Coal-to-liquids technology is in the spotlight as a potential solution in a new report highlighting Australia’s vulnerability unless it can reliably produce a domestic supply of liquid fuel.

Nationals-affiliated think tank the Page Research Centre’s new report, All at Sea: Fuel, War, and Australia’s Achilles’ Heel, also advocates measures including incentivising domestic oil drilling and expanding domestic refining capacity to meet Australia’s diesel-heavy fuel needs.

When it came to pursuing synthetic fuels as a means of achieving self-reliance, the report flagged coal-to-liquids as the standout choice when comparing cost, availability of existing technology, and scalability to meet demand.

While gas-to-liquids and biofuel options were worth pursuing in their own right, the sheer scale of Australia’s half-million barrel daily demand for diesel made it unlikely that these technologies alone would meet a large enough share of the nation’s needs, it found.  

Page Research Centre executive director Gerard Holland said coal-to-liquids technology was already being used at scale overseas.

“South Africa has done so for decades and China now uses enormous volumes of coal to produce diesel and other petro-liquids domestically,” Mr Holland said.

“Private capital has also attempted coal-to-liquid projects in Australia, but has run into excessive green or red tape.

“As hard as it is for Australians right now, this is nowhere near our worst-case scenario. We have to be prepared for a war much closer to home, in our own region.

“There is nothing more vulnerable than a ship in war – but lucky for us our land abounds in nature’s gifts and we have all the resources we need for genuine fuel security here at home.

“We can create our own energy abundance with domestic production of liquid fuels – and the necessary steps to achieve it have little economic cost.”

Recommendations from the report include to:

• Prioritise, incentivise, and deregulate domestic exploration and drilling for crude oil, gas, and unconventional petroleum in Australia, in order to restore domestic production as the central objective of fuel security policy;
• Approve and, if necessary, back coal-to-liquids pilot plants, so that Australia can test and scale one of the few domestic pathways capable of supplying a substantial share of national fuel and chemical demand;
• Expand in-country fuel reserves as a bridge, not a substitute, with priority given to distributed storage close to major end-users such as farmers, miners, freight operators, and remote industry;
• Recapitalise and expand domestic refining capacity to meet Australia’s diesel-heavy fuel needs, including hydrocracking capability able to process a wider range of imported and synthetic feedstocks;
• Support complementary fuel streams where they make strategic sense, including Gas-to-Liquid, biofuels and other alternative liquid fuel pathways, while recognising that feedstock constraints are likely to limit them to a supplementary role;
• Establish a dedicated fuel security budget, funded from a portion of fuel excise, a new dedicated excise, or the defence budget, to support stockholding, enabling infrastructure, pilot projects, and other strategic interventions.