Markets: Bioenergy markets in Australia: Bioenergy markets: Biodiesel
Biofuels, comprising ethanol and biodiesel, are one of the main alternatives to petrol and diesel used for motor vehicles in Australia.

Biodiesel is usually blended with conventional fuels (petrol or diesel) for use as motor vehicle fuel, or used as is.

Biodiesel facilities in Australia use a range of vegetable oils, vegetable tallow (animal fats) and used cooking oil as feedstock, which are selected according to price and availability.

Facilities and capacity to produce biodiesel

Production of biofuels in 2010–11 represented around 1% of Australia’s petrol and diesel production, according to the publication, Energy in Australia 2013, published by the Bureau of Resources and Energy Economics.

There are 4 major biodiesel production facilities in Australia, with additional facilities producing small quantities. Most production occurs in Victoria. The facilities are described by the Biofuels Association of Australia.

A total of around 170 million litres a year of biodiesel could be produced.

Policies and regulation

Fuel standards

Biodiesel can be blended with conventional diesel fuel or used as a neat fuel (100% biodiesel). It is typically used as a fuel additive in 5% (B5) and 20% (B20) biodiesel-diesel blends. (Source: Australian Department of Industry webpage.)

The quality standard for diesel in Australia includes a maximum sulphur content of 10 parts per million (ppm). The diesel quality standard also allows up to 5% biodiesel fuel without a labelling requirement. (Source: Energy in Australia 2013, published by the Bureau of Resources and Energy Economics, page 92.)

Specific physical characteristics that biodiesel can have are outlined in the biodiesel fuel quality standard by the Department of the Environment. Blends with up to 5% biodiesel are not required to be labelled (from March 2009) and generally do not require modification of standard diesel engines.

Blends with more than 5% biodiesel, such as 80% diesel and 20% biodiesel or B20, must be clearly labelled at the point of sale or supply. These blends are often used in commercial truck or bus fleets and mining vehicles. (Source: Australian Department of the Environment fuel quality standards.)

Mandated biodiesel sales

In Queensland, parliament passed the Liquid Fuel Supply (Ethanol and Other Biofuels Mandate) Amendment Bill 2015 on 1 December 2015.

The Bill requires the fuel industry to meet targets for the sale of bio-based petrol, such as E10 ethanol-blended petrol and bio-based diesel.

Initial mandates are:
  • 0.5% for bio-based diesel
  • 3% for petrol. In practice, this means that at least 30% of regular unleaded petrol sales must be E10 (because E10 is only 10% ethanol blended with regular unleaded petrol).

Both mandates will start on 1 January 2017.

Find out more about the biodiesel mandate, the percentages, and the possible pathways towards 2020.

Excise and taxation arrangements

If you manufacture or import biodiesel and renewable diesel that is produced using an approved process and meets the relevant fuel standard, the Energy Grants (Cleaner Fuels) Scheme grants 38.143 cents a litre to biodiesel producers for biodiesel produced and supplied for use in Australia.

(Source: Energy in Australia 2013, published by the Bureau of Resources and Energy Economics, page 95.)

The excise-equivalent cleaner fuel grant is applicable to eligible biodiesel or renewable diesel which accrues to the final distribution when the fuel enters the domestic market. You need an excise licence even if you are making a cleaner fuel, such as biodiesel, for your own personal use.

In May 2014, the Australian Government announced that it will reduce the fuel excise on domestically produced biodiesel to zero from 1 July 2015 to 30 June 2016.

In July 2011, the Australian Government extended the taxation arrangements for renewable fuels (biodiesel, ethanol and renewable diesel) for the next 10 years. The industry pays its full excise and it is granted back to them. The Government will review these arrangements after 30 June 2021. (Source: Biofuels Association of Australia webpage.)

A cleaner fuels grants scheme guide about the scheme and how to register, claim and offset your cleaner fuels grant is published by the Australian Taxation Office.

If you manufacture or blend biodiesel, this Australian Taxation Office fact sheet tells you how excise applies to the biodiesel you manufacture, and refers you to more detailed information to help you meet your excise obligations.

Grants and incentives

A number of national and state-based grants and support services are listed in the Grants and incentives section of this website.  


APAC Biofuel Consultants – Mike Cochran

APAC Biofuel Consultants

Phone: +61 08 82715818
A/Prof Kirsten Heimann

James Cook University

James Cook University, Townsville, QLD 4811,
Phone: +61 (0) 422 208 577
Amir Abadi

Department of Agriculture and Food, Western Australia

University of Western Australia, Nedlands WA 6907,
Phone: 0448 879 757