Food, Fuel & Fibre

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Low carbon liquid fuels (LCLFs) can be produced from agricultural and forestry products, as well as from residues, by-products and wastes . Some feedstocks sit within existing food and fibre supply chains, for example sugars, starches or oils from crops. Other feedstocks use material that would not normally be used for food or feed, such as straw, manure, municipal organic waste or used cooking oil.

When managed under recognised certification schemes, low carbon liquid fuel supply chains can contribute to emissions reduction goals while supporting productive food, feed, fibre and fuel production .

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Why this matters Food and fuel prices Same biomass system Fuel generations How it is managed

Why this matters in Australia

Australia exports $3.9 billion of liquid fuel feedstocks (including canola and tallow) to be processed offshore . Australian agriculture also produces substantial residues (cereal straw, sugarcane bagasse) and waste streams (used cooking oil, organic municipal waste) that are already feedstock candidates for low carbon liquid fuels (LCLFs) .

In the Australian context, industry analyses argue the food-fuel-fibre relationship is less about choosing between them and more about how the same biomass system supports multiple outputs .

Cotton ready for harvesting near Oakey, Queensland

Does making fuel from crops affect food prices and supply?

The concern

Crops that people also eat

First-generation fuels use crops that people and livestock also eat. Extra demand for those crops can push up their prices. The European Union caps crop-based fuels partly for this reason, citing pressure on food and feed supply .

The safeguards

Rules that respond

Fuel schemes respond with rules. The EU limits how much crop-based fuel can count towards its targets . CORSIA requires fuel production in food-insecure regions to strive to enhance local food security .

The Australian picture

Food and fuel together

Australian research points to crops and systems that can produce food and fuel together . One example is oilseeds: the protein meal feeds livestock while the oil makes fuel .

Food, fuel and fibre produced from the same biomass system

In agriculture and forestry, a single supply chain can produce multiple outputs in addition to the main product, including by-products (or co-products), residues and waste streams. Many fuel conversion pathways use only one component of a crop (starch, sugar or oil), leaving other components available for food and feed markets .

By-product

A secondary product, with economic value of its own, made in the manufacture of another product .

Canola meal from oil crushingMolasses from sugar millingGlycerine from biodiesel production

Residue

Material left over from growing or processing a main product, with little economic value of its own .

Cereal straw or stoverSugarcane bagasseSawmill residues (e.g. sawdust, bark)

Waste

Material that the holder discards or intends or is required to discard, often with a negative value due to disposal costs .

Used cooking oilMunicipal food wasteSewage sludge

Fuel generations and land use

LCLFs can be broadly grouped into four generations based on their feedstock and production technologies; the boundaries between generations can overlap, and definitions vary slightly between sources . Later generations use feedstocks progressively further from the dinner table.

Fields of canola in Victoria

1First-generation

Typically use sugars, starches or oils from food/feed crops, which can interact directly with food and fibre commodity markets, and with the land that grows them .

Bagasse, the fibre left after sugarcane is crushed

2Second-generation

Use lignocellulosic biomass (the woody, non-edible parts of plants) including agricultural residues, forestry residues and some municipal and industrial organic wastes. These pathways can reduce additional demand for arable cropland compared with expanding crop-based fuels, provided residues and wastes are sourced sustainably and do not displace existing uses .

Microalgae cultivated in a photobioreactor

3Third-generation

Offer the potential to reduce reliance on arable land via organisms that capture carbon dioxide (CO2) and photosynthesise, such as microalgae and seaweed. These organisms can be cultivated on non-arable land and can use a wide variety of water sources .

Hydrogen storage tanks for renewable energy

4Fourth-generation

Commonly associated with emerging technologies such as gas fermentation and genetically modified plants and microbes to improve production efficiency and fuel yields .

Looking ahead, the International Energy Agency (IEA) projects that sustainable fuels could nearly quadruple by 2035, if current and proposed policies are fully implemented . By then they would cover around 10% of global road transport, 15% of aviation and 35% of shipping fuel demand . The IEA’s figures cover liquid and gaseous fuels made from wastes, residues and crops that do not compete with food production .

