Biofuels

Vision

The Queensland Government has committed to explore how the biofuels industry can expand while working closely with the agricultural sector to boost its output to $30B by 2030.

Queensland’s sovereign biofuels production supports our key industries with benefits shared throughout the value chain.

Why Queensland’s biofuels industry matters

Global and domestic demand for biofuels is forecast to grow substantially. The potential size of the biofuels opportunity for the Australian and Queensland economy is significant.

Queensland can capitalise on this opportunity with diverse feedstocks that suit different biofuels processing technologies, highly skilled labour and engineering resources, and proximity to markets.

In regional Queensland, the biofuels opportunity could open doors to new investment that builds resilience, diversifies local economies and supports high-quality jobs. Sharing those benefits along the value chain from growers and producers through to fuel manufacturers and users is a priority for the Queensland Government and shapes how we're supporting the biofuels sector.

In addition to the direct economic contribution of the biofuels value chain, biofuels are going to be critical for some industries to remain globally competitive and grow.

Those traditional sectors powering our economy – resources, tourism, primary industries – will all need biofuels for at least another two decades and, in some cases such as aviation, considerably longer.

Domestic biofuels production will be vital for fuel security in a world where demand will outstrip supply.

Biofuels have the potential to be a major contributor to achieving the target to boost Queensland’s primary industries output to $30B by 2030. This target is supported by the Primary Industries Prosper 2050. This 25-year blueprint for the agriculture sector considers biofuels a value-adding opportunity for feedstock growers and producers.

Types of biofuels

Biofuels are renewable energy sources derived from biogenic materials, such as biomass and residues, that are used as alternatives to fossil fuels. They are considered renewable as the feedstock for their production can be grown relatively quickly or are by-products or waste from other industries.

Liquid biofuels

Liquid biofuels include sustainable aviation fuel (SAF), renewable diesel (RD), ethanol, methanol, e-fuels and biodiesel.

Australia currently uses approximately 7 billion litres (BL) of aviation fuel and 30BL of diesel each year. Aviation, heavy road freight, mining and extraction, maritime, rail and construction account for 80% of liquid fuel use. Some of Queensland’s critical industries, such as resources, tourism and primary industries, are significant users of these liquid fuels.

Some liquid biofuels, such as SAF and RD, are drop-in fuels that can be used now in existing infrastructure and equipment, including heavy road and mining vehicles and aircraft (up to approved blend limits) without requiring modifications or upgrades.

Australia currently exports $3.9 billion per year of feedstock for offshore biofuels production. It is estimated by 2050 a mature domestic liquid biofuels industry could deliver $36 billion of fuels sold^[1] with most of the $15 billion domestic feedstock opportunity this represents being supplied by Australia’s agricultural sector.

Queensland is already a major producer of liquid biofuels feedstocks such as tallow and sugar cane. Our primary industries sector could build on these existing markets and, leveraging expertise and knowhow, expand into more novel feedstock opportunities. This economic diversification could make our primary industries sector more resilient, supporting jobs and communities in our regions.

Currently Queensland produces small volumes of biodiesel and approximately 60ML of ethanol a year.

Production of liquid biofuels in Queensland could assist in alleviating Australia’s reliance on imported fuels, in turn reinforcing fuel supply for the critical industries driving our economy. The potential size of the industry also offers a potentially significant economic opportunity for primary industries and other industries in the supply chain.

Biogas and biomethane

Manufacturing and electricity generation rely heavily on natural gas. Gas usage accounts for a quarter of total energy supply in Australia and approximately one-sixth of electricity generation. Gas-powered electricity generation supports grid reliability providing peak and firming capacity. It is also a critical energy source for high-temperature industrial processes, such as production of aluminium and chemicals

Biogas can be used to generate electricity, steam and heat for industrial production processes, or upgraded to biomethane. Biomethane, also known as renewable natural gas, is interchangeable with natural gas, does not require upgrades to existing gas infrastructure and can also be used as fuel by the medium to heavy vehicle sector.

Biogas and biomethane production are of increasing interest in Australia and Queensland. Opportunities range from lower energy costs for individual businesses running their own anaerobic digestion facility to providing energy to a precinct or into the grid.

There is currently no large-scale biogas or biomethane production in Queensland, although its production is widespread in Europe and the United States.

Biogas can be produced through anaerobic digestion, processing of waste and wastewater, or captured from landfill. Feedstock for anaerobic digestion is largely through primary industries, both residues as well as crops grown specifically for this use. This is well-established technology which, at scale, could support a small number of jobs.

At commercial scale, biomethane could support a range of sectors including high energy use industries such as aluminium smelters. At individual business level, such as on farm, biogas production can reduce energy costs.

Production of biogas and biomethane could support fuel security as well as providing an alternative path for waste management.

Solid biomass fuel

Solid biomass fuels are produced from organic materials, such as residues from agriculture, forestry and waste, and converted into renewable energy. There are also existing or planned waste to energy facilities, which use feedstocks such as other green waste or municipal solid waste. Solid biomass fuels include electricity co-generation, pellets, briquettes and biochar.

In Queensland, co-generation is largely through sugar mills using bagasse. Co-generation mainly provides reduced energy costs for individual businesses, although some facilities are at sufficient scale to export to the electricity grid, or support a precinct with behind-the-meter electricity. Co-generation of electricity from bagasse currently provides about 1.6% of the total electricity generated in Queensland.

There are some existing solid biomass fuel producers in Queensland. Currently, pellets and briquettes are generally exported. When used directly as an energy source they are a replacement for coal, such as in power stations, and can also be used in commercial furnaces and boilers and domestic wood heaters to generate heat.

Biochar is traditionally used as a soil enhancer by the agricultural sector but can also be used as a replacement for charcoal. The process of making biochar can release gaseous by-products that can be converted into liquid biofuels.

How government supports biofuels industry development

Biofuels is one of the priority industries identified as a focus for industry development to build sovereign capability, unlock new economic opportunities and grow Queensland’s regions.

The Queensland Government working with industry partners to facilitate viable biofuel projects, identify opportunities to increase the availability of feedstocks, and address regulatory barriers. This includes:

• facilitating high potential projects and working with industry stakeholders and proponents along the supply chain, such as Ampol and Jet Zero, to understand emerging needs and issues, and looking to identify and address systemic barriers for industry;
• continuing to work with federal and other state counterparts to share information and learnings, and to influence relevant policies and programs.

In early 2025, a Biofuels Feedstock Expansion Study was commissioned, which considers 22 feedstocks across Queensland’s 9 regions. Due for completion in mid-2026, the Study will provide an evidence base for industry, communities and the Government, setting out the critical pathways for each region in Queensland for the most viable feedstocks to meet commercial production requirements.

For more information on biofuels industry development or to discuss potential project opportunities, contact biofuels@dsdip.qld.gov.au.

Biofuels Industry Envoy

Professor Ian O'Hara is Queensland's Biofuels Industry Envoy. Appointed in December 2016, he has extensive biofuels knowledge and global networks to promote and connect the Queensland domestic industry.

Sovereign Industry Development Fund

This fund focuses on strategic and catalytic investment partnership. Applications closed on 27 February 2026.

Queensland biofuels mandates

Queensland’s sustainable biofuel mandates set minimum requirements for the sale of biobased petrol and biobased diesel.

Find out more about E10 compatibility and learn more about th Queensland biofuel mandates.