A team of researchers at the University of Sydney, University of Exeter and University of Adelaide has examined the potential for agave as an environmentally-friendly solution for Australia's transport fuel needs.

It could also be used to produce ethanol for hand sanitiser, which is in high demand during the COVID-19 pandemic.

"The agave plant, used to make Tequila, could be established in semi-arid Australia as an environmentally friendly solution to Australia's transport fuel shortage," the research says.

In the article published this week in the Journal of Cleaner Production, University of Sydney agronomist Associate Professor Daniel Tan together with his research colleagues analysed the potential to produce biofuel from agave.

They found it could be grown in semi-arid Australia using less water than other biofuel crops such as sugarcane and corn, and without interfering with food production.

The RACQ motoring body says biofuels such as ethanol are commonly produced from grain and sugarcane through a fermentation process.

At the bowser, motorists can opt for a biofuel blend from petrol and ethanol, but some cars can operate on 100 per cent ethanol.

Professor Tan said the research showed agave had some "significant advantages" over existing sources of bioethanol such as sugarcane and corn.

"It can grow in semi-arid areas without irrigation, and it does not compete with food crops or put demands on limited water and fertiliser supplies," Prof Tan said on Thursday.

"Agave is heat and drought tolerant and can survive Australia's hot summers.

"This shows agave is an economic and environmental winner for biofuel production in the years to come."

Report lead author Dr Xiaoyu Yan, from the University of Exeter, said the results suggested bioethanol derived from agave was "superior to that from corn and sugarcane in terms of water consumption and quality, greenhouse gas emissions, as well as ethanol output".

The plant is now being grown on a pilot agave farm in Kalamia Estate on the Atherton Tablelands near Ayr in Far North Queensland as a biofuel source by MSF Sugar.

The report said a bioethanol yield of 7414 litres a hectare each year was achievable with five-year-old agave plants.

This compared to 9900 litres a hectare each year from sugarcane.

The study also noted agave used 69 per cent less water than sugarcane and 46 per cent less water than corn, for the same yield.

Australian Associated Press