Running on Empty: Why Hemp Derived Biodiesel Deserves a Serious Place in Australia's Fuel Future

In 2000, the country operated eight refineries. Today, just two remain: Ampol's Lytton refinery in Brisbane and Viva Energy's Geelong plant.

It is a fragile position at the best of times. In the current global environment, it borders on reckless.

US and Israeli strikes on Iran have effectively closed the Strait of Hormuz, a critical passageway carrying roughly 20 per cent of the world's oil supply, sending prices toward US$120 per barrel and triggering genuine alarm about global fuel availability. Australia imports more than 90 per cent of its refined petroleum products from Asian refineries that themselves rely heavily on Middle Eastern crude. A crisis in the Persian Gulf does not simply affect Australia indirectly through global markets; it also affects the refineries in Singapore, South Korea and Japan that produce the petrol, diesel and jet fuel Australians consume daily. The vulnerability sits two steps upstream in the supply chain.

Diesel powers the trucks that move freight across the country, keeps agriculture operating, supports mining and construction, and ensures emergency services can function. If those supplies are disrupted during a global shock, the consequences will be immediate and severe: supermarket shelves would empty, transport networks would stall, and regional communities would be hit hardest.

Against this backdrop, Australia's hemp sector is sitting on an underutilised answer, and a regulatory framework that makes it nearly impossible to scale.

The case for hemp derived biodiesel

Hemp (Cannabis sativa L.) is one of the most versatile oilseed crops on earth. Its seeds yield a cold-press oil that can be processed into biodiesel through standard transesterification, the same method used for canola and soy. Unlike fossil diesel, hemp biodiesel is carbon-cycling rather than carbon-adding, it is non-toxic, and it biodegrades rapidly. It can be blended with conventional diesel at varying ratios, meaning it does not require new engines, new infrastructure, or a wholesale rethink of Australia's transport fleet.

The agronomic case is equally compelling. Hemp is a fast-growing, low-input crop that improves soil health, suppresses weeds and requires significantly less water than comparable broadacre alternatives. It grows across a wide range of Australian climates, from the tablelands of New South Wales to the red soils of the Northern Territory. Research has consistently shown that rotating hemp into grain cropping systems can lift subsequent wheat yields by ten to twenty per cent, meaning the crop delivers value even before the seed reaches a press.

For Australian farmers already under pressure from volatile commodity prices, climate uncertainty, and the ongoing squeeze of input costs, a dual-purpose energy and rotation crop represents exactly the kind of diversification the sector needs.

The regulatory handbrake

Here is where Australia's sensible-sounding hemp framework becomes quietly absurd.

Industrial hemp is legal in Australia, but regulation is split across different government bodies, and rules vary by state and territory, a patchwork that can feel confusing fast. Each state and territory has its own legislation covering cultivation, processing and storage, with licence applicants required to provide national police history checks, and site inspections generally required. Every industrial hemp crop must be tested for THC at the grower's expense.

The fragmentation is not merely inconvenient. It is a structural barrier to the kind of scale required to make hemp biodiesel commercially viable. A farmer in Queensland operates under different rules than one in Victoria. A processor moving hemp across state borders navigates layered compliance obligations that would test a well-resourced legal team, let alone a farming family exploring a new enterprise.

Critically, there is no national industrial hemp policy framework, no dedicated biofuel incentive structure for hemp, and no government-coordinated research program connecting hemp cultivation to Australia's fuel security strategy. A crop that could be part of a sovereign energy solution is being administered primarily as a niche food and fibre commodity.

This is a policy failure hiding in plain sight.

What a serious response would look like

A coherent national approach would begin with the obvious: harmonising industrial hemp licensing across all jurisdictions into a single federal framework, administered efficiently, with appropriate but proportionate compliance requirements. It would include dedicated research funding for Australian hemp biodiesel production pathways, connecting agricultural extension services with energy policy. It would offer targeted incentives for farmers in suitable regions to trial hemp as a biofuel feedstock, with offtake arrangements connected to biodiesel blending mandates for heavy transport and agriculture, sectors that cannot easily electrify.

Analysts warn that with roughly a month of petrol and diesel available under normal conditions, the system functions only because imports arrive continuously. If the Hormuz crisis continues for weeks or spreads further, genuine shortages become plausible.

Australia cannot refinery-build its way out of this crisis quickly enough. But it can grow its way toward a more resilient position, if it chooses to. Hemp biodiesel will not replace crude oil. It was never going to. But it can displace a meaningful proportion of diesel consumption in agriculture, regional logistics, and heavy industry, precisely the sectors most exposed when global supply chains fracture.

The plant is ready. The farmers are interested. The technology is proven.

The only thing missing is the political will to stop treating hemp like a problem to be managed and start treating it like an opportunity.

This article reflects the views of the author. It does not constitute fuel or investment advice. Readers interested in industrial hemp cultivation should consult their relevant state or territory licensing authority.