Australia Biofuel Market 2026 | Worth USD 9.5 Billion by 2034

Australia Biofuel Market Overview:
Australia's biofuel market is entering a transformative growth phase, powered by the Australian Government's AUD $1.1 billion investment in low-carbon liquid fuels, rising demand for sustainable aviation fuel (SAF), expanding ethanol blending mandates in New South Wales and Queensland, and advancements in next-generation feedstocks like Pongamia. The country's three major fuel ethanol facilities have a combined nameplate capacity of approximately 440 million litres per year, with the Manildra Group alone accounting for 300 million litres. The Australia biofuel market size reached USD 3.1 Billion in 2025. Looking forward, the market is projected to reach USD 9.5 Billion by 2034, exhibiting a growth rate (CAGR) of 12.40% during 2026-2034. The market covers biodiesel, ethanol, and other biofuel types, sourced from coarse grain, sugar crop, vegetable oil, and other feedstocks. Jet Zero Australia's $75 million Project Ulysses targeting 113 million litres of SAF annually, Virgin Australia and Qatar Airways' North Queensland SAF facility targeting 96 million litres per year, Viva Energy's pioneering biofuel trial for cruise ships, and Terviva's Pongamia plantation project in Queensland are among the key factors driving market expansion.

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Australia Biofuel Market Summary:
• The Australian Government has committed AUD $1.1 billion to support the production of low-carbon liquid fuels, with eligibility details to be finalized by June 2026 and applications opening in mid-2026. This landmark investment represents a step-change for the domestic biofuel industry, providing production incentives that aim to accelerate decarbonization across transport sectors including aviation, maritime, and road freight.

• Australia's three major fuel ethanol production facilities have a combined nameplate capacity of approximately 440 million litres per year, though actual production sits around 175 million litres, indicating significant underutilization of roughly 60%. The Manildra Group's Bomaderry facility is the largest, producing 300 million litres from waste wheat starch and accounting for approximately 68% of total national ethanol output.

• Sustainable aviation fuel is emerging as the fastest-growing segment, with Jet Zero Australia advancing three major projects in Queensland. Project Ulysses in Townsville has completed $75 million in engineering activities and early civil works, targeting construction commencement in 2026 and production of 113 million litres of SAF and renewable diesel annually by 2028.

• Virgin Australia and Qatar Airways have partnered with Renewable Developments Australia to develop a SAF facility in North Queensland's Charters Towers Region, with a target annual output of up to 96 million litres. This partnership highlights the growing commercial airline commitment to sourcing Australian-produced sustainable fuel to meet emissions reduction targets.

• State-level fuel blending mandates in New South Wales (6% bioethanol content, requiring 60% of petrol sales to be E10) and Queensland (3% ethanol blend requirement) provide a guaranteed domestic market for bioethanol, creating a stable demand floor that supports ongoing investment in production capacity.

• The maritime biofuel sector has opened a new frontier, with Viva Energy Australia launching Australia's first commercial biofuel trial for cruise ships using a B20 blend comprising 80% marine distillate and 20% biodiesel derived from used cooking oil on Royal Caribbean's Celebrity Edge vessel.

• Next-generation feedstocks are gaining momentum, with Terviva partnering with Idemitsu to establish Pongamia tree plantations in Queensland for SAF production, while Energreen Nutrition Australia is building a 70,000-tonne annual capacity multi-seed crushing facility at Yamala in Central Queensland with a long-term vision for Pongamia oil as a SAF feedstock.

• The Manildra Group is constructing a new ethanol storage and export facility at Port Kembla featuring a bulk liquid storage terminal with 24 million litres capacity, positioning Australia as a potential biofuel exporter and strengthening the supply chain infrastructure needed to support growing domestic production volumes.

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Key Trends Shaping the Australia Biofuel Market:
Sustainable Aviation Fuel Pipeline Expansion:
Australia is rapidly positioning itself as a major SAF production hub in the Asia-Pacific region, with multiple large-scale facilities progressing from planning to construction. Jet Zero Australia's Project Ulysses in Townsville has completed $75 million worth of engineering and early civil works, targeting 113 million litres of SAF and renewable diesel annually by 2028. Simultaneously, Virgin Australia and Qatar Airways are backing a facility in North Queensland's Charters Towers Region aiming for 96 million litres of annual SAF output. These projects are directly supported by the Government's AUD $1.1 billion low-carbon liquid fuels incentive programme.

