Qantas calls on Canberra to back sustainable aviation fuel industry

Published Mon 22 Jan 2024

Australian Financial Review

Qantas has called on the federal government to consider mandates and subsidies for producers of sustainable aviation fuel to get a domestic industry off the ground, saying it could generate $13 billion a year by 2040 and provide a boost for cane farmers.

Sustainable aviation fuel, which comes from non-fossil sources, is a direct alternative to jet kerosene. 

It can be made from biogenic sources such as used cooking oils, council waste, plant oils and agricultural residues, including byproducts from sugar cane.

Andrew Parker, chief sustainability officer at Qantas, said zero emissions technology for commercial aviation, such as electric aircraft or green hydrogen, was still decades away, so sustainable aviation fuel remained the key tool for decarbonising.

He said it worked in existing engine turbines and could reduce lifecycle carbon emissions by up to 80 per cent.

Qantas has urged the federal government to provide capital support to kick-start new production facilities, implement a production incentive linked to carbon reduction from fuel to allow domestic producers to compete with overseas companies, and provide tax incentives and credits to sustainable aviation fuel producers.

A report produced by ICF consulting and commissioned by Qantas found that $4 billion of investment for these policies could provide a $12.3 billion return within 16 years.

“Australia is certainly behind … compared to the United States, Europe, particularly Scandinavia, Japan, Canada and even Turkey … policies are developing thick and fast right now. So it will be a fight for capital,” Mr Parker told The Australian Financial Review.

The airline is calling for sustainable aviation fuel mandates in domestic jet fuel supply of 5 per cent by 2030 and 28 per cent by 2040.

In May, Tokyo flagged plans to make it mandatory that 10 per cent of aviation fuel for international flights using Japanese airports was sustainable, Nikkei reported, and the regulation holding oil wholesalers accountable was to take effect in 2030.

Mr Parker said Qantas had started using sustainable aviation fuel for its international flights out of London this year and planned to use it on flights out of California from next year. 

It is yet to use this for international departures from Australia.

Australian Cane Farms chief executive Steve Kirby said Queensland sugar cane farmers could play a leading role in Australia’s sustainable aviation fuel industry. 

He said this would provide a diversified income stream and a more secure future for cane farmers.

Australian sugar was priced at $775.93 per metric tonne on Monday, according to Queensland Sugar Limited, up from $563 at the same time last year.

But Alan Barnard, a second-generation cane farmer from Gordonvale, in Queensland’s north, said he had faced low sugar yields and poor financial returns. 

He welcomed Qantas’ pitch for subsidies for sustainable aviation fuel producers.

“While current prices might be favourable, it’s imperative that we explore alternative business models for our industry,” Mr Barnard said.

“Biofuel projects hold promise of boosting revenue for the entire sector, opening new revenue streams for our crops.

“Supportive demand and supply-side policies from government will be key in encouraging the growth of a domestic sustainable aviation fuel industry, and help realise these broader economic benefits – including for the Australian agricultural sector.”

The aviation industry accounts for slightly more than 2 per cent of global CO2 emissions.