Australia’s canola crops could play a role in securing the nation’s long-term fuel security, according to a new report
Australia could produce more than two billion litres of fuel every year instead of exporting around six million tonnes of unprocessed canola seed.
This is one finding of a Rabobank report, which says there is a “rare strategic window” for Australia to capture greater value from its canola crop.
Canola oil is a key feedstock used in the production of biodiesel, with the report noting a rising demand for renewable diesel and sustainable aviation fuel to reduce emissions in these sectors.
“For Australia, this creates a genuine opportunity to rethink how canola fits into both our agricultural system and our energy system,” report lead author and Rabobank analyst Vitor Pistoia says.
The report says Australia exports around six million tonnes of canola seed each year, most of it unprocessed, which would equate to more than two billion litres of renewable diesel.
“By comparison, Australia imports more than 30 billion litres of diesel annually,” Pistoia says.
“At the moment, we export the raw material and import the finished fuel.
“That means a large share of the processing margin, jobs and strategic control sits offshore.
“As biofuel demand rises, that imbalance becomes harder to ignore.”
New sustainable aviation fuel and renewable diesel plants are under development in the Asia-Pacific region, which the report says will increase demand for processed vegetable oils.
The two main pathways for Australia’s canola industry to capitalise on this, according to the report, are expanding domestic crushing and then either refining domestically or increasing canola oil exports to these overseas refineries.
“Local processing could allow Australia to capture more value across the supply chain, while improving utilisation of co-products such as canola meal,” it said.
“From a technical perspective, canola oil aligns well with the refining pathways being built across Asia-Pacific,” Pistoia says.
“Australia’s geographic proximity to these markets also matters, as shorter shipping distances can reduce freight costs and emissions compared with some alternative origins.”
Diversifying demand for Australian canola by including the energy sector could also support longer-term price resilience and influence canola’s role in crop rotations, the report says.
“For grain producers, biofuels don’t replace existing markets, but they do add another demand pillar,” Pistoia says.
“That diversification can be valuable in managing price risk over the long term, particularly as global energy markets evolve.”
