Biofuels as an alternative transport fuel is a growing and dynamic industry in Australia. The Australian Government has set a target of at least 350 mega litres (ML) of biofuels production by 2010. In addition, some State Governments are introducing ethanol-blend transport fuel mandates.

The capacity for biofuels industry development in Australia is influenced by the comparative cost advantage to the world oil price, available supply of economic feedstock, investment in new or expanded plant and government policy.

There is a limited supply of feedstock, at competitive prices, to meet Australia’s biofuels production capacity. This competition for feedstock will put players already established or nearing commissioning of new plant in Australia ahead of new entrants. Almost all proposed biofuels plants are located close to feedstock supplies in regional areas across Australia. More competitive investment opportunities may lie in production by existing plants with sunk costs or biofuels made from wastes.¹

¹ Report of the Biofuels Taskforce to the Prime Minister, August 2005, Chapter 6 (pp103-105) online: www.dpmc.gov.au/biofuels/index.cfm