Australia has too much wine. Experts say it might be converted into fuel for cars, trucks and planes

The answer from scientists is: technically, yes, since wine is already ethanol. But the economics surrounding it are considerably harder.

How the oversupply got this bad

The surplus wine in storage is what happens when there’s decades of structural imbalance between what Australian vineyards produce and what the world wants to drink.

Lee McLean, Chief Executive Officer of Australian Grape & Wine, says the industry is facing two problems at once “We’re dealing with a significant oversupply, not just of wine but also in vineyard capacity,” he told ABC News. “It’s a perfect storm for grape growers and wine makers, with grape prices in many areas sitting at about half the cost of production.”

The drop in demand has been hard to ignore. McLean said global wine consumption in 2025 fell back to levels last seen in 1961, when the world’s population was about 40% smaller than it is today. Younger generations, in particular, are drinking less, often choosing low- or non-alcoholic options instead.

Wine consultant Leon Deans added that China was once seen as the industry’s big growth engine, but that bet hasn’t really paid off. “China was seen as the great saviour seven to 10 years ago, but now that market has stabilised and ended up being much smaller than many had hoped,” he said.

For growers caught up in the oversupply, there’s even more limited choices. “Over the past 20 to 25 years of imbalance between supply and demand, many growers have had to sell their water entitlements just to survive,” Deans said. “That makes exiting difficult because there isn’t necessarily a cash-positive pathway out.”

The science behind wine-to-fuel conversion

The idea of turning wine into fuel might sound complicated, but the science behind it is fairly simple. Wine is already fermented, which means the sugars in grapes have long been converted into ethanol by yeast.

From there, converting the wine into fuels doesn’t require starting the fermentation from scratch; it requires distillation, using heat to separate the alcohol from the rest of the liquid.

Rachel Burton, a professor of plant science at the University of Adelaide, said the ethanol in wine is not fundamentally different from the ethanol blended into E10 petrol — the 10%-ethanol fuel sold at Australian service stations. “The difference is in purification,” she told ABC News. “If you wanted to isolate the bioethanol, you would do that through distillation, which is the same process used to make spirits.”

Professor Burton drew the analogy plainly. “Distillation simply involves applying heat to separate out the alcohol. It’s essentially the same process used to make whiskey or tequila. The difference is that for spirits sold to consumers, flavour matters. For biofuels, it doesn’t — the aeroplane doesn’t care what the fuel tastes like.”

But the numbers quickly show where the limits are. The 263 million liters of wine currently in storage would only produce about 30 million liters of ethanol — roughly enough to meet just two days of Australia’s fuel demand, according to estimates from Dr Anne Webster, the Nationals’ Member for Mallee, who has been pushing for more investment in domestic biofuels.

The reason comes down to what wine is actually made of. Most wine contains just 10% to 14% alcohol by volume (with only a few strong wines above 15%), which means most of it is water and other compounds (not fuel), and explains why the conversion yield is this low.

The economics are the hard part

The science is feasible, but it’s harder to make it profitable due to high costs.

Wine consultant Leon Deans said the idea works in principle, but making it commercially viable would almost certainly require government support.. “Broadly speaking, you’d probably need something in the order of about 15 cents per litre of wine to cover the gap,” he told ABC News. “And that assumes we would still recover some value from converting it into a final product such as pharmaceutical-grade alcohol or fuel-grade ethanol.”

The reason a subsidy would likely be needed comes down to cost. Distillation takes energy, and running the process can end up costing more than the ethanol it produces is worth.

McLean said the industry is still in the early stages of figuring out whether the idea makes sense. “With the current fuel situation, it seems sensible to at least explore the economics, barriers and opportunities related to converting some of this into biofuel,” he said.

The political push behind the idea

The proposal has gained traction because two crises have converged at the same time.