Agriculture

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Australian agriculture has a significant role in Australia’s low carbon liquid fuel (LCLF) future. As both a major supplier of feedstocks and a significant user of liquid fuels on-farm, the sector sits at the centre of the opportunity. Building domestic fuel production has the potential to create new markets for crops and processing co-products, attract regional investment and provide growers with more diversified income streams.

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Reducing emissions Feedstocks Fuels for agriculture Fuel handling Policy and regulation Resources

Agriculture at a glance

$3.9 billion

in low carbon liquid fuel feedstock exports

Australia exports canola and tallow suitable for fuel production rather than processing them here .

About 84%

of on-farm energy use

Tractors, harvesters, irrigation pumps and generators nearly all run on diesel .

7.7 million tonnes

of canola in 2025-26

The second largest canola crop on record . Much of it is exported as seed, a large share to Europe for biofuel .

More than $36 billion

potential industry value by 2050

What a mature Australian low carbon liquid fuel industry could be worth in today’s dollars, with agricultural feedstocks central to it .

How agriculture is reducing emissions

Australian farms face a mixed energy future rather than a single switch. Electrification is expected to expand in fixed operations such as irrigation, sheds and processing, while liquid fuels, including biofuels, are expected to remain important for heavy machinery, transport, forestry and fishing .

1

Using less fuel for the same work

Precision guidance, controlled traffic and better machinery setup cut diesel use without changing equipment. These are the reductions available now .

2

Electrifying fixed operations

Irrigation, sheds and processing are fixed operations in one place, and are expected to be where electrification expands. Irrigation pumps are among the few farm loads with a credible near-term electrification pathway .

3

Battery and electric machinery

Battery electric tractors and other electrified equipment are emerging, but availability in Australia is still limited. Farmers report a lack of heavy-duty electric or hybrid substitutes, with only small tractors, irrigation pumps and utility vehicles showing credible near-term pathways, and most electric machinery still at pilot or pre-commercial stage .

4

Drop-in low carbon liquid fuels

Liquid fuels, including biofuels, are expected to remain important for heavy machinery, transport, forestry and fishing, where electrification is hardest . Renewable diesel blends with mineral diesel at all blend rates and runs in equipment already on farm, which matters when machinery is long-lived and often works far from the grid .

Australian agricultural feedstocks for low carbon liquid fuels

Australian farms produce feedstocks for the major biogenic low carbon liquid fuel pathways, including hydroprocessed esters and fatty acids (HEFA), fatty acid methyl esters (FAME) and alcohol-to-jet . Each has a different conversion route, market and considerations. The Feedstock Supply page sets out the full national picture, including the waste, algal and synthetic feedstocks that do not originate on farm. The Australian Government’s National Bioenergy Feedstock Strategy, released in August 2026, sets the national direction for growing feedstock supply from farming and forestry .

