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ABC News
16 hours ago
- Business
- ABC News
Plan to manufacture aviation fuel from Australian canola well underway
Australian farmers could soon be fuelling jets with a low-carbon liquid fuel made from canola. Aviation accounts for about 2.5 per cent of global carbon dioxide emissions and is difficult to decarbonise. A push to replace fossil fuel with sustainable aviation fuels (SAF) is raising the prospect of a new market for the Australian-grown oilseed. Canola, known for its pretty yellow flowers, is harvested in grain-growing regions around the country, with the majority exported to Europe for biofuel production. Australian-owned fuel company Ampol, publicly-listed GrainCorp, and industry super fund IFM Investors are working on a plan to refine canola oil in Australia for use in the aviation industry. Subject to a feasibility study, GrainCorp expects to establish a canola crush with capacity to process 1 million tonnes a year, almost twice the capacity of its existing crush at Numurkah in northern Victoria. It hasn't identified a site for the prospective crush yet, but Western Australia or New South Wales are the more likely options. Canola meal would be extracted for use as livestock feed and the oil transported to Ampol's Brisbane refinery, to be manufactured into a renewable diesel and processed into SAF. Brent Merrick, a general manager at Ampol, said the project would require a multi-billion-dollar investment but could come to market relatively quickly. "Our plan is to aim for the sort of 2030 time range for production, and engineering is well underway," Mr Merrick said. "It's not something that comes across your desk every day; the chance to make such a material change in how the energy mix drives the country. "It is a big deal, it is exciting," he said. Before the canola-fed fuel business gets the green light, project managers are seeking federal government assistance. "The cost of SAF today is more expensive than jet fuel, so we need some temporary support to stand up this industry and get it going," GrainCorp general manager nutrition and energy, Don Campbell, told Landline. "How much? That's what we're working on." Assistance could include mandates for airlines to use a certain percentage of renewable fuel, subsidies for start-up costs associated with manufacturing, and help to ensure the final product meets global emissions reduction certification standards. Last month Qantas imported close to 2 million litres of SAF from Malaysia, enough so that once it is blended it will fly the equivalent of 900 flights between Sydney and Auckland. Last year the federal government committed more than $30 million for the development of an SAF industry using renewable feedstock. It included $8 million for Ampol and $6 million for GrainCorp. Speaking at GrainCorp's Newcastle port facility at the time of the funding announcement, Transport Minister Catherine King said establishing a low-carbon liquid fuel industry in Australia made sense. "These are things we should be making here in Australia. It's good for farmers, it's good for our manufacturing sector, it's good for sectors like GrainCorp." Earlier this year, the government also announced $250 million from its Future Made in Australia Fund would be provided as grants to accelerate a domestic low-carbon liquid fuels industry. The CSIRO has estimated an Australian low-carbon liquid fuel industry, reliant on a variety of technologies and feedstock, could contribute up to $12 billion a year to the economy. Zach Whale, a spokesperson for the farm lobby group GrainGrowers, believes much of that benefit would be felt in regional communities. "If demand does really spike, we don't anticipate every farmer turning away from wheat and chickpeas and barley. "We think canola will just remain a mainstay, but with greater domestic demand and hopefully favourable pricing for our growers." CSIRO senior research scientist Cathryn O'Sullivan said SAF made from a variety of feedstock, including tallow, sugar and canola, needed to be certified to ensure any carbon abatement stacked up. "We need really strong sustainability measures and metrics to make sure that we get that balance right between food and fuel and carbon abatement in these systems," Dr O'Sullivan said. "I don't really consider [it] a roadblock, but it's a factor that needs to be considered in making sure these things are sustainable, and they don't compete with our food system." She said canola was a good example as it produced fuel and food. "Our canola gets crushed and the oil can go into human consumption or it can go into fuel production, and the remaining canola meal that's left over goes into animal feed, so from one product you're getting both food and fuel," Dr O'Sullivan said. Mr Whale said a canola-fed SAF sector would not come at the detriment of food production. This year Australian grain growers are forecast to produce 5.7 million tonnes of canola from 3.4 million hectares. Watch ABC TV's Landline at 12:30pm AEST on Sunday or stream anytime on ABC iview.
