Frequently asked questions

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Answers to common questions about low carbon liquid fuels: what they are, what goes into making them, how they are used in Australia, and how emissions claims are verified. Every answer links to the evidence behind it. Search for a word or phrase, filter by category, or browse the key terms at the end of the page.

The basics

Low carbon liquid fuels, or LCLFs, are liquid fuels that release fewer greenhouse gases across their full life cycle than the conventional fuels they replace. Most are made from biological materials such as crops, animal fats, wastes and residues. Others, known as e-fuels, are made by combining renewable electricity with captured carbon dioxide. They are used in the same broad applications as petrol, diesel and jet fuel.

Largely, yes. Biofuels are fuels made from biological materials, and they make up most of this category. Low carbon liquid fuels is a broader term: it also covers e-fuels, which are made from renewable electricity and captured carbon dioxide rather. The terms renewable fuels and sustainable fuels are also used, each slightly differently across industry and policy. This Hub uses low carbon liquid fuels, the typical term used in Australian Government documents .

It means fewer greenhouse gas emissions across the full life cycle than the conventional fossil fuel being replaced. The life cycle covers producing or collecting the feedstock, converting it into fuel, distributing it, and burning it. Counting the full life cycle allows all fuels to be compared on the same basis; the size of the reduction varies between fuels.

Not necessarily. Where there are carbon emissions through the supply chain (in feedstock production or collection, fuel processing or distribution), there will still be some amount of carbon emissions. ‘Low carbon’ describes emissions relative to the conventional fuel being replaced, not zero emissions.

Plants absorb carbon dioxide from the air as they grow, and that carbon carries through into crop products as well. When a fuel made from any of these is burned, the carbon dioxide returns to the atmosphere, where new plant growth can absorb it again. The carbon in conventional fossil fuels has been underground for millions of years, so burning it releases carbon dioxide that is not part of a short-term carbon cycle .

Biofuels are made from biological materials. E-fuels, also called electrofuels or power-to-liquid fuels, are made by using renewable electricity to split water into hydrogen and oxygen, then combining the hydrogen with captured carbon dioxide to synthesise a liquid fuel. E-fuels are at an earlier stage of commercial development than most biofuels.

A drop-in fuel is a fuel that meets the same specification as the conventional fuel it replaces, so it can be used in existing engines, storage and distribution without modification. Renewable diesel is an example . Being drop-in is about compatibility rather than blend level: a drop-in fuel may be used on its own or blended with conventional fuel.

Using low carbon liquid fuels

Many Australian drivers already do. E10 is petrol containing up to 10% ethanol and it is sold at service stations across the country. Whether a particular vehicle is suited to E10 depends on the manufacturer’s guidance. Most modern petrol cars are compatible, while some older vehicles, particularly those built before 1986, and some high-performance vehicles are not . The New South Wales and Queensland governments publish vehicle compatibility checkers.

It depends on the fuel. A drop-in low carbon liquid fuel such as renewable diesel meets the same specification as the conventional fuel it replaces and needs no modification . Other low carbon liquid fuels are chemically different and can be used up to a set blend level, as with E10 petrol and biodiesel blends. A third group, including renewable methanol and renewable ammonia, requires purpose-built engines and refuelling or bunkering infrastructure.

Fuel recommendations are set by the vehicle or equipment manufacturer and they vary between models. Those recommendations are published in the owner’s manual, on the fuel filler flap and on the manufacturer’s website. This Hub is an information resource and does not provide advice on individual vehicles.

It depends on the fuel. Drop-in low carbon liquid fuels are chemically very similar to conventional fuels and do not perform significantly differently in an engine: renewable diesel, for example, is processed to meet the diesel specification and performs comparably to conventional diesel in existing engines . For more oxygenated fuels the answer is a little more complex. While E10 has slightly lower energy density than petrol, so using it can increase fuel consumption by around 3% , the added ethanol increases the Research Octane Number (RON), which can also improve engine performance. Every fuel must meet the relevant standard before it can be sold for a given use.

All fuels supplied in Australia must meet standards set under the Fuel Quality Standards Act 2000 . Aviation fuels are additionally certified against international specifications such as ASTM D7566, issued by the standards organisation ASTM International, before they can be used in commercial aircraft . Any fuel, low carbon or conventional, cannot be sold for a given use until it meets the relevant specification.

In small volumes. Ethanol has been produced from Queensland sugar-mill molasses since 1927 and is blended into petrol as E10; Manildra also produces ethanol from wheat starch in New South Wales. Biodiesel is produced at several Australian sites, and renewable diesel is available through some suppliers, though distribution is concentrated in major centres . Low carbon liquid fuels currently meet less than 1% of Australia’s transport energy . Several larger production facilities are at design or approval stage.

