Australia backs co-processed biofuels at refineries with new carbon rules

Australia's government has changed national emissions reporting rules to recognize low-carbon liquid fuels made by blending renewable feedstocks with fossil fuels at existing refineries. This move, Viva Energy and Cleanaway said, would help build domestic supply chains and keep valuable waste materials in the country.

Under the reform to the National Greenhouse and Energy Reporting scheme, customers may report certified renewable content in eligible co-processed fuels as having zero Scope 1 CO2 emissions, while the fossil portion continues to be subject to the applicable fossil emission factor, the companies said July 30. The change also allows International Sustainability and Carbon Certification ISCC PLUS certificates to track biogenic content through supply chains for two years while the government develops its Guarantee of Origin framework.

The reform is expected to increase demand for co-processed diesel, LPG and kerosene made at Australian refineries using waste-derived and renewable feedstocks in existing infrastructure, potentially reducing the country's reliance on fuel imports and creating commercial incentives to process domestic feedstocks locally rather than export them.

Policy unlocks investment

"This is a big step forward for Australia's low-carbon fuels industry," Viva Energy CEO Scott Wyatt said. "For the first time, customers will have a regulatory pathway to recognize the emissions benefits of eligible co-processed diesel, LPG and kerosene in their NGERs reporting."

The change gives customers greater incentive to use these fuels and provides refiners with certainty to invest in refinery and feedstock supply chains, Wyatt said. Co-processing can help build Australia's low-carbon liquid fuels industry faster than waiting for dedicated plants to be developed, he said.

Viva Energy is also leading Australia's first end-to-end sustainable aviation fuel storage and blending facility connected to an airport fuel system, which has begun operations at Brisbane Airport.

Viva Energy is progressing plans to produce co-processed diesel at its Geelong refinery using eligible waste-derived and renewable feedstocks. The company has begun sourcing used cooking oil from Cleanaway to be processed into co-processed renewable fuels at Geelong, marking the first time Australian businesses can use this type of renewable fuel to lower Scope 1 emissions, the companies said.

"Australia already has valuable sustainable feedstocks such as used cooking oil and vegetable oils," Wyatt said. "Too often, those materials are exported overseas to be turned into renewable fuels for other countries. This reform helps create the commercial landscape to keep more of that value here in Australia."

Circularity loop

Closing the circularity loop, the reform connects waste collection, local manufacturing and lower-carbon fuel use, Cleanaway CEO Mark Schubert said. By putting a value on the carbon abatement associated with co-processed fuels, the government has created a stronger reason to keep materials such as used cooking oil in Australia, where they can be collected, processed and turned into fuels that help local businesses reduce emissions, he said.

The reform is expected to support production of co-processed renewable diesel and LPG using existing refinery assets. Co-processed renewable diesel can help decarbonize domestic hard-to-abate industries such as heavy-vehicle transport. In contrast, co-processed LPG can be used in high-temperature applications such as firing kilns and other industrial processes, the companies said.

Viva Energy and Cleanaway said they will continue working with the government, customers and industry partners to support development of a domestic low-carbon liquid fuels market and progress opportunities to supply co-processed renewable diesel and LPG.

Platts, part of S&P Global Energy, assessed sustainable aviation fuel HEFA-SPK FOB Straits at $2,545/metric ton July 30, up $5/mt from July 29.

Platts assessed used cooking oil FOB North China at $1,164/mt July 30, down $5/mt day over day.