Groups including the CSIRO and Ampol said Australia had a unique opportunity to lead the world in the eco-friendly fuels and could produce as much as 90 per cent of the green jet fuel needed for domestic flights by 2050.
The forecasts, made on the first day of the Australian Renewable Fuels Week conference in Brisbane, came as the Queensland Government signed an agreement with Qantas to create a sustainable aviation fuel industry in the state.
The memorandum of understanding followed the pair's $2.7 million investment in a future North Queensland biofuel refinery in March.
Steven Bartholomeusz, from energy firm Neste said Australia had a tremendous opportunity to become a world leader in biofuels thanks to its natural resources and large agricultural industry.
He said greater government support and investments were needed to accelerate biofuel production and use in the country.
Without them Australia would remain on track to miss its goal of cutting carbon emissions by 43 per cent in 2030.
"If biofuels get a mandate for carbon reduction program, it could provide a way to reduce that gap of 14 per cent," Mr Bartholomeusz said.
"One option is an 18 per cent biofuel blend – an 18 per cent blend would help Australia reach its greenhouse gas emissions reduction target."
Biofuels, including biodiesel for use in vehicles and sustainable aviation fuel (SAF) for planes, are made from materials such as cooking oils, sugar cane, and animals fats.
CSIRO Futures senior manager Max Temminghoff said Australia could potentially produce huge stores of biofuels and SAF that was currently in high demand worldwide.
The aviation industry has committed to delivering net-zero air travel by 2050, mostly through the use of biofuel.
"Our analysis projects that in 2025 Australia will have enough feedstock to produce 16 per cent of local jet fuel demand using biogenic feedstocks, growing to 90 per cent by 2050 as biogenic feedstocks continue to grow and hydrogen production scales," he said.
"SAF will allow domestic airlines to… contribute to decarbonising Australia."
Qantas sustainable aviation head Graeme Potger said the biofuel had become the only answer to reducing emissions from long-haul flights, as electric and hydrogen-fuelled planes were only expected to become viable for regional flights by 2030.
But Dr Adriana Downie, from advanced recycling firm Licella, said Australia could do more than cut carbon emissions by embracing the use of biofuels, as its production could create thousands of jobs.
The country's sugar cane industry was currently wasting tonnes of materials that could be used to create biofuel and the new trade could double its existing workforce, Ms Downie said.
"We could create a new industry for Queensland.
"We really can create jobs on the scale of the sugar-milling industry and even over that."
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