Why is the Australian Government being urged to mandate biofuel blends?

The government is facing pressure to mandate a 0.5% biodiesel and 1% ethanol blend to combat a national diesel shortage triggered by the closure of the Strait of Hormuz.

How would a biofuel mandate improve Australia’s fuel security?

A nationwide mandate is estimated to inject approximately 250 million litres of fuel into the domestic supply, effectively adding ten days of diesel reserves.

What is the current production capacity of Australian biofuel refineries?

Australia’s six existing refineries have the technical capacity to produce 650 million litres of fuel annually, but they are currently outputting only about 175 million litres.

Why is the Strait of Hormuz closure impacting Australian diesel supplies?

The Strait of Hormuz is a critical global chokepoint that handles 20% of the world’s oil; it has been 90% closed to shipping following US and Israeli air strikes on Iran.

Why doesn't the government simply build more traditional oil refineries?

Prime Minister Anthony Albanese has downplayed taxpayer investment in new refining capability because of the long lead times required for construction.

How does the proposed mandate differ from existing rules in New South Wales?

New South Wales currently requires large retailers to meet a 5% biodiesel target over a three-month period, which allows for flexibility in how they sell blends like B5 or B20.

Biofuel mandates urged to nolster national diesel security

Biofuel mandates urged to bolster national diesel security

Written by Heidi Cuthbert Published Apr. 24 2026Last Updated Apr. 24 2026

The Albanese government is facing mounting pressure to mandate biofuel blends as a strategic buffer against a deepening national diesel crisis.

With the Strait of Hormuz remaining largely impassable following regional military strikes, Energy Minister Chris Bowen is being urged by industry leaders to bypass costly refinery investments in favour of immediate regulatory shifts.

Bioenergy Australia has proposed a nationwide requirement for a 0.5% biodiesel and 1% ethanol blend.

CEO Shahana McKenzie argues that such a mandate would instantly signal demand to under-utilised domestic plants, potentially injecting 250 million litres into the system and extending Australia’s fuel security by ten days.

Currently, the nation’s six refineries operate well below their 650-million-litre capacity, with some plants, like Albury’s Just Biodiesel, running at a mere 10%.

While Prime Minister Anthony Albanese has dismissed "vibes" regarding taxpayer-funded refinery expansions, citing the lengthy lead times required for new infrastructure, the biofuel sector insists their solution is "shovel-ready".

Industry advocates point to Indonesia’s shift towards a 50% palm-oil blend as a benchmark for aggressive fuel security.

Unlike New South Wales, which employs a flexible quarterly quota, proponents are calling for a strict nationwide standard to compel major fuel retailers to prioritise domestic renewables over volatile imports.

Without a mandate, producers warn that local fuel will continue to be exported to Asian markets while Australian diesel reserves remain precariously thin.