Australia Shipped Ethanol Overseas While E10 Vanished From Servos

Australia Shipped Ethanol Overseas While E10 Vanished From Servos

When the fuel squeeze hit in March, E10 was one of the first fuels to disappear from servos. Yet over March and April, 24 million litres of Australian ethanol was loaded onto ships bound for South East Asia, Korea and other markets.

That figure comes from the newly formed Biofuel Producers Alliance, and it sits at the centre of an argument that has just broken into the open in Canberra.

The fuel we made, then sold

According to ABC reporting published today, the alliance brings together Manildra Group, Wilmar Sugar and three biodiesel makers. Between them they can produce about 470 million litres of ethanol and biodiesel a year. That's roughly three days of the country's fuel use.

Much of it doesn't stay here. More than 60 million litres of Australian biofuel went overseas in the first six months of 2026, the alliance says, and close to 80 per cent of our canola and used cooking oil is exported, mainly to Europe and Asia, where some is turned into renewable diesel and jet fuel and sold back to us.

Biodiesel made up just 0.1 per cent of Australia's diesel last year, about a fiftieth of the rate in the US and Europe. And when the Middle East conflict began in February, ethanol blended petrol recorded its weakest month since 2010, the pandemic aside.

The alliance's chief executive, Matt Hobbs, argues the four big fuel companies have little commercial reason to buy local product because they're vertically integrated and find it cheaper to supply themselves. His fix is a national blending requirement on importers and refiners, starting in 2027.

A mandate, just not yet

Canberra is already thinking along these lines, only on a slower clock. The federal consultation on securing Australia's cleaner fuels industry, which closed on 15 September, floated a "volumetric mandate" that would require fuel suppliers to buy or supply set volumes of low carbon liquid fuels. The ABC reports the paper pencils in a 2029 start, with the rule switching after 2035 to a carbon intensity target instead of fixed volumes.

Unions, the National Farmers' Federation and grain and sugar growers wrote to Prime Minister Anthony Albanese in August asking for a national ethanol and biodiesel mandate. The Australian Chamber of Commerce and Industry went the other way, telling the government not to impose demand side measures now and to offer temporary assistance until supply, prices and infrastructure are ready. The Australian Institute of Petroleum, whose members include Ampol, BP, Mobil and Viva Energy, has backed policies to stimulate demand for low emission fuels, while noting that its members' international supply chains kept fuel flowing through the crisis.

We've been here before

Australia's relationship with ethanol has been rocky for more than two decades. In 2003 the federal government capped ethanol in petrol at 10 per cent after vehicle testing suggested higher blends could cause problems in some older cars, and labelling rules followed. The episode dented confidence in ethanol, and E10 has been fighting that reputation ever since.

NSW passed its Biofuels Act in 2007. The state's target is for ethanol to make up 6 per cent of petrol sold, which works out to around 60 per cent of sales being E10. It has never come close. IPART's 2024 monitoring report found E10 accounted for about 22 per cent of fuel sales, roughly a third of what the target implies. Queensland set a 4 per cent ethanol target from July 2018, and a 2021 state bill conceded it had never been reached, with compliance peaking at about 3 per cent.

Mandates aimed at what servos sell have struggled when drivers can simply pick regular unleaded instead. The national proposals sit further up the chain, at the companies that supply the fuel.

Most of our ethanol comes from a handful of plants: Manildra's at Bomaderry, just outside Nowra, which turns waste wheat starch into fuel, a sorghum plant at Dalby and Wilmar's molasses plant at Sarina, south of Mackay. Biodiesel has had a tougher run. Just BioDiesel's plant at Barnawartha, near Wodonga, was running at about 20 per cent of its 60 million litre capacity in March, the ABC reported, at a production cost of around $2.20 a litre.

How the rest of the world does it

To put this in perspective, more than 60 countries require petroleum companies to blend biofuels, including the US, the UK, Canada, EU members and Singapore. Brazil lifted its petrol blend to 30 per cent ethanol and its diesel to 15 per cent biodiesel in August 2025. Closer to home, Indonesia credits its B40 program (40 per cent biodiesel) with cutting its diesel imports, and its energy minister has said ethanol blending will be mandatory no later than 2028.

Some trivia worth sharing: Supercars have run on E85, a blend that's mostly ethanol, since the 2009 season, so the cars at Bathurst are burning the stuff. For everyday drivers, the sticking points have been price and confidence.

What three days actually buys

Three days doesn't sound like much. But Australia held 41 days of petrol and 33 days of diesel on 13 October, according to the government's fuel statistics, well short of the 90 days expected of International Energy Agency members. With Brent crude at US$151 a barrel in the week to 14 October and petrol averaging around $2.42 a litre, a few extra days of supply grown on Australian farms is a real buffer, and it doesn't need a tanker to get through the Strait of Hormuz.

Could a mandate bring prices down? The alliance says it could take several cents a litre off during price shocks. That hasn't been tested here, and biofuel isn't cheap to make.

The 2 cent problem at your servo

Here's the practical upshot for your wallet. Ethanol carries less energy than petrol, so E10 has about 3 per cent less energy than regular unleaded. The NSW Government and the RACV both say that typically means burning about 3 per cent more fuel, and the RACV's rule of thumb is that E10 needs to be at least 3 per cent cheaper to come out ahead.

At today's prices, 3 per cent is about 7 cents a litre.

Petrolmate checked official prices on Tuesday morning at servos within about 15 kilometres of the Sydney and Brisbane CBDs that sell both fuels. Of 162 Sydney servos, 118 priced E10 exactly 2 cents under regular unleaded, and only two had a gap of 7 cents or more. In Brisbane, 131 of 155 sat at exactly 2 cents and none reached 7. Median prices were 235.9 for E10 and 237.9 for unleaded in Sydney, and 234.9 and 236.9 in Brisbane.

A gap that uniform looks more like a pricing habit than a reflection of what ethanol costs. On the motoring clubs' maths, regular unleaded is often the better buy per kilometre right now, even though E10 looks cheaper on the sign. Your car may lose a little less (RACQ testing has found a penalty of 2 to 3 per cent), but 2 cents is a thin margin.

That goes to the heart of the mandate debate. If producers want Australians to burn more homegrown fuel, the price at the bowser has to reward it.

What to keep in mind

* Do the 3 per cent sum. At around $2.36 a litre, look for a gap of roughly 7 cents before choosing E10 on cost alone. Compare E10 prices with unleaded petrol prices near you, or try the savings calculator.

* Check your car first. Most petrol cars sold here in the past couple of decades can use E10, but your owner's manual or fuel flap will confirm it.

* Don't expect a mandate to move prices this summer. The government's draft timeline starts in 2029, and even the producers' faster version wouldn't begin until 2027.

* Watch the stockpile numbers. Cover is still well under 90 days, which is why homegrown fuel has crept into the security conversation, and diesel prices remain the pressure point for farmers and freight.

Australia has argued about ethanol for more than twenty years, usually when prices spike. This time the question is whether we can keep the tanks full. Keep an eye on what Canberra does with that consultation.