FeedstockFuel use todayFuels it can produce
Cereal grains, straw and stubbleMade into fuel in Australiawaste wheat starch onlyEthanolIsobutanolSustainable aviation fuelRenewable dieselRenewable methanolRenewable ammonia
VolumeTens of millions of tonnes (grain)
RegionsWestern Australia, New South Wales, South Australia, Victoria and Queensland
Main use todayFood; malting; stockfeed; export; residues to soil cover and livestock feed
Route to fuelGrain starch: fermentation to ethanol and isobutanol, and alcohol-to-jet to sustainable aviation fuel. Straw and stubble: gasification with Fischer-Tropsch, pyrolysis or hydrothermal liquefaction to renewable diesel, sustainable aviation fuel, ethanol, renewable methanol and renewable ammonia
Key considerationsResidue volumes available for collection are not published nationally . Wheat waste starch, a by-product of gluten processing, is used to produce fuel ethanol in Australia .
SugarcaneMade into fuel in Australiamolasses onlyEthanolIsobutanolSustainable aviation fuelRenewable dieselRenewable methanolRenewable ammonia
VolumeTens of millions of tonnes (cane cut)
RegionsCoastal Queensland, the Atherton Tablelands and Northern New South Wales
Main use todaySugar export; bagasse to mill cogeneration; molasses to stockfeed and ethanol
Route to fuelSugars and molasses: fermentation to ethanol and isobutanol, and alcohol-to-jet to sustainable aviation fuel. Bagasse and trash: gasification with Fischer-Tropsch, pyrolysis or hydrothermal liquefaction to renewable diesel, sustainable aviation fuel, ethanol, renewable methanol and renewable ammonia
Key considerationsMost of the raw sugar is exported . Bagasse is burnt at the mills to raise steam and generate electricity, and cane trash is not currently collected at scale .
CanolaMade into fuel overseasmost of the crop, exported as seedSustainable aviation fuelRenewable dieselBiodiesel
VolumeMillions of tonnes (seed)
RegionsWestern Australia, New South Wales, Victoria, South Australia
Main use todayEdible oil; export as seed
Route to fuelHydroprocessing to renewable diesel and sustainable aviation fuel; transesterification to biodiesel
Key considerationsMost of the crop is exported as seed rather than crushed in Australia . European and United States rules on indirect land use change determine whether canola-derived fuel counts toward their targets .
Sorghum grain—EthanolIsobutanolSustainable aviation fuel
VolumeMillions of tonnes (grain)
RegionsQueensland and Northern New South Wales
Main use todayStockfeed; export
Route to fuelFermentation to ethanol and isobutanol, and alcohol-to-jet to sustainable aviation fuel
Key considerationsQueensland and Northern New South Wales together account for about 98% of national production .
Cottonseed and cotton gin trashNot used for fuelSustainable aviation fuelRenewable dieselBiodieselEthanolRenewable methanol
VolumeMillions of tonnes (cottonseed)
RegionsNorthern New South Wales and Southern Queensland; Central Queensland
Main use todayCottonseed to cattle feed ; gin trash composted and returned to the land
Route to fuelCottonseed oil: hydroprocessing to renewable diesel and sustainable aviation fuel; transesterification to biodiesel. Gin trash: gasification with Fischer-Tropsch, pyrolysis or hydrothermal liquefaction to renewable diesel, sustainable aviation fuel, ethanol and renewable methanol
Key considerationsOne crop yields two feedstocks that follow different conversion pathways.
Beef and sheep tallowMade into fuel overseasmost of productionSustainable aviation fuelRenewable dieselBiodiesel
VolumeHundreds of thousands of tonnes (rendered fat, exported)
RegionsRendering plants attached to meat processing sites nationally
Main use todayExport to biofuel refineries; oleochemicals; stockfeed; pet food
Route to fuelHydroprocessing to renewable diesel and sustainable aviation fuel; transesterification to biodiesel
Key considerationsTallow is a co-product of meat processing . For transportation fuel produced after 31 December 2025, the United States Clean Fuel Production Credit applies only to fuel derived from feedstock produced or grown in the United States, Mexico or Canada, which excludes Australian tallow .
Other oilseedsNot used for fuelSustainable aviation fuelRenewable dieselBiodiesel
VolumeTens of thousands of tonnes (sunflower)
RegionsSunflower in New South Wales and Queensland; carinata, safflower, camelina and juncea at small scale
Main use todayEdible oil; birdseed; industrial and trial use
Route to fuelHydroprocessing to renewable diesel and sustainable aviation fuel; transesterification to biodiesel
Key considerationsCarinata is a certified non-food crop that can be grown in rotation or on fallow ground . Australian production of these oilseeds is small.
No national volume published
Forestry residuesNot used for fuelSustainable aviation fuelRenewable dieselEthanolRenewable methanolRenewable ammonia
VolumeNot published nationally (mapped by region)
RegionsNew South Wales, Victoria, Queensland, Tasmania, Western Australia and the Green Triangle
Main use todayPulp; panels; mill energy
Route to fuelGasification with Fischer-Tropsch, pyrolysis or hydrothermal liquefaction to renewable diesel, sustainable aviation fuel, ethanol, renewable methanol and renewable ammonia
Key considerationsThe Green Triangle spans the south-east of South Australia and the south-west of Victoria . Sawmill residues are sold into existing markets, and residues left at harvest sites must be collected and transported . Forestry sits alongside agriculture in the Australian Government’s National Bioenergy Feedstock Strategy, released in August 2026, which covers feedstocks from both primary industries .
Perennial grasses and woody cropsNot used for fuelharvested for eucalyptus oilSustainable aviation fuelRenewable dieselRenewable methanolEthanol
VolumeThousands of hectares (mallee planted)
RegionsMallee in the Western Australian Wheatbelt; perennial grasses at trial scale
Main use todaySmall-scale commercial harvest for eucalyptus oil
Route to fuelGasification with Fischer-Tropsch, pyrolysis or hydrothermal liquefaction to renewable diesel, sustainable aviation fuel and renewable methanol; lignocellulosic fermentation to ethanol
Key considerationsMallee was planted in belts through the Wheatbelt mainly to manage dryland salinity rather than as an energy crop, integrated with existing cropping and pasture . No commercial fuel production from these crops operates in Australia .
PongamiaNot used for fuelpre-commercialSustainable aviation fuelRenewable dieselBiodiesel
VolumeThousands of hectares (trial plantings)
RegionsNorth and Central Queensland
Main use todayPre-commercial; trial plantings and research
Route to fuelHydroprocessing to renewable diesel and sustainable aviation fuel; transesterification to biodiesel
Key considerationsPongamia is a tree crop, so plantings take about five years to reach yield, and the oil is not used as food . Australian trials are on cleared grazing land, and some are designed as silvopasture, running cattle among the trees .
AgaveNot used for fuelpre-commercialEthanolSustainable aviation fuel
VolumeTens of hectares (trial plantings)
RegionsNorth Queensland: the Atherton Tablelands and the Burdekin
Main use todayPre-commercial; trial plantings
Route to fuelFermentation to ethanol, and alcohol-to-jet to sustainable aviation fuel
Key considerationsAgave is drought and heat tolerant and can be grown without irrigation . Australian research from a five-year North Queensland field trial found agave yields less ethanol per hectare than sugarcane and uses substantially less water per litre produced .

