Strengthening Australia’s Fuel Security and Resilience: Consultation Paper (2026)
The Australian Government released this paper to receive feedback about their proposed design measures to strengthen Australia’s fuel security and resilience. The paper includes:
- the Australian Fuel Security Reserve (AFSR)
- increasing the Minimum Stockholding Obligation (MSO)
- policy to support our two domestic refineries.
This consultation paper seeks feedback on design, implementation, costs, and the impacts on the industry.
Why is Liquid Fuel Security Still Required?
Liquid fuels are a critical part of Australia’s economy, community wellbeing, and national security. Liquid fuels account for over half of Australia’s final energy consumption, being about 2.5 times more than electricity use. The recent conflict in the Middle East highlights the heavy reliance Australia has in imported fuels which affect local fuel availability and prices. Australia has only two major refineries in operation which face constant competitive pressure by more efficient ones in the Asia-Pacific region.
Design 1 – Australian Fuel Security Reserve (AFSR)
The AFSR will be an Australian Government-controlled and owned strategic reserve of approximately 1 billion litres. The AFSR will be designed to be deployed when there are severe fuel supply disruptions. The AFSR is targeted to be full and ready by 2030. The proposed reserve composition is as follows: 80% diesel (~920 ML), and 20% jet fuel (~240 ML) with the possibility of including crude oil. This will be approximately 10 days consumption for each fuel. For the locations, they are proposing four storage locations in the NW, NE, Sen and SW. Each location will have a minimum of 15% reserve with the remaining 40% being held for flexibility. There is a proposed two-tier emergency release framework; general emergency – to prevent or alleviate actual or anticipated disruptions on a national level, targeted emergency – to address acute localised shortage or regional disruptions.
Design 2 – Minimum Stockholding Obligation (MSO) Increase
In place since 2023, the MSO requires refiners and importers to hold stock for fuel in cases of fuel disruption which covers petrol, diesel, and jet fuel to provide the first layer of fuel security resilience. The Government is proposing to increase the current obligation by 10 additional days by 2030. There are three different approaches they have proposed to increase storage each year with the fastest uplift being their preferred option; option 1 – later uplift, option 2 – gradual uplift, option 3 – early uplift.
Design 3 – Refinery Retention Support
The Government seeks to work with industry to retain refining capability beyond 2030. The Government currently supports the operation through the Fuel Security Services Payment (FSSP) which provides production payments to refineries during loss-making periods. The proposed support options to help the refineries are to extend the existing FSSP – continuing after 2030, and a new FSSP model – greater risk sharing, margin certainty, and higher payment caps.
TfA’s Position
The Government is seeking stakeholder feedback on targets, fuel coverage, obligated entities, compliance arrangements, certification requirements and support for domestic production. Subject to consultation outcomes, legislative development would occur during 2027, with the compliance framework commencing in 2029. The first formal policy review is proposed by 2032.
TfA’s Position
TfA Project Group welcomes the Australian Government’s focus on strengthening fuel security and recognises the importance of increasing strategic fuel reserves and storage infrastructure across Australia. However, the consultation highlights that additional storage alone will not deliver true long-term fuel resilience. While increased reserves can provide protection against short-term supply disruptions, they will not shield Australia from prolonged international supply shortages or global fuel price shocks. Australia’s ongoing dependence on imported fuels remains a significant sovereign risk that requires a broader and more diversified response.
TfA supports expanding strategic reserves for diesel and jet fuel but also recommends the inclusion of petrol. Despite the continued growth of electric vehicles, petrol is expected to remain a critical transport fuel for decades, and excluding it from future fuel security planning would leave a significant vulnerability within Australia’s liquid fuel supply chain.
The submission also emphasises that developing the proposed storage infrastructure will be a medium to long-term undertaking. New fuel terminals and storage tanks require extensive planning approvals, engineering, procurement and construction activities, with industry capacity constraints likely to mean that achieving the proposed uplift in storage could take between five and ten years.
A key theme of TfA’s response is that fuel security is ultimately strengthened through increased use of domestic feedstocks rather than simply larger stockpiles of imported fuels. The submission identifies ethanol, biodiesel and other low-carbon liquid fuels as cost-competitive opportunities that can improve resilience, support regional industries and reduce exposure to international supply disruptions. Existing biofuel production assets, together with investment in new facilities, present an opportunity to rapidly increase Australia’s effective fuel security while delivering broader economic benefits.
TfA further recommends that future government support for Australian refineries be linked to the integration of renewable fuel technologies, including co-processing and HEFA production pathways. Increasing the use of locally sourced feedstocks would enhance fuel security, support refinery employment and position existing infrastructure to contribute to Australia’s future energy resilience objectives.
For queries in relation to these consultation papers, please contact the TfA Project Group team.
Telephone – 1300 794 300
Email – enquiry@tfa.com.au
Website – www.tfa.com.au