On The Land
29 August, 2026
Liquid fuels policy welcomed
THE Federal Government’s newly-released consultation paper on a national demand mechanism for low-carbon liquid fuels has been welcomed by the sugar industry along with a warning from Member for Kennedy Bob Katter that local manufacturing must be prioritised to rectify the reliance on imports by foreign-owned oil giants.
The consultation paper proposes an initial national volume requirement for cleaner fuels, potentially commencing in 2029, before a proposed transition to a carbon-intensity system from 2035.
Importantly, it proposes covering petrol and recognises ethanol as an eligible fuel. However, imported cleaner fuels could also satisfy the requirement, with no guarantee that the resulting demand would support Australian production.
Described as the most significant step forward in national policy on the issue in decades, Canegrowers chief executive officer Dan Galligan said it was critical that Australia started building its biofuels industry now.
“Australia has talked about biofuels for decades, and it’s been five years since the Federal Government released its first bioenergy roadmap, yet while we analyse and assess, other countries have built industries,” he said.
“The decision by the Federal Government to consult on the implementation of a demand-side policy to support a low-carbon liquid fuel sector is warmly welcomed. The direction is right, but the pace matters. Investment decisions are being made now and industry needs certainty now.”
However, he also warned that Australia could not wait until 2029 for action while overseas competitors raced ahead.
“If we move too slowly or allow the massive new global demand for low-carbon liquid fuels to be satisfied largely through imports, Australian dollars will help fund factories, jobs and regional development overseas while available capacity here remains underused,” Mr Galligan said.
More than 90% of the liquid fuels used in Australia were either imported directly or refined locally from imported crude. Yet Australia had abundant agricultural feedstocks, established regional processing capacity and growers ready to play their part.
The government’s paper identifies 360 million litres of operational ethanol capacity in Australia. The sugar industry processes around 30 million tonnes of sugarcane in a typical year, and industry estimates suggest it could ultimately produce more than 2.5 billion litres of ethanol a year – equivalent to approximately 14% of Australia’s petrol needs.
“Australia already has the feedstock, infrastructure, expertise and production capacity to make more bioethanol today. We should use what we have now while building what we need next,” Mr Galligan said.
“Sugarcane is a major renewable biomass resource. It can make an immediate contribution through ethanol, while its biomass can also support the development of advanced fuels such as sustainable aviation fuel and renewable diesel.
Mr Katter has also “cautiously” welcomed the policy paper but warned that local manufacturing must be prioritised.
“It is a measure of just how bad our governments have been in Australia, that we have remained one of the very few countries left on Earth to not mandate cleaner and greener ethanol fuels made by Australian farmers and manufacturers to reduce motor vehicle emissions along with our chronic dependency on imported fuels,” he said.
He said Australia was paying “our foreign overlords 10 times the amount that we sell our own indigenous oil reserves for, to buy back as refined product because all but two of Australia’s neglected oil refineries have been left to shut down in the past two decades”.
“The last thing we need right now is for any foreign ethanol producers to be given special access to our biofuels market, when Australia’s own growers and fuel producers need to be supported and protected. Any foreign access will spell disaster.”
