Australia exported millions of litres of biofuels during fuel crisis as industry urges domestic mandate

A new alliance of biofuel producers says the government should require petroleum companies to buy Australian-made fuels to shore up supplies and ease price shocks.

By LineZotpaper

Published20 October 2026

Read Time3 min

Australia is exporting tens of millions of litres of biofuels that could otherwise add at least three days of supply to the nation's petrol and diesel stocks, fresh data shows, as the federal government consults on whether to force petroleum companies to buy domestically produced low-carbon fuels. With petrol prices averaging $2.42 per litre and the Iran war dragging on, Australia holds 41 days of petrol and 33 days of diesel, well below the international requirement of 90 days.

In the first six months of this year, when Australia was scrambling for additional fuel, more than 60 megalitres of Australian-produced ethanol and biodiesel was sent overseas, according to the newly formed Biofuel Producers Alliance. The alliance, made up of Manildra Group, Wilmar Sugar and three biodiesel companies, has about 470 megalitres of capacity — equal to about three days of extra supply.

"When we were sitting in March and April, and all of this was unfolding, E10 was one of the first fuels to drop out in service stations, and at the same time we shipped out 24 million litres of ethanol to South-East Asia, Korea and other places for them to use with their cars," said Matt Hobbs, chief executive of the alliance. "At a time of a fuel crisis we ignored fuel that we made here and instead sent it to other countries."

The alliance is urging the federal government to introduce a national biofuel blending requirement from 2027, rather than wait until 2029 as proposed in a government consultation paper on low-carbon liquid fuels. The government's proposal would begin with a volumetric mandate in 2029, shifting after 2035 to a carbon-intensity requirement. Mr Hobbs said a blending mandate could shore up stocks and ease the pain at the bowser by several cents per litre during price shocks.

The Australian Chamber of Commerce and Industry (ACCI) cautioned against imposing demand-side measures prematurely. In its submission, ACCI said any mandate should proceed only where sufficient fuel is available at competitive prices and the market, infrastructure and compliance systems are ready. It also said policy should increasingly focus on hard-to-abate sectors like aviation, heavy freight, mining and defence as the vehicle fleet electrifies.

The Australian Institute of Petroleum (AIP), representing Ampol, BP, Mobil Oil and Viva Energy, said in August it supports policies to "stimulate demand for low-emission fuels" and noted that its members have robust international supply chains that have ensured continued supply despite the Middle East crisis. "Local refining and in-country fuel reserves also strengthen our fuel security," said chief executive Malcolm Roberts.

Mr Hobbs countered that the four major fuel companies lack commercial reasons to buy Australian biofuels because they are vertically integrated and it is more advantageous to use their own supplies. In August, the Manufacturing Workers Union, Australian Workers Union, National Farmers' Federation, grain and sugar farmers jointly wrote to Prime Minister Anthony Albanese advocating for a national ethanol and biodiesel mandate.

Analysis

Why This Matters

Australia's fuel stocks remain far below the international benchmark of 90 days, leaving the country vulnerable to price and supply shocks.
A domestic biofuel mandate could provide an additional buffer of several days' supply and potentially lower pump prices during crises.
The government is weighing energy security against industry readiness, with implications for farmers, fuel companies, and motorists.

Background

Australia's fuel security vulnerabilities were exposed when the Iran war began in February, driving petrol prices to record highs. The government imposed emergency measures that lifted stocks above the lows seen early in the conflict, but the country still holds only 41 days of petrol and 33 days of diesel. While more than 60 countries require petroleum companies to buy biofuels, Australia has no such mandate, and domestic production is largely exported. Less than 1 percent of Australia's diesel last year came from biodiesel, far below rates in the United States and European Union.

Key Perspectives

Biofuel Producers Alliance: Argues a blending requirement could begin immediately, using existing capacity, to keep Australian-made fuel in the country and reduce price volatility. The alliance says the government's proposed 2029 start is too slow. Australian Chamber of Commerce and Industry: Warns against imposing demand-side measures until supply, infrastructure and compliance systems are proven ready. Supports temporary assistance and a focus on hard-to-abate sectors as electrification reduces passenger vehicle demand. Australian Institute of Petroleum: Backs the goal of low-carbon liquid fuels but emphasises that existing international supply chains and local reserves already underpin security. Vertically integrated fuel companies have little commercial incentive to buy domestic biofuels.

