As Australian households suffer the impact of higher fuel prices – compounded by cost of living pressures and a further rise in interest rates – some are calling for biodiesel to be made available at the pump.
Conflicts in the Middle East have caused fuel prices to rise, causing panic buying and shortages across Australia, and alternatives such as biodiesel are now being considered as a possible solution ABC News.
Unfortunately, most modern vehicles sold in Australia can only run on negligible blends of biodiesel.
Two decades ago, many believed that biodiesel – which can be made from waste oil, vegetable oil, algae and organic waste products – would make a significant contribution to the transition away from traditional fossil fuels due to its ease of production and the infrastructure currently in place.
With Daily Sparkz you can save thousands on a new car. Click Here to get a great deal.
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.
Abroad, some developing countries are turning to biodiesel to reduce their dependence on crude oil. The Philippines is considering switching to a seven percent biodiesel blend known as B7 (blended with 93 percent traditional diesel derived from crude oil).
Indonesia is at the forefront, with the country expected to move from a 40 percent mix to 50 percent this year.
In Australia, government fuel standards allow the addition of up to five percent biodiesel.
As recently as June 2025, the Australian Strategic Policy Institute – the independent, defence-funded think tank – highlighted the federal government’s apathetic policies towards fuel safety over the past decade and explained why urgent action was needed.
In August 2025, Airbus Australia boss Stephen Forshaw called for the introduction of a one or two percent duty on ethanol in aviation to jump-start Australia’s fledgling biofuel industry – rather than relying almost exclusively on fuel refined in Singapore.
“If we don’t seize this opportunity quickly, we risk the future being built in Singapore, not Australia,” Forshaw said Australian Financial Report at the time.
“We want to use our raw materials here to produce fuels here, to drive our industry here and to take advantage of the economic and safety advantages here.
“We can’t afford to give up what we’ve always done well in Australia – exporting our raw materials for others to process. By doing so, we’re simply exporting the opportunity to others.”
Weeks later, in September 2025, the federal government announced a $1.1 billion package for biofuels – but it won’t begin until 2028, around 25 years after experts called for a major commitment to the industry.
However, as both the public and private sectors begin to invest in the development of new generation synthetic fuels – so-called eFuels – simpler solutions such as biodiesel and ethanol may no longer be viable for most modern cars driven in Australia.
While older diesel vehicles with mechanical injection pumps can usually run on biodiesel without any problems, newer common rail engines – which became more prominent in the late 1990s – can usually only accept a blend of up to five percent biodiesel, with select examples able to accept a blend of up to 20 percent, known as B20.
Likewise, some older vehicles such as the Holden Commodore and Saab 9-3 Biopower were able to accept ethanol blends of up to 85 percent (E85), but the vast majority of petrol cars now sold can only accept 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.
Although there is a community of enthusiasts making biodiesel in their own garages and sheds, producing biodiesel costs about $2.20 per liter, said Peter Chomley, director of Just BioDiesel ABC News last week.
Not particularly helpful is the federal fuel consumption tax, which biodiesel is still subject to, even if it is produced privately and in small quantities.
Simply put, if someone makes a liter of biodiesel for their diesel riding mower from waste oil that would normally be discarded, they should also write a check for $0.52 to the ATO.
Regardless, there are some commercial applications for biodiesel: US tractor giant John Deere has approved a B30 blend in its agricultural machinery, while Pepsi in North America has converted more than a dozen Volvo prime movers to run on B100.
Elsewhere, advances in sustainable fuel technologies mean companies like Porsche are investing in new e-fuel production facilities – including one in Tasmania – that promise to capture carbon from the atmosphere and convert it into synthetic gasoline and diesel compatible with modern engines.
Instead of allowing new carbon molecules to be released into the atmosphere, as is the case with petroleum-derived products and biodiesel, cars that use eFuels supposedly only burn the same amount of carbon that has been removed from the atmosphere.
Porsche claims that this will enable “potentially almost CO2-neutral operation of petrol engines”. Another advantage of using eFuels is that they can take advantage of the fuel infrastructure and vehicles currently in use.
Monash University has also developed technology that converts used tires and plastics into products that can be refined into fuels – with the added benefit of reducing landfill.
“On a commercial scale, this could result in plants processing around 60 tonnes per day, producing diesel-like fluids, solid carbon and chemical monomers,” said Professor Sankar Bhattacharya, who heads the department of chemical and biological engineering at Monash.
“The liquid products could be supplied to domestic fuel refineries, while the solid carbon and monomers can support circular tire manufacturing, plastics production and other industrial materials.”
All of this ignores the significant impact of electric vehicles, which – from a commercial perspective – can easily provide a “last mile” solution for couriers who tend to serve a specific area and do not typically require the longer range that a diesel engine offers.
Electric car owners now use the electricity generated by solar panels in their homes every day.
The use of eFuels could provide a sustainable solution for scenarios where electric vehicles are impractical or the technology does not yet exist; for example, road trains that operate 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 may be able to ease some of the pain Australians are currently suffering, real investment and action in the emerging eFuels industry – alongside the reintroduction of subsidies and incentives for electric vehicles – is urgently needed to ensure the country’s fuel security is protected from the next international crisis and to address ongoing environmental challenges.
MORE: What the $100 a barrel oil price really means for Australian petrol and diesel