Low carbon liquid fuels for agriculture

Australian primary industries run primarily on diesel. In agriculture, diesel accounts for approximately 84% of on-farm energy consumption . Blending or replacing that diesel with renewable diesel, produced from many of the same feedstocks Australia currently exports, is one of the most direct ways low carbon liquid fuels can decarbonise the sector, because it does not require changes to engines or refuelling infrastructure .

A diesel-equivalent hydrocarbon fuel produced from oils, fats and residues by hydrotreating, known as hydrotreated vegetable oil or hydroprocessed esters and fatty acids, or through synthetic power-to-liquids pathways. Chemically and functionally different from biodiesel .

How it can fit in agriculture

  • Tractors
  • Harvesters
  • Irrigation pumps
  • Generators
  • Farm freight trucks

Considerations

Drop-in substitute for petroleum diesel, blendable at all blend rates. Supplied in Australia under its own standard, the Fuel Quality Standards (Paraffinic Diesel) Determination 2025, separate from the conventional diesel standard .

Learn more about renewable diesel

A liquid fuel made by reacting fats or oils, such as vegetable oils, used cooking oil or tallow, with an alcohol. Reacting with methanol produces fatty acid methyl esters (FAME); reacting with ethanol produces fatty acid ethyl esters (FAEE) .

How it can fit in agriculture

  • Light and medium farm vehicles
  • Delivery and service trucks
  • Heavy machinery (blends)

Considerations

Blend-limited. Australian fuel quality standards cap biodiesel in ordinary diesel at 5%, known as B5 . Higher blends such as 20% biodiesel, B20, are supplied only under time-limited approvals under section 13 of the Fuel Quality Standards Act 2000 .

Learn more about biodiesel

A petrol fuel made by blending petrol with ethanol, commonly produced from plant-based feedstocks such as sugar, starch or other biomass .

How it can fit in agriculture

  • Petrol utes and light vehicles

Considerations

Blend-limited. Petrol sold in Australia may contain up to 10% ethanol, known as E10, which is the common blend ; a separate standard covers E85, a blend of 70 to 85% ethanol, for flex-fuel vehicles . Less relevant for heavy machinery.

Learn more about ethanol blends

On-farm fuel storage and handling

Step 1

Store it safely

Bulk tanks must be secure, bunded and clearly labelled, and sited away from waterways, drains and yards. AS 1940 is the benchmark: a bund holds at least 110% of the largest tank, or 25% of all tanks, whichever is greater.

Step 2

Refuel in the paddock

Mobile refuelling keeps tractors, harvesters, pumps and generators working through the season. It needs trained operators, a spill kit on the vehicle and a record of what fuel went into what.

Step 3

Test before use

Fuel that sits over the off-season can pick up water and grow microbes. Test stored fuel before harvest. Biodiesel blends absorb water and oxidise, so buy them to use within months, not seasons; renewable diesel stores like conventional diesel.

