Submission: Cleaner Fuels Program (Future Made in Australia)

In September 2025, the Australian Government announced a 10-year, AUD $1.1 billion Cleaner Fuels Program as part of its Future Made in Australia agenda.

The program aims to stimulate domestic production of low-carbon liquid fuels (LCLF) in order to:

• support hard-to-abate sectors, including heavy transport, freight and aviation

• strengthen Australia’s fuel security

• create skilled, future-focused jobs

In November 2025, the Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts (DITRDCSA) consulted on the design of the program.

The proposed program would provide production-linked incentives over 10 years, targeting support toward LCLF projects that are:

• advanced in development

• progressing toward a final investment decision

• targeting production in the near term

The Australian Sustainable Finance Institute (ASFI) has provided feedback on the proposed design principles and framework of the Cleaner Fuels Program, setting out three key positions.

1. Eligibility and support levels should be calibrated using three core considerations

In determining eligibility for, and the level of, support under the Cleaner Fuels Program, the Government should take into account:

• Alignment with the Australian Sustainable Finance Taxonomy criteria for low-carbon liquid fuel manufacturing (a necessary but not sufficient condition for eligibility).

• The strength of economic use cases for the fuel.

• The cost-competitiveness of the fuel on a marginal abatement basis, both now and over the longer term, taking into account long term sustainability of feedstocks.

2. Additional support may be required for emerging LCLF pathways

Targeted measures may be needed to support less-mature LCLF approaches that show strong long-term potential for cost-competitive abatement, but which are not yet commercially viable at scale.

3. Broader policy reform is required to unlock LCLF production at lowest cost to taxpayers

To maximise value for public investment, the Government should pursue complementary policy interventions. In particular:

• the 2026–27 Safeguard Mechanism Review should consider reforms to more effectively price carbon across the economy, and

• options to phase out the Fuel Tax Credit should be considered as a priority.

To read ASFI’s full submission, including responses to the consultation questions, download the submission below.