The Australian government will work with its ally across the Tasman to take advantage of the transition to a net-zero economy by helping industries decarbonise and streamlining trade of low-emissions products.
Treasurer Jim Chalmers and Climate Change and Energy Minister Chris Bowen hosted talks with their Kiwi counterparts, Minister for Finance Nicola Willis and Minister for Climate Change Simon Watts, in Brisbane on Tuesday.
The production of low-carbon liquid fuel - which can power trucks, cargo ships and planes more sustainably - and sustainable aviation fuel will be the focus of future discussions.
Jim Chalmers and Chris Bowen held talks with their counterparts from New Zealand. (Darren England/AAP PHOTOS)
"The opportunities are enormous for Australia and New Zealand to be key parts of the supply chain for sustainable aviation fuel across not just our region but the world," Mr Bowen told reporters.
"We haven't solved all the world's problems, nor were we ever going to, but we've taken a step forward."
Aviation contributes 2.5 per cent of the world's carbon emissions, according to the CSIRO.
But it is one of the most difficult industries to decarbonise as long-haul flights cannot run on electricity because of technological limitations.
This means commercial airlines and defence forces will generally need to rely on sustainable aviation fuels, which are derived from feedstocks such as biomass, waste products, natural oils and hydrogen.
Demand for these fuels is increasing across the world but supply may not be able to keep up because of global production limits.
Ampol will assess whether a renewable fuels facility could be created at its Brisbane refinery. (Darren England/AAP PHOTOS)
But as a source of feedstocks and producer of sustainable aviation fuel, Australia could step in.
"We know that there are issues around supply of sustainable aviation fuels, we know that sustainable aviation fuels can be good for workers, good for airlines, good for the economy and good for the environment at the same time, but we've got to get these supply issues sorted out," Dr Chalmers said.
"And for Australia, there's a big chance for us."
The two governments have agreed to investigate conditions required to develop a regional sustainable aviation fuel industry, unpick the red tape preventing the net-zero transformation and work with sectors to decarbonise.
Australia has invited NZ's aviation companies and representatives to join its Jet Zero Council, which brings stakeholders together to try deliver net-zero aviation.
Separate from the government discussions, fund manager IFM Investors, agribusiness company Graincorp and energy provider Ampol on Tuesday agreed to explore the establishment of an integrated renewable fuels industry in Australia.
Ministers Simon Watts and Nicola Willis represented New Zealand at the talks. (Darren England/AAP PHOTOS)
Ampol and IFM will assess whether a renewable fuels facility could be created at the energy company's refinery in Brisbane while GrainCorp will investigate potential to supply a future plant with homegrown feedstocks.
The Australian Workers' Union has strongly endorsed the three-way memorandum of understanding and called for the government to invest.
The union's national secretary Paul Farrow said it could create more than 500 jobs at the Ampol refinery while shoring up fuel security.
"Our current dependence on imported fuel is just a disaster waiting to happen. We can't afford to keep relying on fragile supply chains at the whim of regional conflicts," he said.
"We have the resources, facilities and workers needed to make green fuel at a lower cost than the rest of the world."
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