Step 4

Approve the change

Check with the equipment maker first: FCAI members warrant biodiesel only to B5 unless the manufacturer says otherwise, and renewable diesel (HVO) needs the maker’s approval. Confirm your bulk supplier can actually deliver it; availability outside major centres is still limited.

Policy, regulation and technical guidance

The sections below cover the Australian policy environment for agricultural feedstocks and on-farm low carbon liquid fuel use, alongside the international frameworks that determine which Australian feedstocks reach which markets, grouped by the role they play.

Fuel quality and technical standards

These decide whether a fuel is legal to sell in Australia and fit to run in farm and freight equipment.

Certification criteria

If your feedstock or fuel is sold into export markets or claimed as low carbon, these schemes decide whether it counts, and how the claim is proven.

Mandates, targets and feedstock requirements

The rules that create demand: state blending mandates at home, and overseas targets that decide which Australian feedstocks reach which markets.

Keep exploring
Feedstock supply Diesel fuels Funding initiatives

Resources

A selection from the library related to this page.

    • Roadmap & strategy
    • 2021

    Australia’s Bioenergy Roadmap Report
    Australian Renewable Energy Agency (ARENA), prepared by Blunomy (formerly Enea Consulting) and Deloitte
    ARENA’s Bioenergy Roadmap report (prepared by Blunomy (formerly Enea Consulting) and Deloitte) outlines Australia’s bioenergy opportunities, including renewable fuels and biogas pathways, feedstocks and actions to scale the sector.
    Read more
    • Report
    • 2025

    Opportunities and Priorities for a Low Carbon Liquid Fuel Industry in Australia
    Commonwealth Scientific and Industrial Research Organisation (CSIRO), prepared in partnership with the Australian Government
    CSIRO report, prepared in partnership with the Australian Government, outlining opportunities for a low carbon liquid fuel industry in Australia and identifying priorities to progress projects from development through to commercial scale.
    Read more
    • 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
    • Market outlook & country report
    • 2026

    Agricultural Commodities Report
    Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)
    ABARES quarterly outlook on Australian agricultural commodities, providing forecasts and analysis relevant to feedstock supply for low carbon liquid fuels.
    Read more
    • Technical & scientific report
    • 2024

    Update on drop-in biofuel and co-processing commercialization
    International Energy Agency Bioenergy Technology Collaboration Programme (IEA Bioenergy) Task 39
    IEA Bioenergy Task 39 report on progress in drop-in biofuel and co-processing commercialisation, updating its 2022 report on low carbon intensity drop-in fuels. Finds that the hydrotreated esters and fatty acids (HEFA) pathway remains the only fully commercial route to drop-in biofuels, with a substantial increase in announced facilities and in sustainable aviation fuel output driven by supportive policy.
    Read more
    • Roadmap & strategy
    • 2026

    National Bioenergy Feedstock Strategy
    Australian Government, Department of Agriculture, Fisheries and Forestry (DAFF)
    Australian Government strategy, released 26 August 2026, setting a shared national direction for growing bioenergy feedstock supply from agriculture and forestry for low carbon liquid fuel production. It sets out five priority areas: data, innovation, regional supply chain development, sustainability and certification, and sector capability.
    Read more
    • Data & statistics
    • 2026

    Australian Crop Report
    Australian Government, Department of Agriculture, Fisheries and Forestry (DAFF)
    ABARES quarterly report providing forecasts of Australian winter and summer crop production, used to inform feedstock availability for biofuels including ethanol and renewable diesel pathways.
    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
    • 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
    • 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

    Decarbonising diesel industries
    Australian Academy of Technological Sciences and Engineering (ATSE)
    ATSE report examining options to reduce conventional diesel use and emissions across Australian mining, freight and agriculture, fisheries and forestry, including technology pathways, enabling infrastructure and policy. Source of the figure that diesel accounts for approximately 84% of on-farm energy consumption in agriculture, at page 9. Note that figure is for on-farm agriculture only, not the three sectors combined, and ATSE attributes it to three secondary sources without giving a year.
    Read more
    • Report
    • 2022

    The diesel transition: Petroleum diesel alternatives for the Australian agriculture, fisheries and forestry sector
    AgriFutures Australia
    AgriFutures Australia report on alternatives to conventional diesel for agriculture, fisheries and forestry, covering low carbon liquid fuels and other options such as electrification and hydrogen.
    Read more
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