CANBERRA, May 21 (Reuters) - Australia plans to introduce biofuel blending mandates to incentivise local production and increase its energy security, a government spokesperson said, adding that developing the policy was a priority after the Iran war imperilled fuel imports.
Australia is a major producer of canola seed and tallow that are used to make biofuel but currently exports these products and imports the vast majority of its fuel.
Many countries have been seeking to increase their biofuel production and use since the Iran war began in late February, strangling exports of hydrocarbons through the Strait of Hormuz and pushing up oil prices.
Rising gasoline, diesel and jet fuel prices and the threat of supply shortages dominated newspaper front pages in Australia after the war began.
Biofuel blending mandates require fuel suppliers to ensure that a specified share of the fuel they sell comes from biofuels. They have been implemented in numerous countries for petrol, diesel and jet fuel.
The government will begin a consultation in the coming months on what mandates to introduce and could have a policy ready by the end of the year, a spokesperson said.
"It's a process that is being expedited," they said.
The consultation will include engagement with industry, study of other countries' policies, cost/benefit analyses and assessment of Australia's potential as a low-carbon fuel producer.
Government efforts to grow a biofuel sector - something long called for by Australia's farm industry - have accelerated in recent months.
The centre-left Labor government last year announced A$1.1 billion ($783.86 million) of funding over the next decade to support production infrastructure. It said Australia could have a low-carbon fuel industry worth tens of billions of dollars by mid-century.
($1 = 1.4033 Australian dollars)
Reporting by Peter Hobson; Editing by Jamie Freed
Source: Reuters