At present with existing processes we could not produce enough biofuel to replace petrol.

If we made a huge effort and developed 2nd generation technologies, and if everything went better than planned, it may be possible to replace petrol and diesel with biofuel. It is more likely electricity and batteries will come to the rescue. Biofuel will be needed for planes, remote locations, and maybe ships.

Ethanol

If all the grain and sugar grown in Australia was converted to ethanol, it would only supply less than 30% of Australia's petrol needs. And we would have nothing much to eat.

If all the grain and sugar presently exported from Australia was converted to ethanol, it would supply at most 11–22 % of Australia’s current petrol usage  

Biodiesel

If all Australia's domestic waste oil, tallow and oilseed were converted to biodiesel, it would supply at most 12% of Australia’s current diesel usage.

If only the exported fraction was converted, it would supply at most  4–8 %.

From: Biofuels in Australia an overview of issues and prospects - CSIRO

The World Resource Institute has released a report on biofuels:

Avoiding Bioenergy Competition for Food Crops and Land

Key findings:

Dedicating crops and/or land to generating bioenergy makes it harder to sustainably feed the planet.

The world needs to close a 70 percent “food gap” between crop calories available in 2006 and those needed in 2050. If crop-based biofuels were phased out by 2050, the food gap would shrink to 60 percent. But more ambitious biofuel targets—currently being pursued by large economies—could increase the gap to about 90 percent.

Wider bioenergy targets—such as a goal for bioenergy to meet 20 percent of the world’s total energy demand by 2050—would require humanity to at least double the world’s annual harvest of plant material in all its forms. Those increases would have to come on top of the already large increases needed to meet growing food and timber needs. Therefore, the quest for bioenergy at a meaningful scale is both unrealistic and unsustainable.

Bioenergy is an inefficient use of land to generate energy.

Fast-growing sugarcane on highly fertile land in the tropics converts only around 0.5 percent of solar radiation into sugar, and only around 0.2 percent ultimately into ethanol. For maize ethanol grown in Iowa, the figures are around 0.3 percent into biomass and 0.15 percent into ethanol. Such low conversion efficiencies explain why it takes a large amount of productive land to yield a small amount of bioenergy, and why bioenergy can so greatly increase global competition for land.

Solar photovoltaic (PV) systems’ conversion efficiency—and therefore their land-use efficiency—is much higher. On three-quarters of the world’s land, PV systems today can generate more than 100 times the useable energy per hectare than bioenergy is likely to produce in the future even using optimistic assumptions.

Large estimates of GHG emissions reductions from bioenergy are based on a misplaced belief that biomass is inherently a carbon-free source of energy.

Most calculations claiming that bioenergy reduces greenhouse gas emissions do not include the carbon dioxide released when biomass (e.g., from maize) is burned. They exclude it based on the theory that this release of carbon dioxide is matched and implicitly “offset” by the carbon dioxide absorbed by the plants growing the biomass feedstock. Yet if those plants were going to grow anyway (e.g., for food), simply diverting them to bioenergy does not remove any more carbon from the atmosphere and therefore does not offset emissions from burning that biomass. In effect, these analyses “double count” plant growth and thus “double count” carbon, leading to overly optimistic estimates of emissions reductions.

There are some sources of “additional” biomass that are consistent with a sustainable food future and will therefore reduce greenhouse gas emissions (relative to the use of fossil fuels) because they do not compete with food production or otherwise make dedicated use of land. Examples include growing winter cover crops for energy, timber processing wastes, urban waste wood, landfill methane, wood from agroforestry systems that boost productivity, and crop residues that are not otherwise used. However, their potential to meet a sizeable share of human energy needs is modest.

2nd generation - Biofuels from lignocellulose - wood

2nd generation ethanol technology is based on converting lignocellulose to ethanol or  biodiesel. This could supply 10–140 % of our current petrol usage.

The figures are vague due to lack of knowledge on what is ecologically and economically possible.

Source

Cost of biofuel in  Australia

Currently ethanol from waste starch and C-molasses,
and biodiesel from waste oil can be produced at a
cost less than 45 c/L (roughly competing with oil
at US$40/barrel). Ethanol from sugar, and biodiesel
from tallow and canola can be produced for less than
80 c/L (roughly competing with oil at US$80/barrel).
High variability in cost of production is largely due
to variations in the cost of feedstock.

Although some existing biomass sources do not have existing
markets, they may have existing uses (eg retaining
carbon in ecosystems, providing habitat).

•  In the case of a large scale biofuel industry, there
are likely to be competing markets not just for
the feedstocks, but also the factors of production
including land, water and labour which would then
impact on many other industry sectors especially in
regional Australia.
 

Benefits to regional Australia

Local studies on ethanol plants in NSW showed 
for plant capacities ranging 50–80 ML/yr that there
would be 6–34 permanent direct jobs, 125–357
permanent flow-on jobs, 49–68 construction direct
jobs and 63–87 construction flow-on jobs. A case
study for Sarina ethanol from sugar showed that the
plant created 36 permanent jobs and 222 flow-on
jobs, 389 construction direct jobs and 256 flow-on
jobs, and added $7.7 million to household income in
the region. However caution is required in extending the
results more broadly across regions which do not take
into account potential impacts on associated industries. 

Competition with food crops

Food, livestock and biofuel producers are competing
for the same commodity crops in the international
arena. About 61 % of the world’s ethanol production
comes from sugar crops. Corn-based ethanol production
is growing by about 30 % per year in the USA.
Impacts include doubling of USA corn prices in
2006–7; rising prices of milk, eggs, chicken and
tortillas in China, India, Mexico and the USA; in
Europe rapeseed (canola) oil prices doubling over
the last five years and the price of cereals, starches
and glucose increased by about 20 % in the last year.

Non-food feedstocks outperform food-based feedstocks on energetic, environmental, and economic criteria. Trees, other woody plants, and various grasses and weeds, which can all be converted into synfuel hydrocarbons or cellulosic ethanol, can be produced on poor agricultural lands with little or no fertilizer, pesticides, and energy inputs. Their production rates will not be as high as when grown on richer agricultural land with high inputs.