Farm waste such as animal manure, plants and wood has been identified as integral to the government's national interest and help secure Australia's fuel security.
This farm feedstock can be turned into low-carbon liquid fuel and power the aviation, maritime and heavy transportation sectors that, unlike cars, are hard to electrify, according to the government.
Details on the bid to progress farm-waste-to-fuel plans came on Tuesday as part of the government's release of two consultation papers regarding its $14.8 billion Fuel Security and Resilience Package, announced in the May budget.
"It is crazy that we are not taking the opportunity to develop this industry here," Transport Minister Catherine King told reporters in Canberra.
"We already export around about $5 billion worth of feedstock that is then turned into low-carbon liquid fuel internationally, and then sold out to Australian airlines," including Qantas and Virgin along with the defence force, she said.
The government has already identified 16 projects Australia-wide to further develop the biofuel that produces 80 per cent less carbon emissions compared with traditional fossil fuels.
Further investment in low carbon emission fuels will assist in a future fuel crisis, help achieve Australia's 2050 net zero emissions goal, and create economic opportunities for farmers, it said.
Energy Minister Chris Bowen said the government's approach will help it achieve its 2030 goal of having a mandatory minimum of 50 days petrol, diesel and jet fuel reserved onshore.
"While we got through the last this crisis well internationally, it would have been better if we had more fuel in Australia," he said, referring to the US-Iran war which has hampered global fuel supplies.
"When we came to office, we had two refineries ... and of course our fuel stocks were held in Texas. We've worked to improve that."
Low emissions liquid carbon fuels will be integral to this plan, Mr Bowen said.
In his weekly fuel update on Saturday, Mr Bowen said Australia had 41 days of petrol, 37 days of diesel, and 35 days of jet fuel domestically stocked.
However, the International Energy Agency - which Australia is a party to - mandates countries have 90 days of fuel reserves.
Opposition Leader Angus Taylor has previously called to Australia to adhere to this minimum stock-holding obligation.
