Australia imports around 80 per cent of its diesel, and a new Rabobank report says the country’s farms could help cut that exposure while opening up new markets for growers.
The report, Biofuels could strengthen Australia’s fuel security and create new markets for farmers, comes from the bank’s RaboResearch division.
It says Australia’s heavy reliance on imported diesel and jet fuel leaves farmers, freight operators, mining, airlines, and motorists exposed to global supply disruptions and price spikes.
Australia is also in the top 10 importers of jet fuel and the top 15 for petrol.
Report author and RaboResearch general manager Stefan Vogel said the reliance on imported fuel was both a “strategic vulnerability” and a “market opportunity” for the food and agribusiness sector.
“Recent global diesel shortages and price spikes raise an important question for Australia: ‘are competing agricultural exporters better protected from fuel supply disruptions because they produce more fuel domestically, including biofuels?’,” he said.
Major competitors including Brazil, the EU, and Indonesia have built large biofuels industries over the past two decades, supported by local legislation.
“Brazil, the EU and Indonesia produce biodiesel volumes that materially offset their diesel import requirements,” Mr Vogel said.
The report found Australia’s canola exports, which have averaged 5.7 million tonnes a year over the past five years, could in theory replace more than nine per cent of the country’s annual diesel use if converted to biodiesel.
There would be “further upside” if canola plantings grew and other feedstocks such as tallow, used cooking oil, cottonseed, and non-food oilseeds were added.
Grain and sugar exports could in theory replace about 10 and 20 per cent of petrol use respectively if converted to ethanol.
Alternatively, canola, sugar, and grain exports could theoretically meet more than half of Australia’s jet fuel needs if turned into sustainable aviation fuel.
The report says these are “theoretical conversion estimates” rather than likely outcomes, and Australia would not need to redirect all its farm exports to improve fuel security.
More than 70 per cent of Australia’s grains, canola, and sugar are exported, which adds to the risk for farmers during trade friction and geopolitical tension.
“Local value-add provides options for farmers when they sell their products and can result in better prices,” Mr Vogel said.
He said capturing the opportunity would likely need coordinated action, including “credible long-term government policy, investment in processing and distribution, robust sustainability standards and careful management of food exports and land use”.
“Australia may want to assess biofuels as an integrated fuel security and agricultural market strategy,” Mr Vogel said.
“A staged approach focused on the most competitive feedstocks and uses could build resilience, develop new value chains and test commercial viability without compromising existing markets.”
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