ABC News
04-06-2025
- Business
- ABC News
GDP numbers argue for more RBA interest rate cuts as savings rise and spending flatlines
Australia is teetering on the brink of falling back into a per capita recession, but the bad news could soon be good news for borrowers. The latest National Accounts published by the ABS show Australia's economy inched forward by just 0.2 per cent over the first three months of this year. Over the year to March 31, economic activity increased by just 1.3 per cent. Over both the past quarter and the past year, Australia's population grew much faster than its economy. Per person, our economic output is 0.4 per cent less than it was a year ago. As IFM Investors chief economist Alex Joiner pointed out, economic growth has failed to keep up with population growth for nine of the past 11 quarters. Per person, Australia now produces 1.7 per cent less than it did around three years ago. On the surface, it's a grim picture, but the details show there is room for some optimism. First up, Cyclone Alfred brought great disruption and damage to heavily populated areas of south-east Queensland and northern NSW. The repair jobs to fix that damage will add to GDP over the current and coming quarters. Secondly, it was the public sector dragging the chain, with no growth in its spending and a decline in investment as a number of major infrastructure projects were either completed or put on hold. This should be a relief to those economists who have worried about public spending "crowding out" the private sector, which now appears to have more room to step up. Thirdly, the drop in activity didn't mean a drop in incomes, with business profits up as well as wages, and even rents, all growing faster than inflation. So, if incomes are growing across the board but economic activity is stagnating, where's all the extra cash going? Into the bank. From historical peaks above 20 per cent during COVID, when stimulus payments collided with a physical inability to get out and spend the dough, the household savings rate plummeted to a low of just 1.5 per cent in September 2023. That was the lowest since December 2007, as households chewed into their savings to cope with high interest rates and a surging cost of living. But the savings rate has rebounded from that low. In the March quarter it rose to 5.2 per cent, which is roughly back where it was immediately before COVID. This is a fourth reason why the economic slowdown in the March quarter isn't as bad as it seems. Now that savings are back around more normal levels, it becomes increasingly likely that future income growth (such as from yesterday's minimum and award wage decision) will be channelled into household consumption. And there's a very simple way to make this happen. The publication this week of the RBA's May meeting minutes reconfirmed that the board had seriously contemplated a 0.5 percentage point cut, before opting for 0.25. However, at least at the start of this week, most Australian economists had been anticipating that the Reserve Bank would wait until August before making another cut. But financial market traders strongly disagree, particularly after reading those minutes and seeing today's GDP numbers. They are now pricing in a greater than 80 per cent chance that the RBA will cut interest rates again in July with about a 70 per cent chance of a follow up cut in August. Markets predict the cash rate will be at or below 3.1 per cent by the end of the year, down 75 basis points (or three standard rate cuts) from its current level of 3.85 per cent. That's not surprising, given that the RBA most recently predicted annual economic growth of 1.8 per cent in the year to June — a forecast that now requires a very unlikely 0.7 per cent leap in growth this quarter to achieve. With inflation seemingly tamed, at least for now, excuses are running out for the Reserve Bank not to lower interest rates more quickly. The rising savings rate, weak household consumption and modest growth in private investment all reinforce the idea that the cash rate is "restrictive" — that is that it is still holding back the economy. What better way to encourage households and businesses to spend more on consumption and investment, and save less, than by cutting interest rates? The odds of the RBA cutting rates sooner rather than later are also boosted by the dour global economic outlook, clouded by Donald Trump's tariff policies and generally erratic policymaking. The OECD released its latest Global Economic Outlook report overnight, and cut its global growth forecast for this year from 3.1 to 2.9 per cent, with no improvement expected next year. "Today's policy uncertainty is weakening trade and investment, diminishing consumer and business confidence and curbing growth prospects," the organisation's secretary-general, and former Australian finance minister, Mathias Cormann said. Indeed's Asia-Pacific economist Callam Pickering warned we are far from immune. Treasurer Jim Chalmers said that "the Australian economy remains one of the strongest in the world" but, at the moment, that's little to write home about. And, as Pickering pointed out, Australian productivity has been unchanged over the past two quarters and remains more than 5 per cent below its peak. Meanwhile, the lingering affects of previous inflation and real wage declines are likely to take at least until the end of this decade to repair, even if nothing goes wrong in the meantime. While the re-elected government is talking up its reform agenda to try and kick-start the private sector, Pickering argued the RBA must also play its part. "The RBA will need to cut rates at least another couple of times this year to provide sufficient support to households and businesses, while ensuring that the unemployment rate remains low and we avoid recession." Having avoided falling off what successive RBA governors have described as "the narrow path" of reducing inflation without spiking unemployment, it would be ironic if the bank was too slow to recognise the latest bend in the economy and blithely walked right over the edge.
AU Financial Review
16-05-2025
- Business
- AU Financial Review
ASX hits 3-month high; Airport shareholders revolt; AI starts to work
Want to get this in your inbox at lunchtime every weekday? Financial Review subscribers can sign up for The Brief newsletter here. Plus start your day with our Before the Bell newsletter and read a full wrap of the day's news in Market Wrap. In today's news, Australia's sharemarket hits a three-month high, IFM Investors leads a shareholder revolt, and the rise of AI could make Donald Trump's drama look like a sideshow.
Yahoo
30-04-2025
- Business
- Yahoo
Surge in imports drives US GDP down as businesses navigate Trump tariffs
Surging imports to the US have slowed economic growth in the first quarter, leading to a 0.3% contraction, new data published Wednesday showed, sending US stock markets into the red on open. The negative reading reflected 'the record widening of the US trade deficit' as businesses sought to stockpile inventories ahead of President Donald Trump's tariffs, Ryan Weldon, investment director at IFM Investors told Semafor via email. The president argued that the GDP slowdown has 'nothing to do' with import duties. Americans have not entirely pulled back on spending — possibly in order to get ahead of the duties — the data showed, although economists have warned that is likely on the horizon; the most recent ADP job report found private payrolls rose just 62,000 in April, suggesting a dramatic slowdown in hiring. The Labor Department is due to report its employment data for last month on Friday. Meanwhile, consumer sentiment has also declined, while inflation appears to be rising. Global head of market strategy at TradeStation David Russell told Semafor in an email that 'the numbers increasingly suggest a recession may have begun.'
Bloomberg
04-02-2025
- Business
- Bloomberg
UK Pension Nest Takes 10% Stake in Australia's IFM Investors
UK pension fund Nest is taking a 10% stake in the parent of Australian investment manager IFM Investors, becoming its first overseas shareholder as it pushes deeper into private markets investments. Nest will join 16 Australian pension funds as owners of IFM, which manages about A$230 billion ($144 billion), according to a statement Wednesday. IFM's portfolio includes infrastructure assets from airports to ports and toll roads, as well as both listed and private equity and debt investments.
