Australia's Farmers Want to Put Their Crops in Your Petrol Tank

Nine out of every ten litres of petrol that flowed into your tank this morning was foreign. It was refined in Singapore, South Korea, Japan or China, then shipped here on a tanker that took weeks to arrive. And right now, a coalition of Australian grain growers, cane farmers and sugar manufacturers reckon that's a national embarrassment they can fix with a paddock and a brewery.

The news that slipped past most of us

On Tuesday this week, four of Australia's biggest agricultural bodies did something they've never done before. The National Farmers' Federation, GrainGrowers, Australian Sugar Manufacturers and CANEGROWERS issued a joint statement calling for an immediate national mandate on ethanol and biodiesel. Between them, they speak for more than 150,000 farming businesses and 16 sugar manufacturing facilities.

It didn't make the front page. There were no press conferences with hard hats and shovels. But here's what's really going on: this is the first time the entire grain, oilseed, pulse and cane growing chain in Australia has formally united around a single fuel policy ask. And what they're asking for would touch every motorist in the country.

The coalition wants two things. First, a firm escalating pathway to grow demand for Australian made ethanol and biodiesel over time, the kind of legislated trajectory that retailers and refiners can plan against. Second, the inclusion of Australian made ethanol and biodiesel as eligible low carbon fuels under the Federal Government's $1.1 billion Cleaner Fuels Program, with applications opening mid 2026.

In plain language, they want the law to require a small but rising percentage of every litre of petrol and diesel sold in Australia to be made from Aussie crops.

How we got here

To put this in perspective, you have to go back about 20 years. Australia used to refine most of its own fuel. We had refineries in Sydney, Brisbane, Adelaide, Melbourne, Geelong, Kwinana and a handful of smaller plants. One by one, they shut. Mobil's Altona plant. BP's Kwinana operation. ExxonMobil's Adelaide refinery. Each closure was framed as a commercial decision, but the cumulative effect was strategic.

Today Australia has exactly two operating refineries. Viva Energy at Geelong and Ampol at Lytton in Brisbane. In 2025 they produced about 12 billion litres of petrol, diesel and jet fuel between them, which sounds like a lot until you realise that's only 20 per cent of what the country actually burns each year. The other 80 per cent comes off ships.

That reality became uncomfortably visible over the past few weeks. The current Middle East disruption forced the Federal Government to release emergency stocks, drop the Minimum Stockholding Obligation by 20 per cent and quietly hunt for tankers from the United States, South Korea and Malaysia. Energy Minister Chris Bowen told the country we had 46 days of petrol on hand. Forty six days. That's the buffer between business as usual and a national supply problem.

It's against that backdrop that the farmer coalition timed their announcement.

What's already in your tank

If you live in New South Wales, part of this story is already familiar. NSW has had a state biofuel mandate for years. The legislation requires bioethanol to make up 6 per cent of total petrol sales, which in practice means about 60 per cent of all petrol sold in the state is meant to be E10. Drive through Sydney and you'll see the green E10 bowsers everywhere, often two or three cents per litre cheaper than standard unleaded.

Queensland has its own version, requiring 0.5 per cent of all diesel sold to be biodiesel. Both schemes have been politically contentious for years, with retailers occasionally pushed into compliance through fines and awkward conversations with state regulators.

What the farmer coalition is proposing is essentially this, but federalised and ratcheted up over time. A starting percentage that's modest enough not to spook anyone, with a published increase schedule so investors and growers can commit to expansion. Long term, the coalition says Australia could produce more than 3 billion litres of biofuel a year, enough to meaningfully offset diesel imports.

For Queensland cane farmers, this is existential. Sugar mills already produce ethanol as a byproduct, but the domestic market for it is tiny. A federal mandate would create guaranteed demand. For grain growers across the wheat and sorghum belts of New South Wales and Victoria, it opens a second buyer for low grade or weather damaged grain that currently struggles to find a market.

Compared to the rest of the world

Here's the fascinating bit. Australia is genuinely behind on this. Brazil has been blending ethanol into petrol since the 1970s, and most petrol sold there contains 27 per cent ethanol. The United States blends about 10 per cent ethanol into virtually all its petrol under the federal Renewable Fuel Standard. India has just hit a 20 per cent ethanol blend nationally, two years ahead of schedule.

Thailand mandates E10 minimum, with E20 widely available. Even the United Kingdom shifted its standard petrol grade to E10 back in 2021 specifically to cut emissions.

In that company, Australia's voluntary federal approach with two state level mandates looks like a country that hasn't quite decided whether biofuel is a serious policy lever or a regional jobs program. The farmer coalition is essentially saying it's both, and it's time to stop pretending otherwise.

What this actually means for you at the bowser

Let's get to the practical bit. If a national mandate passes in something like the form the coalition is proposing, here's what changes for motorists.

First, expect more E10 and less standard ULP91 at metro servos. Retailers will rebalance their bowser allocations to meet the mandate, which usually means dropping or shrinking the standard unleaded option. Premium 95 and 98 stay on the menu because most modern engines specify them.

Second, E10 prices are typically 2 to 4 cents per litre cheaper than unleaded, but you'll lose roughly 3 per cent fuel efficiency compared to straight petrol. The maths usually still works in your favour, but only just. If E10 is only one cent cheaper, you're better off with regular unleaded.

Third, if you drive an older car, particularly anything pre 1986, check the fuel cap or owner's manual before you switch. Most Australian delivered vehicles built after 1986 are E10 compatible, but a handful of older Japanese imports, classic cars and some marine engines aren't. The Federal Chamber of Automotive Industries maintains a free compatibility list online.

Fourth, biodiesel mandates affect diesel drivers differently. Modern common rail diesel engines handle B5 and B7 blends without complaint, but if you've got a fleet vehicle on a manufacturer warranty that specifies pure mineral diesel, the small print matters.

The bigger picture

The Federal Government's $1.1 billion Cleaner Fuels Program was originally pitched as a sustainable aviation fuel initiative, with most of the political oxygen going to airlines and their net zero commitments. The farmer coalition's intervention is a deliberate attempt to broaden the program's scope so road transport biofuels qualify too.

Whether they get there politically depends on a few moving pieces. The retail fuel industry has historically been lukewarm on mandates because compliance costs sit with them. Refiners are split, with Ampol publicly more supportive of biofuels than Viva. The Greens want it but want it bigger. The Coalition wants it as a regional jobs play. Labor has the numbers but is wary of anything that pushes pump prices around in a year that already saw a 32 cent excise cut.

My industry contacts tell me the most likely path is a watered down version that starts with a 2 per cent ethanol floor and a longer escalation curve, designed to land before the next election cycle gets serious. Whether that satisfies the farmer coalition is another question entirely.

What to keep an eye on

The fuel industry rarely makes headlines until prices spike, but understanding these changes now puts you ahead of the curve. Keep an eye on this space.