Making low carbon liquid fuels generally costs more than making the conventional fossil fuels they replace. The gap depends on the fuel, how it is made, feedstock prices, plant size and government policy. The Australian Government’s $1.1 billion Cleaner Fuels Program pays production-linked incentives over 10 years to encourage these fuels to be made in Australia and to strengthen fuel security. It supports producers and the growth of a local industry .

Gradually, and only in part. The shift is a transition rather than a switch: low carbon liquid fuels are expected to be supplied alongside conventional fossil fuels for years, often blended with them and moved through the same storage and distribution systems. Blend shares can rise as production grows, and existing refineries can co-process renewable feedstocks alongside conventional ones. This staged pathway is why the change is described as the energy transition.

E10 is sold at service stations across much of Australia. Renewable diesel is currently supplied mainly to fleet and industrial customers rather than through retail sites, and availability outside major centres is limited . Sustainable aviation fuel is supplied to airlines rather than sold at retail.

Yes. Low carbon liquid fuels supplied in Australia must comply with the relevant Australian fuel quality standards, regardless of whether they are produced domestically or imported. These standards help ensure fuels are safe, fit for purpose and compatible with vehicles and equipment.

The standards help protect vehicle performance, reduce harmful emissions, and provide confidence that fuels can be used safely in approved engines and fuel systems.

Biodiesel and bioethanol can be supplied in Australia, but they must comply with the relevant Australian fuel quality standards or obtain an approval to vary those standards. The Australian Government has specific fuel quality standards for biodiesel and ethanol-blended fuels to ensure they are safe, fit for purpose and compatible with vehicles and equipment.

Exemptions can be granted. Under section 13 of the Fuel Quality Standards Act 2000, a fuel supplier can apply for approval to vary a fuel standard where appropriate. These approvals are assessed by the Australian Government and may allow the supply of fuels that differ from the standard for a specified purpose or period.

The cost of low carbon liquid fuels can vary significantly because feedstock availability, production capacity and market demand differ across regions. Unlike conventional fuels, low carbon liquid fuel markets are still developing and are not yet fully mature or globally integrated.

Sustainable aviation fuel prices are influenced by both conventional jet fuel prices and renewable feedstock prices. As it is typically blended with conventional jet fuel before use, changes in fossil fuel prices can affect the overall cost. However, prices are also heavily influenced by the cost of renewable feedstocks, such as used cooking oil, tallow and agricultural residues. These feedstocks can be more volatile than crude oil due to factors such as agricultural conditions and competing demands.

Yes. Most modern petrol vehicles can safely use E10 fuel. However, vehicle owners should check the manufacturer’s recommendations, as some older vehicles and vehicles requiring premium fuel may not be compatible.

Feedstocks and production

The raw material a low carbon liquid fuel is made from. Common examples are canola oil, tallow, used cooking oil, sugarcane, molasses, wheat, straw and sugarcane bagasse. For e-fuels, the inputs are renewable electricity, water and captured carbon dioxide rather than a grown feedstock.

Four broad groups. Fats and oils, including canola oil, tallow rendered from animal by-products and used cooking oil. Sugars and starches, including sugarcane, molasses, wheat and sorghum. Crop and forest residues, including straw, sugarcane bagasse and sawmill residues. And organic wastes, including food waste and other household and commercial organic material .

Most feedstocks used today are residues, wastes and by-products rather than food itself: used cooking oil collected from food businesses, tallow from meat processing, straw and sugarcane bagasse left after harvest and milling. A single crop can also produce more than one output, so a wheat crop can supply grain for flour while the straw left in the paddock becomes fuel. Where a feedstock could compete with food, feed or fibre production, sustainability frameworks and certification schemes assess that competition as part of approving the fuel. This is sometimes described as the food versus fuel question, and the Hub covers it in more detail on the Food, Fuel and Fibre page.

Assessments of Australia’s biomass availability have been published by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and through the Australian Biomass for Bioenergy Assessment . How much is available depends on which feedstocks are counted, what they are currently used for, and the cost of collecting and transporting material that is often dispersed. Feedstock availability is one of the main factors affecting how quickly domestic production can grow.

Many are already traded or used for other purposes. The Clean Energy Finance Corporation and Deloitte estimate that Australia exports around $3.9 billion a year of commodities such as canola and tallow that could be used as low carbon liquid fuel feedstocks . Crop residues are variously left on the paddock to maintain soil, used as stockfeed, or burnt.

