The CSIRO says the future of the biofuels industry in Australia is looking shaky because production costs are outstripping the profits being returned for alternative fuels.

Senior scientist Dr Tom Beer says large scale production of fuels from food stocks is no longer economically sound.

Darwin's biodiesel plant, Natural Fuels Australia, has gone into voluntary administration, putting 15 jobs at its harbour operation in jeopardy.

Dr Beer believes the plant ran into financial difficulty mostly because of the high cost of the palm oil it used to produce fuel.

"The big problem we have is even where it's scientifically possible, we can do it in the laboratory, we're not sure if we can do it on large scale," he said.

"We're especially not sure whether we can do it on large scale economically, and that really was the problem with the Darwin plant."

Dr Beer says it is hoped the industry will use alternatives to food stocks to remain viable.

"All of the biodiesel plants in Australia have had problems because the cost of feed stocks - in the case of Darwin it was palm oil, in the case of some of the others it was tallow - have risen markedly in the past few years since these plants were originally on the drawing board," he said.