Australia Considers Biofuel Mandate as Fuel Security Concerns Grow
Australia is considering measures to increase the use of locally produced biofuels as rising petrol prices and concerns over fuel supplies renew calls to strengthen the country’s energy security.
Petrol prices have climbed to an average of $2.42 per litre amid the ongoing war in Iran. Australia currently holds around 41 days of petrol supply and 33 days of diesel, remaining well below the international benchmark of 90 days.
The Biofuel Producers Alliance, a newly formed group of Australian producers, is urging the federal government to require major fuel companies to purchase locally made biofuels instead of sending them overseas.
The alliance includes Manildra Group, Wilmar Sugar and three biodiesel companies. Together, they have the capacity to produce about 470 megalitres of ethanol and biodiesel, equivalent to roughly three days of additional fuel supply.
However, more than 60 megalitres of Australian-produced biofuels were exported during the first half of the year, despite concerns about domestic fuel availability.
Alliance chief executive Matt Hobbs said stronger demand for Australian biofuels could help improve fuel security and potentially reduce price pressures at service stations. He is calling for a national blending requirement to begin in 2027.
The federal government is already consulting on a proposed policy requiring fuel suppliers to purchase low-carbon liquid fuels, including biofuels. Under the current proposal, a supply requirement could begin in 2029, with a shift towards fuels offering greater emissions reductions after 2035.
The alliance wants the policy introduced earlier, arguing that existing production capacity could help Australia reduce its reliance on imported fuel.
The Australian Chamber of Commerce and Industry has identified potential for domestic production to reach two billion litres of low-carbon fuels, with further investment potentially allowing locally produced fuels to replace up to one-fifth of imports by 2040.
However, the business group has cautioned against introducing mandatory purchasing requirements before supplies, prices and supporting infrastructure are ready. It favours temporary assistance to help the industry develop.
The Australian Institute of Petroleum has also backed policies to encourage low-emission fuels, particularly for sectors such as heavy transport, agriculture and mining, where reducing emissions can be difficult.
Biofuel producers argue that Australia has significant untapped potential. The country exports large quantities of cooking oil and canola, much of which is processed overseas into renewable diesel and aviation fuel.
Despite this, biodiesel accounted for just 0.1 per cent of Australian diesel consumption last year, according to the figures cited in the report.
The debate has gained support from industry and farming groups. In August, several unions, the National Farmers’ Federation and grain and sugar industry representatives jointly urged Prime Minister Anthony Albanese to introduce a national ethanol and biodiesel mandate.
The government now faces the challenge of balancing fuel security, consumer costs, investment and emissions targets as it considers the future role of Australian-made biofuels.
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Source : ABC News
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