Wastes and residues avoid direct competition with food production, but they are limited in volume and widely dispersed, which affects the cost of collecting them. Most published assessments expect a mix of feedstock types rather than reliance on any single group.

Australian feedstocks are often exported because overseas producers may offer stronger demand, larger processing capacity and more established markets for low carbon liquid fuels than currently exist in Australia. As a result, feedstock suppliers may receive a better commercial return by selling into international markets.

Emissions and sustainability

Lower carbon means fewer greenhouse gas emissions across the full life cycle than the conventional fossil fuel being replaced. The size of the reduction varies by feedstock and production pathway. Transport for New South Wales cites a reduction of around 65% for renewable diesel, depending on feedstock and process . Because the range is wide, fuels are assessed individually rather than as a category .

Through life-cycle assessment, which counts emissions at every stage: producing or collecting the feedstock, converting it into fuel, distributing it and burning it. The result is expressed as a carbon intensity, meaning emissions per unit of energy the fuel delivers, which allows different fuels to be compared on a consistent basis .

Independent certification bodies check producers against a published framework. In Australia, the Clean Energy Regulator administers the Guarantee of Origin scheme, which issues certificates recording the emissions intensity of a product, based on verifiable information. Internationally, the International Sustainability and Carbon Certification (ISCC) and Roundtable on Sustainable Biomaterials (RSB) schemes perform a similar role, and the International Civil Aviation Organization sets sustainability criteria for aviation fuels through the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) .

Through a defined chain-of-custody model, so the fuel that is delivered can be matched to the claim made about it. The international standard ISO 22095 sets out the terminology and the models used, including mass balance and book-and-claim . A certified batch carries a record of its feedstock, origin, production volume and life-cycle emissions, and the auditor’s role is to confirm that the record and the physical fuel correspond.

These sit outside what the term “low carbon” describes and are handled separately through sustainability frameworks and certification. Clearing or converting land to grow fuel crops can reduce the climate benefit substantially, and in some cases cancel it out, which is why land use change is assessed alongside direct emissions. Water use, soil health and effects on ecosystems are assessed through the same schemes.

If land already used for food or feed production is switched to growing fuel feedstock, that food or feed production may move elsewhere, and land may be cleared somewhere else to make up for it. Estimating that effect requires modelling rather than direct measurement, which is why it remains one of the most contested areas of emissions accounting. Different frameworks treat it differently .

Combustion emissions other than carbon dioxide, such as particulates, sulphur compounds and nitrogen oxides, depend on both the fuel and the engine. Some low carbon liquid fuels contain very little sulphur, and ethanol contains oxygen which affects how it burns . These effects vary by fuel and application, and are measured separately from greenhouse gas accounting.

Role alongside other technologies

Electrification is replacing liquid fuels in a growing share of transport, including passenger cars and short-haul freight. Its reach is shaped by energy density: a battery stores less energy per kilogram than liquid fuel, so the energy carried adds weight, and that weight increases with distance and load. Aviation, shipping, heavy freight, rail and agricultural machinery need large amounts of energy in a compact form and need to refuel quickly, which is where liquid fuels remain in use .

Hydrogen is a gas that can be produced by using renewable electricity to split water, a process called electrolysis. It is used directly in some industrial and transport applications, and it is also a building block for e-fuels, where hydrogen is combined with captured carbon dioxide to make a liquid fuel. Hydrogen and low carbon liquid fuels are therefore related rather than alternatives, and the same renewable electricity can end up in either.

A battery stores electricity. It is charged from the grid, holds that energy chemically, and releases it to drive an electric motor. A hydrogen fuel cell does not store electricity: it generates electricity on board by reacting hydrogen from the vehicle’s tank with oxygen from the air, leaving water as the only by-product at the point of use. In short, a battery vehicle is recharged and a fuel cell vehicle is refuelled. Hydrogen can also be burned in an engine or turbine instead of being used in a fuel cell.

Aviation, maritime, heavy road freight, rail, construction, agriculture and natural resources. How they are used in each depends on the engines and equipment involved and the fuel infrastructure already in place.

Sustainable aviation fuel, or SAF, is aviation fuel made from feedstocks such as wastes, residues and oils, or from renewable electricity and captured carbon dioxide. Aircraft need a large amount of energy in a light package, which batteries are not currently able to provide for long-haul flight. It is used today as a blend with conventional jet fuel: most approved pathways under the ASTM D7566 specification cap the blend at 50%, and no 100% specification has been approved as at 2026 .

