The Queensland government announced it would pump $25 million into the development of renewable diesel in partnership with Ampol's Port of Brisbane refinery ahead of a potentially awkward national cabinet meeting.
The project will deliver the country's first sustainable production of second generation low-carbon liquid fuels, with stage one set to pump out up to 20 million litres of renewable diesel a year from 2028.
Up to 750 million litres of diesel are expected to be produced by the early 2030s.
"Within a few short years, Queensland will be producing hundreds of millions of litres of liquid gold because the right investments were made and the right partnerships were forged," Deputy Premier Jarrod Bleijie said on Wednesday.
The refinery's existing hydro‑treating facility will be upgraded to process biogenic feedstocks such as tallow and canola alongside traditional diesel.
The investment was part of Queensland's fuel security plan which includes exploring Taroom Trough - touted as Australia's first significant new oil field in 50 years - triggering a war of words with the commonwealth.
Fuel security meant restoring Queensland's "ability to drill, refine and store", Premier David Crisafulli said on Wednesday.
"This project means more fuel produced locally for Queenslanders," Mr Crisafulli said.
"These projects are important to ensure we are never again left at the mercy of foreign nations, at the end of a global supply chain."
The Queensland government will attend Thursday's national cabinet meeting to discuss fuel issues after butting heads with the commonwealth over fast tracking plans to explore Taroom Trough.
It has been calling for the federal government to grant an oil exploration exemption for the project but has been accused of being "all talk and no action" by the environment minister.
Murray Watt said the state government was calling for the project to be fast-tracked via a mechanism that did not exist under federal environment laws, accusing it of not making a formal request about drilling prospects.
Prime Minister Anthony Albanese will discuss fuel security measures at national cabinet on Thursday after extra diesel shipments were secured for Australia.
An additional 200 million litres of diesel will come into Australia as part of four cargoes coming from South Korea, Malaysia and Brunei.
Two of the cargoes have been bought by BP and the other two by Viva Energy using new taxpayer-backed underwriting powers, with the shipments due to arrive in Australia in late May or early June.
According to the NRMA, Australia uses almost 94 million litres of diesel a day.
The supplies would give an extra buffer against volatility in the fuel market driven by the war in Iran and subsequent blockages of the Strait of Hormuz, Mr Albanese said.
"We will continue to use every measure at our disposal to make a difference," the prime minister told reporters from Sydney's Port Botany on Wednesday.
No major changes to fuel security strategies are expected from national cabinet talks.
There are 61 fuel ships en route to Australia, with five to arrive in Sydney in coming days.
Meanwhile, farmers have been promised more fertiliser imports as part of a deal struck between the federal government and major companies.
The agreement with chemical suppliers CSBP and Incitec Pivot involves underwriting their purchases to reduce the financial risk of importing fertiliser.
The deal was struck using the government's strategic reserve powers, which are designed to shore up supplies of crude oil, fuel and fertiliser, all of which have been impacted by the strait's closure.
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