Blog

Australia is set to grow enough canola this year to “fill just over six MCGs”, according to CommBank Agriculture and Sustainability Economist Dennis Voznesenski. Yet very little of that crop stays at home.

“Most of our canola is sent to Asia, the Middle East and Europe,” Voznesenski said.

Once offshore, the oilseed has two main uses. One is familiar – cooking oil. The other surprises many people.

“It’s either eaten as cooking oil or, believe it or not, turned into fuel,” he said.

Why canola is part of the fuel conversation

The idea of crops powering vehicles isn’t new, but it has gained momentum as governments and industries look for ways to cut emissions.

“A while ago scientists found that biofuels, when burnt in a car, truck or plane, produce fewer emissions than conventional fossil fuel,” Voznesenski said.

Biofuels are particularly relevant for sectors where cutting emissions is difficult. Aviation is one of them.

“You can make cars electric but not planes, at least not yet,” he said. “In the case of plane transportation, it helps reduce emissions in a hard to abate sector.”

That makes sustainable aviation fuel a growing focus globally – and a potential opportunity for Australian agriculture.

The missing piece: local production

Despite Australia’s large canola harvests, the country currently has limited ability to turn crops into fuel.

“As of today, there’s very limited capacity to create biofuel in Australia for road-based vehicles, and none for planes,” Voznesenski said.

The main barrier is cost.

“The cost of biofuel far outstrips conventional diesel,” he said.

That price gap has slowed investment locally, even as overseas markets scale up production and demand.

More than an emissions story

While emissions reduction is often the headline, Voznesenski said local biofuel production could deliver broader economic and strategic benefits.

One is supply security.

“Last year Australia imported over 95 per cent of its fuel,” he said. “That’s a scary stat for any industry.”

Producing more fuel domestically could reduce Australia’s exposure to global supply disruptions and geopolitical shocks.

Another benefit is for farmers.

“Creating local demand for crops reduces the risk of economic coercion being used against the farming sector,” Voznesenski said, pointing to recent tariff disputes that have affected agricultural exports over the past five years.

A domestic biofuels industry could provide growers with another major buyer for their crops, helping to diversify income streams and reduce reliance on a small number of export markets.

What it could mean for canola growers

If Australia were to establish a sustainable aviation fuel industry, the scale of demand would be significant.

“If a sector for sustainable aviation fuel production is created in Australia, our numbers show that roughly a million tonnes of canola would be needed,” Voznesenski said.

That level of demand would represent a substantial share of current production and could reshape how and where canola is sold.

It would also keep more value onshore, linking regional farming communities more closely to domestic energy and transport supply chains.

The key takeaway

Canola may look like just another crop, but it sits at the intersection of agriculture, energy security and emissions reduction.

You can explore the economics and implications of canola in more detail in the report Refuelling Australian Aviation.