Next-Generation Feedstock Development:
The Australian biofuel industry is moving beyond traditional grain and sugar-based feedstocks toward advanced alternatives that don't compete with food production. Terviva has partnered with Japanese energy company Idemitsu to establish Pongamia tree plantations in Queensland, creating a dedicated non-food feedstock supply chain for SAF production. Jet Zero's Project Silvo Plus is trialling both Pongamia and agave as novel feedstocks, while Energreen Nutrition Australia is building a 70,000-tonne processing facility at Yamala with long-term Pongamia oil ambitions. These developments signal a structural shift toward second and third-generation biofuels.

Government Incentive-Driven Market Acceleration:
The AUD $1.1 billion federal investment in low-carbon liquid fuels represents Australia's most significant policy commitment to the biofuel sector. Combined with existing state-level mandates in New South Wales requiring 6% bioethanol content in petrol and Queensland's 3% ethanol blend mandate, the regulatory environment is creating a multi-layered support structure for domestic production. The incentive programme is designed to use locally sourced agricultural and waste feedstocks, which simultaneously supports regional economies and reduces import dependence for renewable fuels.

Maritime and Heavy Transport Biofuel Adoption:
Biofuels are expanding beyond road transport into hard-to-abate sectors like maritime shipping and heavy freight. Viva Energy Australia's launch of Australia's first commercial biofuel trial for cruise ships, using a B20 blend of marine distillate and used cooking oil-derived biodiesel on Royal Caribbean's Celebrity Edge, marks a significant milestone. This trend reflects growing recognition that biofuels offer one of the few practical near-term decarbonization pathways for maritime and long-haul transport sectors where electrification remains impractical.

Infrastructure Buildout and Export Potential:
Australia is investing heavily in biofuel storage, processing, and export infrastructure to match its growing production ambitions. The Manildra Group's new ethanol storage and export facility at Port Kembla, featuring a 24-million-litre bulk liquid terminal, positions Australia to become a biofuel exporter in the Asia-Pacific market. With existing production capacity of 440 million litres significantly underutilized at around 175 million litres of actual output, the combination of new incentives, expanding SAF demand from regional airlines, and improved port infrastructure creates a pathway for Australia to scale production well beyond domestic consumption.

Market Growth Drivers:
Government Policy and Billion-Dollar Investment Support:
Australia's biofuel market is being supercharged by unprecedented government financial backing, headlined by the AUD $1.1 billion federal incentive programme for low-carbon liquid fuels announced in September 2025. This represents the largest single government commitment to the biofuel sector in Australian history, with public consultation underway and applications expected to open in mid-2026. At the state level, New South Wales mandates that bioethanol constitute 6% of petrol sales, effectively requiring 60% of all petrol to be sold as E10, while Queensland requires a 3% ethanol blend across regular unleaded petrol. These mandates provide a guaranteed demand floor that de-risks investment in new production capacity. The Queensland Government has additionally provided targeted support for SAF development, recognizing the state's strategic advantage in feedstock availability and its proximity to major Asia-Pacific aviation routes.

Sustainable Aviation Fuel Demand Surge:
The global aviation industry's commitment to net-zero emissions is creating enormous demand for SAF, and Australia is positioning itself as a key regional producer. Jet Zero Australia is advancing three projects in Queensland, with Project Ulysses completing $75 million in engineering work and targeting 113 million litres of annual SAF production by 2028. The Virgin Australia and Qatar Airways partnership with Renewable Developments Australia for a 96-million-litre SAF facility in North Queensland brings major airline backing to the production pipeline. The aviation sector's willingness to sign long-term offtake agreements for SAF provides the revenue certainty that biofuel producers need to justify the significant capital investment required for commercial-scale facilities. With Australia's geographic position as a gateway between Asia-Pacific and global aviation routes, domestically produced SAF can serve both Australian carriers and international airlines refueling at Australian airports.

Feedstock Innovation and Circular Economy Integration:
Australia's biofuel industry is overcoming feedstock constraints through innovation in both agricultural crops and waste valorization. Terviva's partnership with Idemitsu to cultivate Pongamia trees in Queensland represents a breakthrough in non-food competitive feedstock development, as Pongamia thrives in marginal agricultural land and produces oil-rich seeds suitable for conversion to SAF and biodiesel. Jet Zero's Project Silvo Plus is also trialling Pongamia alongside agave as novel feedstocks. On the waste side, Viva Energy's use of used cooking oil for its B20 marine biofuel trial demonstrates how waste streams can be valorized into high-value transport fuels. The Manildra Group's use of waste wheat starch for ethanol production and the broader potential for crop residues, forestry waste, and municipal organic waste as advanced biofuel feedstocks align Australia's biofuel strategy with its circular economy ambitions.

