Labor faces calls for renewable diesel industry

Labor faces calls to develop a renewable diesel industry to meet its net zero targets and help hard to abate sectors like construction reduce their emissions more swiftly

Minister for Infrastructure, Transport and Regional Development of Australia, Catherine King during Question Time. Picture: NCA NewsWire / Martin Ollman

The Albanese government faces new calls to urgently develop a low carbon liquid fuel policy to help transition hard to abate sectors such as construction, and is being warned a failure to act will result in the nation failing to meet its net zero target.

The push comes ahead of a high-powered gathering for a two-day renewable fuels conference in Canberra which will include major players such as Boeing, ExxonMobil, Qantas, BP, Ampol, Neste, Rio Tinto, Lendlease and a keynote address from Industry Minister Catherine King.

A new construction industry position paper - obtained by The Australian - says that Australia will not be able to meet its climate objectives unless the construction sector is decarbonised, but that technology constraints mean the preferred pathway of electrification of construction machinery will take too long.

Only 40 per cent of construction machinery will be suitable for electrification by 2030 and only 60 per cent will be suitable by 2040, according to the document.

The position paper prepared by The Australian Constructors Association (ACA) ahead of the two-day conference, commencing from Tuesday, said that a strategy of electrification was incompatible with Australia’s meeting its net zero target despite it being the most promising “long-term solution” for eliminating construction’s emissions.

It called on the government to instead develop a domestic renewable diesel industry, noting that renewable diesel could be used as a 100 per cent substitute for mineral diesel while achieving a reduction in emissions of 95 per cent.

However, there is no domestic renewable diesel production in Australia - reflecting a lag in Australian policy behind the rest of the world.

Renewable diesel - which would allow existing construction machinery to live out the rest of its working life - is becoming widely available overseas and, in the US, renewable diesel production is expected to more than double through to 2025.

Renewable diesel is only available in Australia through importation at a “high-cost premium” and the position paper calls on Labor to introduce a suite of tax incentives and capital grants to shore up the viability of an Australian renewable diesel industry.

The ACA called on the government to lead the development of a low carbon liquid fuel policy to “accelerate the development of domestic renewable diesel industry.”

“The policy should plot a clear course for scaling a sustainable renewable diesel industry in Australia using Australian feedstocks. Consideration should be given to the role of fuel carbon intensity standards, tax treatment, as well as capital grants and incentives,” it said. “A key outcome should be to prescribe a holistic regulatory framework that builds investment confidence and empowers organisations to rapidly adopt renewable diesel.”

ACA chief executive Jon Davies called for “direct government policy intervention to rapidly accelerate both the supply and demand for renewable diesel in Australia.”

“Importing renewable diesel is cost prohibitive relative to mineral diesel, making adoption competitive disadvantage,” he said.

The two day conference, being held at the National Gallery of Australia, will focus on sustainable aviation fuel and renewable liquid fuels to assist the decarbonisation of key industries including construction, aviation, agriculture, heavy road transport, rail and mining.

Ms King said the government was “already taking steps to support the growth of renewable fuels” but said there was “more to do.”