Australia's largest renewable biodiesel producer is back in operation, three years after it was driven to closure.

Just Biodiesel has partnered with Refueling Solutions to re-commission the Barnawartha plant in north-east Victoria.

The companies say they are aiming to produce up to 50 million litres of biodiesel each year, including B5, B20 and B100 fuels.

Australian Renewable Fuels used to run the plant before it fell into voluntary administration in early 2016, blaming competitive oil prices at the time.

The company was also hurt by Federal Government taxation on biofuels under the 2014 federal budget, which trounced 2011 legislation making renewable fuels excise free until 2021.

The excise rate for domestic biodiesel at more than 13 per cent this financial year, gradually rising to 50 per cent in the year 2030 and beyond.

It is something the revived operation must factor in.

“It's one of the major hurdles of the development of a successful biodiesel industry,” Just Biodiesel general manager Greg Boyall said.

“We'll work around it by looking at where the best opportunity to sell biodiesel is, whether it be domestic or export.”

Biodiesel is made from feedstock including tallow and recycled vegetable oil, and can be used in most standard diesel engines without modification.

Bioenergy Australia chair Dr John Hewson says the Federal Government is clearly lagging in renewable fuel policy.

“Right now one of the most challenging issues that has been consistently neglected by government is fuel security,” Dr Hewson said.

“In those circumstances we've got to start thinking about the resource we've got, the feedstock we've got, and the opportunities they present not in terms of biodiesel but more broadly.”