Australia’s $735M Biofuels Investment and Its Implications

Australia has just made one of its boldest clean energy moves to date: a A$1.1 billion (US$735 million) investment to kickstart a domestic low-carbon fuels industry.

Beginning in 2028 and spreading over the next decade, the funding signals a substantial step in how the country positions itself in the global renewables race.

Australia has remained an active biofuels market participant—albeit something of an outlier compared to the US, Europe, and Asia. This announcement marks a turning point with Australia’s intent to become a serious player within the sustainable aviation fuel (SAF), biodiesel, and renewable diesel sectors.

Read More: Your Guide to Sustainable Aviation Fuels

Why This Matters

• A new industry onshore: Government officials call milestone announcement a “down payment on developing an entirely new industry in Australia.” The country will become capable of supporting renewable aviation, shipping, heavy transport, and construction.
• Job creation and regional growth: Farmers and rural communities, in particular, stand to benefit in both domestic and international markets. Canola, sugarcane, sorghum, and tallow, all major Australian outputs, are already in global demand for biofuel production.
• Greater domestic energy security: Australia currently exports most of its feedstocks and imports much of its gasoline. Developing a domestic fuels industry could rebalance this equation.

Implications for Feedstocks

Feedstock availability is where the policy truly comes into the spotlight.

• Canola: Already a significant export to Europe for biodiesel, canola could see even higher domestic demand.
• Sugarcane: Australia’s long-standing sugar industry could become a pillar of future biofuel production.
• Waste oils and residues: Tallow and used cooking oil will be vital for scaling sustainably.
• Export shifts: As more crops are diverted toward domestic refining, markets that rely on Australian feedstocks may feel the pinch.

The scale of the commitment suggests feedstock competition will intensify. This holds true not only within Australia, but across global supply chains.

Global Context of Australian Biofuel Expansion

This move brings Australia closer in line with policy-heavy peers such as the US (Inflation Reduction Act), the EU (RED III), and CORSIA-aligned aviation mandates. For investors and airlines, the timing is critical. Fuel from supported projects must begin flowing by 2029, right when global demand for SAF is expected to surge.

Looking Ahead

Australia’s $735 million biofuels commitment is more than just a funding package. It’s a signal to global markets that the country intends to move from the sidelines into a leadership position.

For biofuels producers, feedstock suppliers, and airlines, this is a development to watch very closely. The changes could reshape not just domestic markets, but international trade flows as well.

Want an in-depth look at the global biofuels and feedstocks market through 2025 and into 2026? Check out our on-demand webinar, Finding Feedstocks: Biofuels Outlook Q4 2025.