NSW offers funding to progress large-scale low-carbon fuel proposals
NSW businesses developing large-scale low-carbon liquid fuel production and refining facilities can apply for grants of up to $2 million to undertake feasibility studies and other work needed to prepare their projects for investment decisions.
The NSW Government has opened a $5 million funding round aimed at helping proposed low-carbon liquid fuel facilities progress from development planning towards investment readiness.
The Low Carbon Liquid Fuels Project Development Grant opened on 6 October 2026 as part of the NSW Renewable Fuel Strategy. It offers grants of between $500,000 and $2 million to co-fund studies examining the technical, commercial, financial and environmental viability of proposed production and refining facilities.
The funding is intended to reduce the cost and risk of preparing investment-grade studies, allowing proponents to develop more detailed project proposals before seeking finance for construction.
Supporting fuel production in NSW
The program covers proposed facilities producing or refining low-carbon liquid fuels, including sustainable aviation fuel, renewable diesel, biodiesel and intermediate products used to manufacture these fuels.
According to the NSW Government, the funding is intended to help develop a pipeline of investment-ready projects while improving the quality and consistency of cost estimates across proposed facilities.
The government also wants NSW projects to be better prepared to compete for Commonwealth funding, including the Australian Renewable Energy Agency's Future Made in Australia Innovation Fund, which has a low-carbon liquid fuels priority.
The program forms part of the NSW Renewable Fuel Strategy, which seeks to develop domestic production capability and reduce the state's exposure to imported liquid fuels.
Funding for project development studies
Eligible activities include pre-feasibility studies, feasibility studies and front-end engineering design, commonly known as FEED.
The studies can examine site selection, feedstock availability, production processes and technology options, as well as capital and operating costs.
Funding can also support lifecycle emissions assessments, market analysis, potential customers and offtake arrangements, and financial feasibility work.
Eligible expenditure includes independent consultants undertaking the studies, specialist engineering and financial advice, and personnel directly involved in managing the work.
Activities that contribute to knowledge sharing with the NSW Department of Climate Change, Energy, the Environment and Water may also be funded, including reports, databases and applications produced as part of the study.
The grants do not fund construction, land acquisition, pilot plants or demonstration projects. Expenditure directly related to obtaining NSW planning approvals is also excluded.
Eligibility restricted to established proposals
The funding round is targeted at NSW businesses that submitted projects to the NSW Investment Delivery Authority's Fuel Security market sounding or expression of interest process in May 2026.
Eligible applicants must be incorporated Australian entities with an Australian Business Number and must own, or intend to own, the proposed production or refining facility, or have, or intend to have, operational control of it by the full application stage.
Projects must have an estimated capital cost of at least $100 million and use technology that has been tested at commercial scale in Australia or overseas.
Applicants must also demonstrate a credible pathway to a final investment decision within a defined timeframe after completing the funded study.
The NSW Government will contribute between $500,000 and $2 million towards eligible study costs, with applicants required to provide at least 50 per cent of those costs themselves or through eligible project partners.
Higher private financial contributions will be viewed favourably during assessment.
Applications close in November
Applications opened on 6 October and close at 5 pm on Friday 6 November 2026.
The NSW Department of Climate Change, Energy, the Environment and Water expects to announce outcomes from December 2026 and aims to execute funding agreements with successful applicants by 30 January 2027.
Funded studies must be completed within 18 months of the funding agreement being executed. Projects are expected to begin by 1 February 2027 and must be completed by 31 August 2028.
Applications will be assessed against the program's eligibility and merit criteria, with funding decisions made by the department.
