Submission to the consultation into Securing Australia’s Cleaner Fuels Industry: Demand Mechanism consultation paper

ATSE recommends the development of a Future Fuels Strategy and the review of the Fuel Tax Credit Scheme and the Safeguard Mechanism to better support a phase out of diesel incentives and promote low carbon fuels. ATSE also calls for the re-introduction of Australian Carbon Credit Units for activities that reduce transport emissions, and for investment in R&D at both early and pilot stages.

To support building a demand mechanism for LCLF, ATSE makes the following recommendations:

Recommendation 1: Create a dedicated Future Fuels Strategy aligned with Australia’s net zero goals.

Recommendation 2: Review the Fuel Tax Credit Scheme and use the 2026-27 Safeguard Mechanism Review to phase out diesel incentives and promote low carbon liquid fuels.

Recommendation 3: Reintroduce ACCUs for activities that lower land, sea and air transport emissions.

Recommendation 4: Develop mandates for LCLF beyond just aviation, as proposed in the discussion paper, to shipping in line with international best practice.

Recommendation 5: Invest in early-stage research and development for LCLF technologies to develop the next generation of LCLF.

Recommendation 6: Use public co-investment to help de-risk and accelerate first-of-a-kind LCLF projects and create stronger market confidence.