Australia Biofuel Market Segmentation:
Breakup by Type:
• Biodiesel
• Ethanol
• Others

Breakup by Feedstock:
• Coarse Grain
• Sugar Crop
• Vegetable Oil
• Others

Breakup by Region:
• Australia Capital Territory and New South Wales
• Victoria and Tasmania
• Queensland
• Northern Territory and Southern Australia
• Western Australia

Key Players:
The major players in the Australia biofuel market include Manildra Group, Viva Energy Australia, Jet Zero Australia, Dalby Bio-Refinery, Wilmar (Sucrogen), United Petroleum, Terviva Inc., Rio Tinto, Shell, and others. These companies are driving growth through investments in sustainable aviation fuel facilities, advanced feedstock development, ethanol production expansion, and next-generation biofuel technologies to meet Australia's rising demand for low-carbon liquid fuels.

Key Aspects Required for the Australia Biofuel Market:
• AUD $1.1 billion federal government investment in low-carbon liquid fuels with applications opening mid-2026, representing the largest single policy commitment to Australia's biofuel sector and providing production incentives for domestic renewable fuel manufacturing.

• Jet Zero Australia's Project Ulysses completing $75 million in engineering activities in Townsville, targeting 113 million litres of annual SAF and renewable diesel production by 2028, with construction slated to commence in 2026.

• Virgin Australia and Qatar Airways' partnership with Renewable Developments Australia to build a SAF facility in North Queensland's Charters Towers Region targeting 96 million litres of annual output, backed by major airline offtake commitments.

• State-level ethanol blending mandates in New South Wales (6% bioethanol, requiring 60% of petrol as E10) and Queensland (3% ethanol blend) providing a guaranteed domestic demand floor for bioethanol production.

• Manildra Group's dominance in ethanol production at 300 million litres annually from waste wheat starch (68% of national output), complemented by a new 24-million-litre export terminal under construction at Port Kembla.

• Pongamia tree cultivation emerging as a breakthrough non-food feedstock, with Terviva-Idemitsu partnerships in Queensland and Jet Zero's Project Silvo Plus trialling both Pongamia and agave for SAF production.

• Viva Energy Australia's first commercial maritime biofuel trial using B20 blend (20% biodiesel from used cooking oil) on Royal Caribbean's Celebrity Edge, opening a new market segment for biofuels beyond road transport.

• National ethanol production capacity of 440 million litres significantly underutilized at approximately 175 million litres of actual output, representing a major opportunity for capacity ramp-up as policy incentives take effect.

Recent News and Developments:
September 2025: The Australian Government announced the AUD $1.1 billion production incentive for low-carbon liquid fuels, the largest single federal investment in biofuels, with scheme details to be finalized by early 2026 and applications opening in mid-2026.

May 2025: Viva Energy Australia launched the nation's first commercial biofuel trial for cruise ships, utilizing a B20 blend of marine distillate and biodiesel derived from used cooking oil on Royal Caribbean's Celebrity Edge vessel.

April 2025: Virgin Australia and Qatar Airways partnered with Renewable Developments Australia to announce plans for a Sustainable Aviation Fuel facility in North Queensland's Charters Towers Region, targeting annual output of up to 96 million litres of SAF.

March 2025: Jet Zero Australia's Project Ulysses in Townsville completed $75 million in engineering activities and early civil works, with construction planned to commence in 2026 targeting production of 113 million litres of SAF and renewable diesel annually by 2028.

February 2025: Terviva Inc. partnered with Japanese energy company Idemitsu to establish Pongamia tree plantations in Queensland, Australia, creating a dedicated non-food feedstock supply chain for sustainable aviation fuel production.

January 2025: The Manildra Group's new ethanol storage and export facility at Port Kembla, featuring a bulk liquid storage terminal with 24 million litres capacity, neared completion, positioning Australia as a potential biofuel exporter in the Asia-Pacific region.

November 2024: Energreen Nutrition Australia announced plans to establish a 70,000-tonne annual capacity multi-seed crushing and processing facility at Yamala in Central Queensland's Inland Port at Emerald, with a long-term vision for Pongamia oil production as a SAF feedstock.

October 2024: Rio Tinto expanded its biofuel procurement strategy to reduce emissions in its Australian mining operations, partnering with domestic biofuel suppliers to secure renewable diesel for its heavy transport fleet.

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