Fuel! Does Australia have Options?

Biofuels in Australia: The Overlooked Alternative to Imported Fuel

As I have written previously, one topic often leads you to another, talking on AI, EV’s and infrastructure with an audience, tends to bring up the topic of energy and fuel.

Much of the discussion around energy in Australia focuses on electricity, renewables, and electrification.

But there is another part of the energy system that remains heavily dependent on imports.

Liquid fuels.

Transport, aviation, mining, agriculture, and heavy industry still rely overwhelmingly on diesel, petrol, and jet fuel, much of it sourced from overseas.

This raises a strategic question:

Are imported fossil fuels the only option?

The answer is no.

Australia already has the resources to produce a significant portion of its own liquid fuels through biofuels.

Australia’s Biofuel Opportunity

Biofuels are produced from biological materials:

 Unlike fossil fuels, these are renewable and domestically available.

Australia is uniquely positioned due to:

 Research from the CSIRO and Australian Renewable Energy Agency indicates that bioenergy could supply a meaningful share of Australia’s future energy demand, particularly in sectors that are difficult to electrify.

Ethanol from Sugarcane and Grains

Ethanol is the most widely used biofuel globally.

In Australia, it is produced from:

 Ethanol production involves fermenting sugars into alcohol, which can then be blended with petrol.

 Current Use

 Australia has multiple ethanol production facilities, particularly in Queensland and New South Wales, with capacity in the hundreds of millions of litres annually.

Sugarcane: A Dual Energy Resource

Sugarcane offers a significant advantage as a biofuel feedstock.

It produces:

Bagasse is already used to generate renewable electricity in Australia, contributing to regional energy systems.

 There is also increasing focus on:

Biodiesel from Canola and Waste Oils

Biodiesel is produced from:

 It has the potential to be used in existing diesel engines, with minimal modification.

The Canola Opportunity

Australia exports millions of tonnes of canola annually, much of it processed overseas into biofuels.

This presents a clear opportunity:

Instead of exporting feedstock, Australia could produce fuel domestically.

This would support:

Beyond Crops: Waste and Advanced Biofuels

The next phase of biofuel development focuses on non-food feedstocks.

These include:

 Australia produces significant volumes of biomass waste annually, much of which remains underutilised.

Emerging technologies are enabling conversion of these materials into:

 This expands the potential resource base beyond traditional crops.

Energy Security and Infrastructure

Biofuels are not just about emissions.

They are about energy security.

 Australia:

 Domestic biofuel production offers:

 Importantly, biofuels can often be:

 This makes them one of the few scalable alternatives for liquid fuel systems.

The Economic Reality: Fuel Prices and Supply Risk

Global fuel markets have become increasingly volatile.

Australia, as a net importer of refined fuels, is directly exposed to:

Data from the Australian Competition and Consumer Commission and global analysis from the International Energy Agency show that fuel prices have experienced sustained volatility in recent years.

These fluctuations directly impact:

 At the same time, long term global trends suggest continued pressure on liquid fuel markets due to:

 This creates a structural challenge.

Australia relies on imported fuels for critical sectors, and yet, it has limited control over price or supply.

Why Timing Matters

Rising fuel costs and supply uncertainty change the economics of alternatives.

Biofuels, which may previously have been considered marginal, become more viable when:

 This is not just an environmental issue.

It is an infrastructure and economic resilience issue.

Historically, periods of fuel price volatility have accelerated:

 For Australia, this presents an inflection point.

Where Biofuels Fit

Biofuels are unlikely to replace all fossil fuels.

But they are well suited to sectors where electrification is difficult:

These sectors are critical to Australia’s economy.

The Strategic Opportunity

Australia already has:

 What is missing is scale.

The opportunity is not just to produce biofuels.

It is to build an integrated domestic fuel system.

Closing Thought

The transition to new energy systems is often framed as a shift to electricity.

But liquid fuels remain essential.

Biofuels offer a pathway to:

 And importantly:

They demonstrate that imported fossil fuels are not the only answer.

The question is no longer whether alternatives exist, but whether Australia chooses to develop them while the conditions make it viable.

Footnote

This article is part of a series exploring the physical infrastructure behind energy and the AI-driven economy.

References

Disclaimer

The views expressed in this article are my own and are intended for general information and discussion purposes only. They do not represent the views of any employer, organisation, or client.

© 2026 Rodney Terry – Digital Backbone. All rights reserved