Formula 1 to showcase synthetic fuels as Australia eyes billion-dollar opportunity

You won’t be able to call its afficionados petrolheads for much longer, because next year, Formula 1 will switch to 100% sustainable fuels.

The aim is to throw the spotlight on the real-world potential of low-carbon liquid fuels – such as synthetic and biofuel blends – to power high-performance engines.

Circular economy solution

Synthetic fuels, unlike biofuels made from organic waste, are produced using renewable electricity to extract hydrogen from water and carbon from the air or waste sources.

This means they can be produced and used without competing with food supply chains – a key advantage as scalability increases.

Unlike fossil fuels, these alternatives recycle carbon dioxide and significantly reduce emissions, without compromising performance.

The switch is part of a broader global pivot toward sustainable transport solutions, which is happening despite a fossil fuel backlash with the election of Donald Trump in the US.

Qantas has already imported 1.7 million litres of biofuel for blending with jet fuel, and Australia’s feedstock exports are growing. Yet domestic production of synthetic fuel remains limited, despite rising international demand.

But now companies such as Highly Innovative Fuels (HIF) and Zero Petroleum are planning local manufacturing plants.

HIF’s proposed A$2 billion facility in Tasmania could produce 100 million litres annually by 2030, while Zero Petroleum is assessing a site in South Australia to make aviation and road fuels.

Although they’re compatible with existing vehicles and infrastructure, synthetic fuels remain costly – though proponents say prices will ease as renewable energy becomes cheaper and carbon capture technologies improve.

 Blending synthetic fuel with fossil fuels may also ease the transition.

Australia needs to step up

Despite this potential, Australia currently lacks supportive regulation. Unlike Asia and Europe, where fuel blending mandates are emerging, Australia’s policy remains in development.

Industry stakeholders warn that without such frameworks, domestic production may be diverted offshore.

The Clean Energy Finance Corporation estimates Australia’s low-carbon fuel market could reach A$36 billion annually by 2050.

But with just two operating refineries and growing geopolitical risks to imports, establishing local production is increasingly seen as a strategic imperative to secure the nation’s energy future.