Queensland is set to transform fat into renewable diesel in a bold new plan that could see hundreds of thousands of vehicles running on kitchen waste within just a few years.

The state government has announced $25 million in funding to produce renewable diesel by mixing regular diesel with tallow, canola oil and animal fats at Ampol’s oil refinery in Lytton. Last year, 242,000 tonnes of tallow or animal fat were shipped out of the Port of Brisbane, but under the new plan, that fat could instead be processed locally to create fuel that works in conventional diesel cars and trucks by 2028.

The initial production target of 20 million litres a year could fill an estimated 400,000 smaller cars or 180,000 four-wheel drives. “You can get more bang for your buck,” Premier David Crisafulli said.

At its peak, the government believes production could ramp up to an impressive 750 million litres a year by the 2030s. Deputy Premier Jarrod Bleijie pointed to international examples of what is already possible, noting that “in Norway, they are running their F-35 fighter jets on used fish-and-chip oil.”

The announcement comes as service stations offer some relief at the bowser, with prices expected to drop even further in the days ahead. With volatile conditions continuing, the premier also convened a fuel taskforce meeting ahead of National Cabinet on Thursday.