per cent coming from just three countries.

“Securing our fuel future by developing a low-carbon fuel industry must become a top priority for whoever leads the country after the election.”

Lower-carbon liquid fuels are alternatives to fossil fuels, produced from biogenic feedstocks including oilseeds, wastes and biomass, as well as chemical processes.

Retired air vice-marshal John Blackburn, who has advocated for action to secure the nation’s liquid fuel stocks, said Australia needed to hold an adequate supply of fuel onshore and have sovereign capacity to process it.

“Something as important as fuel, you need to make sure that you have a sovereign capability of some type – not everything – and you need to make sure you’ve thought about your supply chains,” he said.

Under pressure to strengthen the supply chain during the pandemic, the federal government introduced requirements that the nation holds oil stocks equivalent to 90 days of net imports under the Minimum Stockholding Obligation.

But Mr Blackburn, who is now the chair of think tank the Institute for Integrated Economic Research, criticised the measurement for being inaccurate because they also factored in stocks of liquid fuel being transported to Australia.

“We can trust both sides of politics to stick their heads in the sand,” he said.

Energy Minister Chris Bowen has defended the current state of the nation’s fuel stocks as being the highest in years, adding that Labor was investing in lower carbon liquid fuels through its Future Made in Australia initiative.

“Australia is now holding more stocks of diesel than ever before,” a spokeswoman said.

“Jet fuel and diesel stockholdings are also healthy.

“We acted so that major refineries and importers keep minimum stockholdings of petrol, diesel and jet fuel in Australia.”