The Federal Government has opened consultation on a $14.8 billion Fuel Security and Resilience Package aimed at strengthening Australia’s fuel reserves, supporting domestic refining and developing a low-carbon liquid fuels industry.
Announced in the 2026–27 Federal Budget, the package is designed to reduce Australia’s exposure to international supply disruptions and fuel market volatility, with implications for freight, transport and other industries that rely heavily on liquid fuels.
The government has released two consultation papers seeking feedback on the design and implementation of the package.
Expanding strategic fuel reserves
The first consultation paper focuses on establishing an Australian Fuel Security Reserve, expanding mandatory fuel stockholding requirements and supporting the continued operation of Australia’s two remaining domestic refineries beyond 2030.
Under the package, the government plans to invest $3.2 billion in a government-owned strategic reserve containing one billion litres of diesel and jet fuel.
The reserve would provide an additional source of fuel during international supply disruptions or periods of significant market pressure.
Mandatory industry stockholding requirements for diesel, petrol and jet fuel would also increase by an additional 10 days by 2030. The expanded requirements would be supported by government co-investment in fuel storage infrastructure.
“We’re strengthening Australia’s resilience by building larger fuel reserves, increasing stockholdings and backing domestic industry to produce more of the fuels we need here at home,” said Minister for Climate Change and Energy Chris Bowen.
For the freight and logistics sector, greater domestic fuel reserves could provide an additional buffer against disruptions to international fuel supply, helping to maintain the movement of goods during periods of market or geopolitical instability.
Industry welcomed package when it was first announced
The Australian Industry Group (Ai Group) welcomed the government’s fuel security package when it was first announced in May, describing expanded onshore fuel stocks and a government-controlled emergency reserve as important steps towards strengthening Australia’s long-term fuel resilience.
Ai Group Chief Executive Innes Willox said at the time that the measures put important fundamentals in place but warned that broader responses would still be needed to address the country’s fuel security challenges.
The comments were made when the government announced the package in May, ahead of the current consultation process on its design and implementation.
Building a low-carbon fuels industry
The second consultation paper examines options for developing Australia’s low-carbon liquid fuels industry and reducing reliance on imported fuel products.
The government is seeking feedback on a potential demand mechanism, including its ambition, implementation and possible effects on businesses and consumers.
Domestically produced low-carbon fuels could help reduce emissions in sectors where electrification remains challenging, including aviation, heavy transport, mining and agriculture.
The government also sees an opportunity to develop new domestic markets for Australian agricultural and other feedstocks used to produce low-carbon fuels.
Minister for Infrastructure, Transport, Regional Development and Local Government Catherine King said Australia currently exports up to $6 billion worth of feedstocks each year, including canola and tallow, to international markets.
“By building a low-carbon liquid fuels industry right here, we will create more jobs, build regional economies, strengthen our fuel security and future-proof our transport industries,” King said.
Implications for transport and supply chains
The proposed measures come as businesses across Australia’s transport and logistics sectors continue to navigate fuel costs, international supply risks and the transition towards lower-emission operations.
For freight operators, the development of domestic fuel reserves and alternative liquid fuels could provide greater supply certainty while supporting the sector’s longer-term decarbonisation efforts.
The government says the consultation will help shape how the measures are implemented, with feedback intended to inform policies that balance fuel security, emissions reduction, industry competitiveness and impacts on consumers.
Read more: Fuel costs and weaker retail demand put pressure on Australian supply chains
Yvette is a Content Producer at Akolade, producing stories for Supply Chain Channel, an Australian learning ecosystem created to address the need for information, networking, case studies, and empowerment for everyone in the supply chain sector.
