A NEW form of biofuel could provide a lifeline to struggling producers, delivering them a lucrative industry without forfeiting prime agricultural land.
Boffins in Queensland are pioneering the use of algae as a power source - the green muck can be grown on any rural property no matter how degraded.
The research is being done by the University of Queensland's Solar Biofuels Research Centre in Brisbane, where the algae is grown in ceramic bowls about the size of a bathtub, then examined to find the best way of converting it into fuel.
Algae-derived oils have already successfully powered modified aircrafts.
The Queensland Government under Premier Anna Bligh pledged $1.5 million towards the $3.5 project, of which about $1 million has already been spent. Funding continued once LNP Premier Campbell Newman took office.
When he toured the newly launched facility, Mr Newman said the growth of this technology would benefit rural Australia.
"With plenty of sunshine and open spaces, rural Queensland has the climatic qualities required to become a major hub for biofuels in the Asia Pacific region, boosting exports as well as the domestic market," he said.
Science Minister Ian Walker said the future of biofuels would be a boon to producers.
"It's an industry that can use non-arable land productively," Mr Walker said.
"If the water is salty or poor quality, the algae can get the salinity out of the water."
The long-held issue of biofuels internationals - particularly when based on using food crops like corn or sugar - is that it creates a battle between food and fuel.
If farmers can make more money selling the crops for fuel, there is a fear it could prompt a food shortage.
Facility boss Professor Ben Hankamer said with algae, there was no such issue.
"With corn ethanol, there was a huge concern over food versus fuel because (corn) was no longer available for food," he said.
The race is now on to have the price of production fall to a point where it is competitive against traditional petroleum.
It is estimated a barrel of algae biofuel costs between three and 10 times more than the current price of oil. Once the process becomes competitive, the industry will likely begin to thrive beyond the walls of specialised research centres.
Update your news preferences and get the latest news delivered to your inbox.