Carbon Markets Driving Fuel Transition

This year could be a turning point for Australia’s biofuels industry, with the country’s reformed safeguard mechanism beginning to trigger demand incentives and the federal government announcing a long-awaited support package in September.

The year started with a significant change in Australia’s compliance carbon market. The July 2023-June 2024 financial year marked the first year since the country’s safeguard mechanism was reformed, triggering a nearly seven-fold increase in carbon unit surrenders. A total 138 facilities out
of 219 covered under the scheme surrendered 7.05mn Australian Carbon Credit Units (ACCUs) and 1.38mn Safeguard Mechanism Credits (SMCs) — or the equivalent of around 8.4mn t of CO2 equivalent (CO2e) — to manage their excess emissions for the 2023-24 financial year, up sharply
from 1.22mn units a year earlier.

Under the reformed mechanism, individual facilities that emit more than 100,000 t/yr CO2e of Scope 1 emissions — direct emissions from their own operations — face declining baselines and need to surrender ACCUs or SMCs if their on-site abatement activities are not enough to keep emissions below thresholds.

The reform has sparked investment in activities to reduce direct emissions across the covered sectors — oil and gas, mining, manufacturing, transport and waste — including cutting higher-emitting fuel use and moving towards lowcarbon alternatives. For example, Australian building materials firm Boral has upgraded the carbon-reduction technology at its Berrima cement plant in New South Wales and plans to use more by-products from steel manufacturing and industrial waste rejections and reduce limestone use.

But most emissions reductions were brought about through lower-cost abatement activities, with the safeguard mechanism not yet incentivising more expensive abatement.

In particular, use of low-carbon liquid fuels (LCLF) is not incentivised at current ACCU prices and safeguard mechanism settings. This could change if the mechanism’s settings are tightened following a scheduled review in 2026-27, coupled with Australia’s recently announced A$1.1bn ($720mn) Cleaner Fuels Program.

Download “The role of ACCUs and renewable fuels in Australia’s decarbonisation” insight paper here » GO.

Learn More:

• Tire Pyrolysis & Low-Carbon Fuel Production
• Pyrolysis Oil as Refinery Feedstock
• Waste-to-Energy & Circular Fuel Projects
• Plastic & Waste Conversion Technologies
• Decarbonization & Circular Economy Insights

Turn Carbon Policy into Revenue with Klean Industries

Australia’s decarbonisation strategy is rapidly evolving—driven by carbon pricing mechanisms like ACCUs and the accelerating demand for renewable fuels. But most industrial players remain exposed to rising compliance costs and uncertain fuel pathways.

Klean Industries helps organizations move beyond compliance—into profitable decarbonisation strategies:

• Convert waste streams into low-carbon fuels and refinery-grade feedstocks
• Generate eligible carbon reduction pathways aligned with ACCU frameworks
• Deploy scalable tire pyrolysis and waste-to-fuel technologies
• Integrate with downstream fuel markets (marine fuels, SAF, industrial energy)
• Structure projects to capture both carbon credits and commodity value

As carbon markets tighten and renewable fuel demand accelerates, the winners will be those who control both emissions reduction and energy production.

Contact Klean Industries to build your decarbonisation strategy today » GO.