Fuels being developed for shipping include renewable methanol and renewable ammonia, which need dedicated engines, storage and bunkering infrastructure. Biodiesel blends and renewable diesel can also be used in some existing marine engines. Fuel choice for shipping is still developing, and different operators are trialling different options.

Hard-to-abate sectors are industries where reducing emissions is particularly difficult because they require high energy density fuels, high-temperature processes, or have limited commercially viable low-emissions alternatives.

They include aviation, where aircraft require energy-dense fuels for long-distance flights, making direct electrification challenging; maritime shipping, where long voyages and large fuel requirements make it difficult to replace conventional fuels with batteries alone; heavy road transport, where long-haul trucks can be difficult to electrify due to range and charging requirements; and heavy industry, where sectors such as steel, cement and chemicals often require high-temperature processes and can generate process emissions that are difficult to eliminate.

Australia, industry and policy

Yes, in small volumes. Ethanol has been produced from Queensland sugar-mill molasses since 1927 and biodiesel is produced at several sites. Low carbon liquid fuels currently meet well under 1% of Australia’s transport energy . Several larger facilities, including renewable diesel and sustainable aviation fuel projects, are at design or approval stage.

Around 80% of Australia’s liquid fuel arrives as imported refined product, and close to 90% once the imported crude oil and blending components processed at Australia’s remaining refineries are counted . Domestic refining capacity has reduced over time. Australia uses around 59 billion litres of transport petroleum products each year .

An Australian Government program supporting domestic low carbon liquid fuel production, with $1.1 billion committed . Details of eligibility and timing are published by the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts.

An Australian Government scheme administered by the Clean Energy Regulator that provides a transparent record of the emissions associated with producing certain commodities. It is being expanded to cover low carbon liquid fuels, which gives producers and buyers a common basis for emissions claims.

Feedstocks are grown and collected in regional areas, and production facilities are generally located near feedstock supply or existing fuel infrastructure. Expanding local processing could capture more value onshore and support regional employment and supply chain resilience . The scale of any benefit depends on how much production capacity is ultimately built.

The Projects page tracks Australian projects, pilots and demonstrations. The Library holds published reports, standards, datasets and case studies. Funding & Initiatives covers government programs and industry partnerships.

Yes. Some Australian airlines already use sustainable aviation fuel on international routes where overseas markets have established supply chains and policies that support its uptake. International measures, including mandates, incentives and emissions reduction policies, have helped create demand in regions such as Europe, the United Kingdom and the United States.

Importing low carbon liquid fuels can increase costs due to transportation, storage and distribution requirements. It can also add lifecycle emissions associated with shipping fuels long distances before they are used in Australia. All imported fuels must meet sustainability requirements.

The overall cost of imported fuels includes not only the fuel itself, but also international freight, handling, storage and supply chain costs. Import reliance can also expose Australia to global supply disruptions and price volatility.

A mature industry would likely resemble today’s petroleum industry, with established supply chains spanning feedstock production, fuel manufacturing, storage, distribution and end-use markets. Rather than relying heavily on imports, domestic producers would be able to convert Australian feedstocks into low carbon fuels at commercial scale and supply them across the economy.

In practice that would mean established domestic production facilities for sustainable aviation fuel, renewable diesel, biodiesel and other low carbon fuels; dedicated storage, transport and distribution infrastructure; reliable domestic and international demand; long-term investment certainty supported by stable policy settings; and integration with existing refineries and fuel supply chains.

Developing a domestic industry requires investment across the entire supply chain, from feedstock production through to fuel manufacturing, storage, distribution and end use. A mature industry needs both supply and demand to grow together, supported by long-term policy certainty and private investment.

Imported sustainable aviation fuel is often used because global production is currently concentrated in a small number of overseas markets that have established production facilities and supply chains. In contrast, Australia’s domestic low carbon liquid fuel industry is still developing and has limited production capacity.

As a result, imported fuel may be more readily available in the volumes needed to meet emissions reduction requirements in the short term. However, relying on imports can increase transportation costs and exposure to international supply chain risks. Expanding domestic production could help retain more value within Australia, create demand for Australian feedstocks, strengthen fuel security and reduce reliance on overseas suppliers over the longer term.

Low carbon liquid fuels are a developing industry in Australia, and no engagement framework has been written specifically for this sector. Existing legal obligations and established principles for First Nations engagement still apply. The Hub’s First Nations engagement and partnerships page brings this information together.

Key terms

B

Bagasse: The fibrous material left after sugarcane is crushed to extract juice. It is currently used to produce renewable electricity as a source of baseload power for the mill and electricity network, but can also be converted into low carbon fuels.

