Words by Toby Grogan, Head of Natural Capital & Advisory
Last week, Danny Elia of IFM Investors told ABC News that if the Australian Government commits to a biofuels mandate, he would go to his investment committee the next day seeking approval for a $3 billion sustainable aviation fuel (SAF) refinery in Brisbane. It would be Australia’s first. GrainCorp would build adjacent crushing capacity.
Elia oversees $266 billion in infrastructure capital on behalf of Australia’s industry superannuation funds. When capital at that scale discloses what’s holding investment back, policymakers should listen carefully.
Australia already has a biofuels industry
NSW introduced Australia’s first ethanol mandate in 2007, designed to reduce reliance on imported petroleum and stimulate domestic biofuel production. Ethanol plants were built. Feedstock supply chains formed. Companies like Manildra Group invested in production capacity.
But the policy architecture became a roadblock.
Mandates were fragmented state-by-state. Only NSW and Queensland adopted them, while the Howard Government ruled out a national scheme. Exemptions diluted demand, excise settings were murky, and investor confidence never fully stabilised. By 2015, Manildra Group was arguing that loopholes in NSW were costing the company tens of millions of dollars, with ethanol blending rates falling well below mandated levels.
The lesson from that period wasn’t that Australia lacked feedstock, processing capability, or investor appetite. It was that infrastructure-scale industries don’t emerge from an unstable policy base. They emerge when governments define demand clearly enough, and long enough, for capital to build against it.
We can learn from hindsight (and from a global fuel crisis)
More than six million tonnes of canola leave Australia each year, most of it flowing into European markets where renewable fuel mandates define demand in advance. In those systems, policy doesn’t follow investment; it precedes it.
Demand is defined first, and capital builds into it.
Australia’s approach has created a structural inversion that’s now difficult to ignore. We are embedded in global fuel security through our exports, but we buy back more than 30 billion litres of diesel each year, carrying full exposure to supply disruption and volatile pricing.
Diesel at +$3/L hasn’t created the paradigm we find ourselves in, but it’s making it harder to ignore.
At the same time, the next biofuels ecosystem is already taking shape. Jet Zero’s Project Mandala (supported by IAA’s Advisory team on agricultural feedstock assessment) has completed feasibility work to expand domestic manufacturing and SAF service capacity across critical sectors, including defence.
GrainCorp is expanding domestic canola crushing capacity linked to renewable fuel production. And agricultural peak bodies – including the NFF, GrainGrowers, Canegrowers, and Australian Sugar Manufacturers – have aligned around the same point: long-term demand architecture is the missing piece.
Once that architecture is in place, the system will self-organise. Feedstock shifts from export commodity to strategic energy input. Processing moves closer to production. Offtake extends beyond seasonal cycles into long-term contracts.
And critically, agriculture moves to the centre of fuel security, and stops being at the mercy of it.
None of this is speculative, because the supply-side components already exist. So does government concern around future fuels, reflected in $1.1 billion in grants to expand biofuel production. (It’s worth noting this announcement was later dwarfed by more than $10 billion of fuel security measures announced last week, focused on stabilising Australia’s existing fossil fuel supply chains.)
What remains unresolved is the mechanism that binds those elements into a system capable of scaling.
The real signal in Danny Elia’s commentary is how quickly capital would move if the right conditions were set. This is no longer a question of proving feedstocks, inventing processing technologies, or waiting on years of technical development. Those pieces already exist.
The remaining constraint is demand durable enough for infrastructure-scale investment to move.
If we take the EU as our cue, that durability is defined by policy, or it is not defined at all.
It’s time our government recognised that demand is designed.
A note on data
Impact Ag Australia manages institutional capital on behalf of investors. That mandate carries not only a requirement for strong, long‑term performance, but data confidentiality.
This piece therefore focuses on system logic, risk exposure, and performance drivers – dynamics observable across the sector both here and globally. Where readers wish to explore the evidence base, or how regenerative practices can add value to their business, please contact us and a member of our Advisory team will be in touch.
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