Fuel switch to drive cleaner technology investment

Biodiesel will supplant diesel as most common fuel powering trucks, with industry to be responsible for driving clean technology investment

By Brad Gardner | July 12, 2011

Biodiesel will eventually supplant diesel as the most common fuel powering heavy vehicles, according to Treasury modelling that also banks on trucking to propel investment in cleaner technologies.

Released in conjunction with the Federal Government’s carbon tax package on July 10, the modelling claims biodiesel will begin to displace conventional diesel from 2020.

Treasury says the road transport sector, which accounts for 85 percent of all transport emissions, will be relatively unaffected by carbon pricing and most emissions abatement will stem from changes to fuel use.

"The most significant change in fuel mix is the adoption of biodiesel blends. By 2030, biodiesels will become the dominant fuel used in heavy vehicles and represent more than 75 per cent of total fuel use by 2050," the Treasury analysis says.

"Changes in transport fuels and technologies driven by heavy vehicle demand are also projected to provide spillover benefits to light vehicle users. In particular, strong heavy vehicle demand aids the development of the biofuels industry. This leads to cheaper and more widely available biofuels for light vehicles."

While the report says the uptake of electricity in the heavy vehicle sector will be limited to rigid trucks and buses due to its unsuitability for long haul transport, Treasury still anticipates flow-on benefits to general motorists.

"Similarly, as heavy vehicle demand drives the development of the infrastructure required for electric vehicles, this will encourage the uptake of light electric vehicles. Nevertheless, conventional petrol remains the dominant fuel used in light vehicles," it says.

Treasury claims a shift in heavy vehicle fuel use will come about regardless of a carbon tax, which will increase diesel prices by 6.85 cents per litre when it applies to trucking from July 1, 2014.

It says high and rising oil prices, which the Greens claim will skyrocket on the back of peak oil, combined with new fuel emission standards will push motorists and businesses towards more efficient vehicles and alternative fuels.

Treasury says there will be limited abatement in emissions from transport in the near term under a carbon tax due to the time needed to turnover existing vehicle fleets and the high upfront costs of switching to new and cleaner technologies.

However, it argues rigid truck emissions will be around 75 percent below 2010 levels by 2050.

"Passenger vehicle emissions fall to nearly 30 per cent below today’s levels, while emissions from articulated trucks, buses and light commercial vehicles increase, but at a slower rate than in the global action scenarios," Treasury says.

Under the modelling, the department assumes most countries will price carbon by 2020, with all countries taking action by 2031.

The Federal Government has committed to reducing emissions by 5 percent below 2000 levels by 2020 and 80 percent below 2000 levels by the middle of the century.

Announced on Sunday, a carbon tax will begin on July 1 next year with a starting price of $23 per tonne of carbon. The price will rise to $24.15 the following year and to $25.40 in 2014.

The government plans to move to a market-based emissions trading scheme on July 1, 2015, which Treasury anticipates will impose a carbon price of $29 per tonne.

The Centre for International Economics says a $30 tax will increase the cost of diesel by about 8 cents per litre based on the current price of around $1.50 per litre.

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