Australia promises $735 million to develop biofuel industry

CANBERRA, Sept 17 (Reuters) - The Australian government said on Wednesday it would invest A$1.1 billion ($735 million) in the development of a low-carbon fuels industry, a move welcomed by farm groups, who hope it will boost demand for biofuel feedstocks like canola and sugarcane.

The money to be released over 10 years and is intended to stimulate private investment in products like biodiesel and sustainable aviation fuel, the government said in a statement.

Australia is a major producer of crops such as canola, sugarcane and sorghum, that can be used to make fuel.

It currently exports the vast majority of those crops and imports most of its gasoline. Australian canola is a major feedstock for Europe's biodiesel industry.

"Thanks to our advanced farming practices and access to cheap and reliable renewable energy, Australia is in an enviable position to produce cleaner, low-carbon liquid fuels that jets, ships, construction machines and heavy trucks need to reach net zero," the statement said.

"This is a down payment on developing an entirely new industry in Australia," said Finance Minister Jim Chalmers.

"It's about making Australians and our economy big beneficiaries of the global net zero transformation."

Australian farm groups have been lobbying for investment in biofuels for years, saying that without government help, an industry won't get off the ground.

"This isn't just about cleaner fuels. It's about creating jobs, diversifying farm businesses, and ensuring our regions remain at the forefront of Australia's transition to net zero," said Su McCluskey, interim CEO of the National Farmers' Federation.

($1 = 1.4952 Australian dollars)