What to Watch

The government's response to its consultation on low-carbon liquid fuels, due to inform policy later this year.
Any further escalation in the Middle East that could tighten global fuel supply and renew pressure for domestic options.
The timeline for a possible blending mandate: whether the government moves it forward from 2029, as the alliance demands.

Sources

While Australia scrambled for fuel, millions of litres were being exported offshore · Just In

Checked

12 claims in this story checked against 1 source: 12 supported.

Show each claim

SupportedAustralia exported millions of litres of biofuels during fuel crisisJust In: “Australia is exporting tens of millions of litres of biofuels... In the first six months of the year, when Australia was scrounging for additional fuel, more than 60 megalitres produced in Australia was sent overseas instead”
SupportedIndustry urges domestic mandateJust In: “The Biofuel Producers Alliance has formed to encourage the federal government to require the major petroleum importers and refiners to buy Australian biofuels”
SupportedA new alliance of biofuel producers says the government should require petroleum companies to buy Australian-made fuels to shore up supplies and ease price shocksJust In: “Mr Hobbs said if the federal government introduced a 'national biofuel blending requirement' from 2027 it could shore up stocks and ease the pain at the bowser by several cents a litre during price shocks”
SupportedIn the first six months of this year, more than 60 megalitres of Australian-produced ethanol and biodiesel was sent overseas, according to the Biofuel Producers AllianceJust In: “In the first six months of the year, when Australia was scrounging for additional fuel, more than 60 megalitres produced in Australia was sent overseas instead”
SupportedThe alliance has about 470 megalitres of capacity — equal to about three days of extra supplyJust In: “The Biofuel Producers Alliance... already has about 470 megalitres of ethanol and biodiesel capacity, which amounts to about three days' extra supply”
SupportedMatt Hobbs said: 'When we were sitting in March and April... we shipped out 24 million litres of ethanol to South-East Asia, Korea and other places'Just In: “When we were sitting in March and April, and all of this was unfolding, E10 was one of the first fuels to drop out in service stations, and at the same time we shipped out 24 million litres of ethanol to South-East Asia, Korea and other places for them to use with their cars”
SupportedPetrol prices averaging $2.42 per litreJust In: “Petrol prices have risen again to an average $2.42 per litre as the war in Iran drags on”
SupportedAustralia holds 41 days of petrol and 33 days of diesel, well below the international requirement of 90 daysJust In: “Australia currently holds 41 days of petrol supply and 33 days of diesel... still well below the international requirement to hold 90 days of supply”
SupportedThe alliance urges a national biofuel blending requirement from 2027, rather than wait until 2029 as proposedJust In: “Mr Hobbs said if the federal government introduced a 'national biofuel blending requirement' from 2027... The government's consultation paper proposes to introduce a 'volumetric mandate' that would begin in 2029”
SupportedACCI cautioned against imposing demand-side measures prematurely and said any mandate should proceed only where sufficient fuel is available at competitive prices and market readinessJust In: “ACCI said the government should not impose demand-side measures... 'Broader demand-side market obligations should only proceed where it is proven that sufficient fuel is available at a competitive price and … that the market, infrastructure and compliance systems are ready.'”
SupportedAIP said in August it supports policies to stimulate demand for low-emission fuels; its chief executive Malcolm Roberts said local refining and in-country fuel reserves strengthen fuel securityJust In: “The Australian Institute of Petroleum... said in August it supported policies to 'stimulate demand for low-emission fuels'... its chief executive Malcolm Roberts said: 'Local refining and in-country fuel reserves also strengthen our fuel security.'”
SupportedIn August, unions and farmers wrote to Prime Minister Albanese advocating for a national ethanol and biodiesel mandateJust In: “In August, the Manufacturing Workers Union, Australian Workers Union, National Farmers' Federation, grain and sugar farmers jointly wrote to Prime Minister Anthony Albanese advocating for a national ethanol and biodiesel mandate.”