With Australian households reeling from the impact of higher fuel prices – compounded by cost-of-living pressures and another interest-rate rise – some are calling for biodiesel to be made available at the pump.
Conflicts in the Middle East have caused fuel prices to spike, resulting in panic-buying and shortages across Australia, and now alternatives like biodiesel are being spruiked as a possible solution according to ABC News.
Unfortunately, most modern vehicles sold in Australia can’t run on anything more than negligible blends of biodiesel.
Two decades ago, many believed biodiesel – which can be created from used oil, vegetable oil, algae, and organic waste products – would form a significant part of the transition away from traditional fossil fuels, given the ease of manufacturing and the infrastructure currently in place.
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However, taxation and a lack of meaningful support from the Australian Government – as well as relatively cheap imported diesel – meant the local industry largely disappeared.
Overseas, some developing countries are embracing biodiesel as a way to reduce crude oil dependence, with the Philippines considering a move to a seven per cent biodiesel blend, known as B7 (mixed with 93 per cent traditional diesel, derived from crude).
Indonesia is at the forefront, with the country expected to move from a 40 per cent blend to 50 per cent later this year.
In Australia, government fuel standards allow up to a five per cent blend of biodiesel.
As recently as June 2025, the Australian Strategic Policy Institute – the independent defence-funded think tank – was flagging the apathetic policies of the Federal Government on fuel security over the previous decade, and why action was urgently needed.
In August 2025, Airbus Australia boss Stephen Forshaw was calling for the introduction of a one or two per cent mandate for ethanol in aviation, to help build momentum with the fledgling biofuels industry in Australia – rather than relying almost entirely on fuel refined in Singapore.
“If we don’t move quickly to seize this opportunity, we run a real risk that the future will be made in Singapore, not Australia,” Mr Forshaw told the Australian Financial Review at the time.
“We want to use our feedstock here to produce fuels here, power our industry here and capture the economic and security benefits here.
“We can’t afford to default to what we’ve been historically pretty good at in Australia – exporting our raw commodities for others to process. Doing this, we simply export the opportunity to others.”
Weeks later, in September 2025, the Federal Government announced a $1.1 billion package for biofuels – but that doesn’t begin until 2028, some 25 years after experts were calling for a major commitment to the industry.
But as both public and private sectors begin to invest in the development of new-generation synthetic fuels – known as eFuels – more primitive solutions such as biodiesel and ethanol may no longer be viable for most modern cars driven in Australia.
While older diesel vehicles that use mechanical injection pumps can usually run on biodiesel without issue, newer common-rail engines – which rose to prominence in the late 1990s – can typically only accept a blend of up to five per cent biodiesel, with select examples able to take up a blend of up to 20 per cent, known as B20.
Similarly, some older vehicles such as the Holden Commodore and Saab 9-3 Biopower were able to accept ethanol blends of up to 85 per cent (E85), but the vast majority of petrol cars sold now can only take a maximum of E10 or E15.
According to the Australian Bureau of Statistics, the average age of cars across the country is around 12 years old.
Despite a community of enthusiasts manufacturing biodiesel in their own garages and sheds, biodiesel costs around $2.20 per litre to produce, Just BioDiesel director Peter Chomley told ABC News last week.
Not helping the situation is the Federal Government’s fuel excise tax – which biodiesel is still subject to, even if it’s produced privately and in low numbers.
Put simply, if someone produces a litre of biodiesel for their diesel ride-on mower using waste oil that would normally have been discarded, they should also write a cheque for $0.52 to the ATO.
Regardless, biodiesel does have some commercial applications, with US tractor giant John Deere approving a B30 mix in its farm equipment, while Pepsi has converted more than a dozen Volvo prime movers to run on B100 in North America.
Elsewhere, advances in sustainable fuel technologies have companies like Porsche investing in new eFuel manufacturing facilities – including one in Tasmania – which promises to farm carbon from the atmosphere and turn it into synthetic petrol and diesel that are compatible with modern engines.
Rather than allowing the release of new carbon molecules into the atmosphere, as is the case with oil-derived products and biodiesel, cars burning eFuels are claimed to only burn the same amount of carbon that was removed from the atmosphere.
Porsche claims they can therefore enable “potentially almost CO2-neutral operation of petrol engines”. The other upshot of using eFuels is they can take advantage of fuel infrastructure and vehicles currently in use.
Monash University has also developed a technology that converts used tyres and plastics into products that could be refined into fuels – with the added benefit of reducing landfill.
“At commercial scale, this could translate to facilities processing around 60 tonnes per day, producing diesel-like liquids, solid carbon and chemical monomers,” said Professor Sankar Bhattacharya, who heads the Department of Chemical and Biological Engineering at Monash.
“The liquid outputs could be supplied to domestic fuel refiners, while the solid carbon and monomers can support circular tyre manufacturing, plastics production and other industrial materials.”
All of which ignores the significant impact of electric vehicles, which – from a commercial perspective – can easily offer a ‘last mile’ solution for couriers who tend to service a specific area, and don’t typically need the longer driving range that a diesel engine provides.
Meanwhile, owners of electric cars are commuting each day using electricity harvested from solar panels on their homes.
The use of eFuels could provide a sustainable solution for scenarios in which electric vehicles are impractical, or the technology doesn’t yet exist; for example, road trains operating in the remote Australian outback.
The best time to plant a tree was 20 years ago, but the second-best time is today, as the old saying goes.
While biodiesel and ethanol can potentially ease a small amount of the pain that Australians are experiencing right now, real investment and action in the burgeoning eFuels industry – alongside the reinstatement of electric vehicle subsidies and incentives – are drastically needed to ensure the nation’s fuel security is protected against the next international crisis, as well as to address ongoing environmental challenges.
MORE: What US$100 a barrel of oil price really means for Australian petrol and diesel
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