Executive summary
- Achieving net zero for road freight will require a mix of technologies
- The internal combustion engine remains a vital part of Australia’s heavy transport landscape
- A key solution for maintaining the efficiency of our supply chains while working towards a low-emissions (net zero) future is the introduction of a Low Carbon Fuel Standard (LCFS).
Net zero with the internal combustion engine
As we face the challenge of reducing carbon emissions, it’s crucial that we consider the future of the internal combustion engine (ICE), which remains a vital part of Australia’s heavy transport landscape. A key solution for maintaining the efficiency of our supply chains while working towards a low-emissions (net zero) future is the introduction of a Low Carbon Fuel Standard (LCFS).
An LCFS would provide a pathway for ICE vehicles to continue contributing to the economy as an essential part of the national supply chain while we work to help meet the Government’s carbon reduction goals. Gradually decreasing the carbon intensity of the fuels we use, rather than relying solely on the rapid transition to technologies not yet ready for use in all specific freight tasks, like electric or hydrogen-powered trucks, is a realistic and cost-effective way for the road freight sector to help achieve net zero.
It’s true that achieving net zero for road freight will ultimately require a mix of technologies. Electric vehicles are increasingly suitable for urban-based freight tasks, where the distances are short and the infrastructure easier to develop. Hydrogen holds potential for heavier freight tasks, which also need more vehicle range. However, for Australia’s longer-distance, remote, and heaviest freight tasks, the internal combustion engine will continue to play a critical role for many years to come. We need a solution that recognises this reality.
An LCFS allows us to do just that.
An LCFS creates a stable investment environment by setting a carbon intensity reduction target for fuel suppliers that increases over time. This motivates fuel suppliers to introduce solutions such as biodiesel and renewable diesel into the market, providing an opportunity to reduce emissions without the need for immediate, large-scale infrastructure changes.
One of the key benefits of an LCFS is that it allows the market to find the most cost-effective solutions. Rather than governments dictating specific technologies or fuels, the LCFS would provide a framework that can innovate and deliver more choice for individual businesses. This is particularly important in the road freight industry, where flexibility and cost-effectiveness are essential.
The gradual introduction of an LCFS is also important. We wouldn’t see a sudden shift to 100% renewable diesel overnight. Instead, renewable diesel could be blended with regular diesel, increasing over time, allowing the industry to scale up gradually and avoid price shocks at the pump. This would ensure a smooth transition for operators, and provide certainty to fuel suppliers, enabling long-term planning and investment.
Renewable diesel isn’t a silver bullet. The feedstocks used to produce it are not unlimited, and we will still need a mix of solutions, including electrification and hydrogen. But an LCFS would ensure the internal combustion engine continues to have a place in the freight sector, particularly for tasks where ICE vehicles remain essential.
The introduction of an LCFS offers a practical transition pathway for every trucking business in Australia. Operators would be able to reduce their carbon emissions, without needing to make major changes to their vehicles or operations. Over time, as the proportion of renewable diesel in the blend increases, the carbon intensity of the fuel would drop, helping the entire industry move towards a lower emissions future.
The benefits of an LCFS also extends beyond environmental gains. By starting gradually, we can allow the renewable diesel industry to mature, ultimately driving down the cost of low-carbon fuels. This would provide much-needed relief to operators who are already managing a challenging economic environment.
In a sector as critical as road freight, where the cost of fuel can make or break a business, we need a balanced, flexible, and cost-effective approach to reducing emissions. We want policymakers to recognise the vital role the internal combustion engine will continue to play in Australia’s freight landscape and to put in place a framework that secures its future in a low-emissions economy.
A Low Carbon Fuel Standard provides that solution, allowing us to continue powering Australia’s economy while contributing to a more sustainable future.
Read more about Low Carbon Fuel Standard (LCFS)
Check out our policy paper “Stronger Economy, Lower Emissions” here.
