As Australia accelerates towards its’ 2030 emissions reduction goal, national policy focus is pivoting from power generation to addressing the significant emissions from the transport sector, particularly road transport. With the transport sector projected to emit around 111 million tonnes of carbon dioxide equivalent (MtCO₂-e) by 2030—accounting for 21% of the nation’s total greenhouse gas emissions—significant emissions reduction from road transport will be essential to the achievement of Australia’s Net Zero 2050 ambition.
Recognizing this challenge, the Albanese Government has initiated consultations to explore strategies for reducing transport emissions. These include a parliamentary inquiry into the transition to electric vehicles, the development of a Net Zero Roadmap for transport, and investigation of the potential for Low Carbon Liquid Fuels (LCLFs) like renewable diesel and sustainable aviation fuels.
LCLFs, which are predominantly derived from waste products using renewable power and have characteristics identical to conventional fuels, present a substantial opportunity to reduce diesel emissions by up to 90%. However, the higher production costs of these fuels relative to conventional fuel – estimated at around $1.20 to $1.40 per litre for renewable diesel – present a significant barrier to widespread adoption within the Australian Transport sector.
“ACAPMA has been actively engaged in these discussions, advocating for government to provide supply side incentives to support investment in domestic LCLF production and demand side measures to incentivise the use of these fuels within the transport sector,” said ACAPMA CEO Mark McKenzie.
Instead of mandates, which risk substantial increases in economy-wide transport costs, ACAPMA believes that demand-side measures should be developed by providing reductions in fuel excise that effectively neutralise the cost premium for fuel consumers.
These incentives could take the form of a discount in the Road User Charge (RUC) currently levied on road freight operators where renewable diesel blends are used in lieu of conventional diesel. This approach could be used to stimulate immediate market demand within the road freight sector and provide a solid commercial case for new investment in LCLF production and importation.
“In the face of the significant challenges associated with the adoption of low carbon drivetrain technologies such as battery electric and hydrogen technologies for heavy vehicle operation in Australia, the widespread market adoption of LCLFs represents the most realistic option for reducing transport sector emissions in the near term.”
ACAPMA will continue to work with the Australian Government and industry stakeholders to promote the early market adoption of LCLFs as a means of delivering tangible GHG emissions from the road transport sector, in line with the Nation’s Net Zero 2050 ambitions.
A copy of ACAPMA’s full submission to the Australian Government on its Low Carbon Liquid Fuels Consultation can be downloaded at: ACAPMA Submission to Low Carbon Liquid Fuels Consultation (July 2024).
ACAPMA