How the food–fuel–fibre interaction is managed

There is no single answer to the food-versus-fuel question; different jurisdictions take different approaches. Major frameworks such as CORSIA and RED III combine four kinds of safeguards .

Eligibility rules

Define which feedstocks are included, and how ‘waste’, ‘residue’ and ‘by-product’ are distinguished from each other .

Sustainability and traceability requirements

Verify how feedstocks were grown and how land-use outcomes are recorded through the supply chain .

Limits and targets that differentiate feedstocks

For example, caps on crop-based fuels and minimum shares for advanced (residue or waste-based) feedstocks .

Land-use change (LUC) provisions

Restrict feedstocks judged to be high-risk for indirect land-use change (ILUC) , or add an ILUC value to the fuel’s carbon intensity calculation .

How the rules are set: Sustainability How claims are proven: Traceability
Keep exploring
Fuel certification and quality assurance Sustainability Traceability Environment and society

Resources

A selection from the library related to this page.

    • Report
    • 2025

    Refined Ambitions: Exploring Australia’s low carbon liquid fuel potential
    Clean Energy Finance Corporation (CEFC), prepared by Deloitte
    CEFC’s Refined Ambitions report assesses Australia’s low carbon liquid fuel potential, covering supply chains, investment considerations and policy levers across fuels such as SAF and renewable diesel.
    Read more
    • Policy & program
    • 2025

    Cleaner Fuels Program: Powering low carbon liquid fuel production in Australia
    Australian Government, Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts (DITRDCSA)
    Australian Government consultation and program page outlining the Cleaner Fuels Program and its policy design process.
    Read more
    • Policy & program
    • 2026

    Guarantee of Origin scheme (Australia)
    Clean Energy Regulator (CER)
    Australian Government webpage on the Guarantee of Origin scheme, a voluntary scheme that provides a transparent, publicly accessible record of the emissions associated with the production of key commodities. Administered by the Clean Energy Regulator, with policy development and emissions accounting methodologies the responsibility of DCCEEW.
    Read more
    • Policy & program
    • 2025

    Renewable Fuel Standard (RFS) Program
    United States Environmental Protection Agency (US EPA)
    US EPA webpage explaining the Renewable Fuel Standard program, including annual renewable fuel volume requirements, compliance mechanisms (RINs) and the treatment of fuels such as ethanol and biomass-based diesel.
    Read more
    • Legislation & regulation
    • 2023

    Renewable Energy Directive (RED III) amendment (Directive (EU) 2023/2413)
    European Union (EU)
    EU directive amending the Renewable Energy Directive (RED III), including updated renewable energy and transport provisions and sustainability rules that affect biofuels and other renewable fuel pathways.
    Read more
    • Guidance
    • 2025

    CORSIA Sustainability Criteria for CORSIA Eligible Fuels (Fourth Edition)
    International Civil Aviation Organization (ICAO)
    ICAO document setting the sustainability criteria that CORSIA eligible fuels must meet, covering greenhouse gas reduction, feedstock sourcing, land use and biodiversity, and social and economic themes, with separate criteria for CORSIA sustainable aviation fuel and CORSIA lower carbon aviation fuel. Note that lower carbon aviation fuels meeting these criteria are not classified as sustainable fuels. Fuel producers must be re-certified by an approved sustainability certification scheme every 365 days.
    Read more
    • Roadmap & strategy
    • 2025

    Low carbon liquid fuels roadmap
    Grains Research and Development Corporation (GRDC)
    GRDC roadmap outlining how grain-based feedstocks could support a low carbon liquid fuels industry in Australia, including regional supply chains, biorefineries and priorities for collaboration, investment and policy support.
    Read more
    • Report
    • 2025

    Delivering Sustainable Fuels: Pathways to 2035
    International Energy Agency (IEA)
    IEA report outlining pathways to scale sustainable fuels to 2035 across transport and industry, including policy and investment needs and where fuels can complement electrification in hard-to-abate uses.
    Read more
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