Media Release: NatRoad calls for $3.5 billion investment in truck decarbonisation

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 The nation’s leading national representative road transport organisation is calling on the Federal Government to commit $3.5 billion to a fund to kick start truck decarbonisation.

The National Road Transport Association (NatRoad) call for a Clean Transport Fund comes in an Australian road freight transport decarbonisation industry whitepaper issued today. It draws on local and global research, and experience on the shift to low emission road freight vehicles, and operations.

It advocates for a mix of financing and direct incentives to drive the move towards alternative fuels like electricity, hydrogen, and low emission trucks.

NatRoad Chief Executive Officer Warren Clark said the proposed Clean Transport Fund would involve an additional $3 billion across the Budget forward estimates, split between $2billion for low emissions freight financing based on the existing Clean Energy Finance Corporation (CEFC) financing model and a further $1 billion in incentives.

The existing $500 million Driving the Nation Fund, which is focused on light vehicles and a small number of demonstration projects for heavy vehicles, would continue as part of the broader Clean Transport Fund.

“We are advocating for a hand-up, not a hand-out. This is a shared national problem, and it requires a shared national response,” Mr Clark said.

“It is a must to have co-investment by government as many of our road freight businesses are unable to meet the steep initial costs. The vast majority are small businesses with chronically low profit margins.”

The CEFC is the Federal Government’s ‘green bank’ which has invested $12.7 billion to enable total transactions worth $48.8 billion focused on supporting economy-wide decarbonisation including renewable energy, energy efficiency, alternative fuels and low carbon materials.

NatRoad will work towards establishing a forum of trucking industry and government stakeholders early in 2024 to discuss the White Paper and build collaboration for decarbonisation.

Earlier this week, the International Road Transport Union, the world transport organisation, representing over 3.5 million transport and logistic companies in more than 100 countries, announced NatRoad as its Australian member representing road freight members.

Mr Clark said the $2 billion establishment cost of the Clean Transport Fund low emissions freight financing would be about half of the projected public benefits from reducing carbon emissions from road freight.

“This may not be sufficient in the long term, but represents a reasonable, proportionate initial investment to drive down emissions and accelerate the market take up of low emissions solutions,” Mr Clark said.

The Grattan Institute has calculated the public benefits from accelerating the uptake of zero emission trucks to be approximately $4.2 billion, including avoided health costs, avoided CO2 emissions and reduced noise[1].

Grattan says these benefits will require $9.6 billion to be spent by businesses, including infrastructure and vehicle costs, reduced payload, and a need for more vehicles.

Mr Clark said CEFC finance has proven to be a successful mechanism for mobilising private sector investment, attracting $2.42 in private sector capital for every $1 invested by the CEFC.

“Since its inception approximately $3.3 billion of capital has been returned or repaid to the CEFC[2] making it available to be reinvested,” he said.

In 2020, transport produced 18 percent of Australia’s greenhouse gas emissions, of which trucks and buses accounted for a fifth.  Australia has committed to reducing its emissions by 43 percent by 2030 (on 2005 levels) and achieving net- zero emissions by 2050.

The NatRoad White Paper is based on six principles:

  • Co-design, co-investment, committed funding and support from government and supply chain partners
  • A centrepiece Clean Transport Fund operating as a ‘green bank’ to help fund the industry’s transition
  • Collaboration on key aspects of the shift between government, the road freight industry and supply chain partners including on policies, regulations, time frames, and contracts
  • Capacity building rather than the decimation of segments of the industry
  • Tangible recognition of road freight as an essential service critical to the nation’s supply chains, economy and well-being, evidenced by its efforts during the COVID crisis
  • Acceleration of the technology pathways to make a material contribution to reducing emissions.

[1] As Grattan utilise current carbon offset prices, it is possible that the carbon savings will be greater over time.

[2] CEFC, 2022, Budget signals major funding boost for CEFC as part of Rewiring the Nation program.

Find the white paper here