Biodiesel: A diesel-like fuel made from oils and fats through a process of transesterification into Fatty Acid Methyl Esters (FAME). It is chemically different from petroleum diesel and is used in blends up to a set limit.

Biofuel: A fuel made from biological materials such as crops, animal fats, wastes or residues. Biofuels make up most, but not all, of the low carbon liquid fuel category.

Blend limit: The maximum proportion of a low carbon fuel that may be mixed with a conventional fuel. Blends are named for the low carbon share, so E10 is petrol containing up to 10% ethanol.

C

Carbon intensity: The greenhouse gas emissions associated with a fuel, expressed per unit of energy it delivers. It allows different fuels to be compared on a consistent basis.

Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA): A scheme run by the International Civil Aviation Organization. It sets sustainability criteria and life-cycle emissions methods for eligible aviation fuels.

Certification: Independent assessment confirming that a fuel meets a published set of rules. The resulting certificate turns a claim into evidence that regulators and buyers can rely on.

Chain of custody: The method used to track a batch of fuel through the supply chain so that the fuel delivered can be matched to the claim made about it.

Co-processing: Running renewable feedstocks through an existing refinery alongside crude oil, producing fuel that contains a renewable share without building a dedicated plant.

D

Drop-in fuel: A fuel that meets the same specification as the fuel it replaces, so it can be used in existing engines, storage and distribution without modification.

E

E-fuel: A liquid fuel made from renewable electricity and captured carbon dioxide rather than from plant or waste material. Also called an electrofuel or power-to-liquid fuel.

E10: Petrol containing up to 10% ethanol, sold at service stations across much of Australia.

Electrolysis: Using electricity to split water into hydrogen and oxygen. When the electricity is renewable, the hydrogen produced can be used as a low emissions fuel or as an input to e-fuels.

Ethanol: An alcohol fuel produced by fermenting sugars or starches such as sugarcane, molasses, wheat or sorghum. In Australia it is mainly blended into petrol.

F

Feedstock: The raw material a fuel is made from, such as canola oil, sugarcane, straw, tallow or used cooking oil.

Fuel cell: A device that generates electricity by reacting hydrogen with oxygen from the air, producing water as the only by-product at the point of use. Unlike a battery, which stores electricity, a fuel cell generates it while the vehicle runs.

G

Guarantee of Origin: An Australian Government scheme, administered by the Clean Energy Regulator, that records the emissions associated with producing certain commodities, including low carbon liquid fuels.

H

Hard to abate: Sectors where emissions are difficult to reduce with current technology, usually because electrification is impractical. Aviation, shipping and heavy freight are common examples.

Hydrogen: A gaseous energy carrier. It can be produced by using renewable electricity to split water, and used in a fuel cell, burned in an engine, or combined with captured carbon dioxide to make e-fuels. Hydrogen is a gas rather than a liquid fuel, so it is a separate option alongside low carbon liquid fuels.

Hydroprocessed Esters and Fatty Acids (HEFA): The most widely used production pathway today for renewable diesel and sustainable aviation fuel, using oils and fats as feedstock.

I

Indirect land use change: The displacement of food or feed production when land is switched to growing fuel feedstock, which may cause land to be cleared elsewhere. It is estimated through modelling and is a contested area of emissions accounting.

L

Life-cycle emissions: The greenhouse gas emissions produced across every stage of a fuel’s existence: growing or collecting the feedstock, converting it into fuel, distributing it, and burning it.

M

Mass balance: A chain-of-custody model in which certified and uncertified material may be physically mixed, provided the certified volume entering the system matches the volume claimed leaving it.

R

Renewable diesel: A diesel-equivalent fuel made from oils and fats and processed to meet the diesel specification, so it can be used in existing diesel engines and infrastructure. Also called hydrotreated vegetable oil (HVO).

S

Sustainable aviation fuel (SAF): Aviation fuel made from feedstocks such as wastes, residues and oils, or from renewable electricity and captured carbon dioxide. It is currently used as a blend with conventional jet fuel.

T

Tallow: Rendered animal fat, a by-product of meat processing, used as a feedstock for renewable diesel and sustainable aviation fuel.

Technology readiness level (TRL): A nine-point scale for how developed a technology is, from laboratory research and concept testing (TRL 1–3), through pilot-scale demonstration (TRL 4–6), to technologies proven in full-scale commercial operation (TRL 7–9).

U

Used cooking oil (UCO): Cooking oil collected from food businesses after use, and a major feedstock for renewable diesel and sustainable aviation fuel.

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