Roadblocks to industry in new emission plan

By: Rob McKay

Green Paper shows Direct Action Plan should be attractive to trucking but it’s not that simple

Roadblocks to industry in new emission plan
Trucking will have issues with the Direct Action Plan

Commercial vehicle owners are best placed to gain from the Federal Government’s emissions reduction policy, a Green Paper on its Direct Action Plan appears to show.

However, trucking industry observers point out that there are impediments to take-up.

Under the plan, transport and logistics operators, along with other parts of the economy, will be able to bid for emission reduction contracts with the Federal Government.

The Government, which is seeking public submissions due by February 21, proposes to create the office of the Clean Energy Regulator (CER) that would operate a procurement process to purchase emissions reductions at the lowest available cost.

"This approach is akin to a reverse auction, a mechanism that has been used in Australia and overseas to identify the lowest cost available for emissions reductions and other types of environmental goods and services," the Green Paper states.

"Simple tenders and other reverse auction approaches create competitive pressures which would enable the lowest-cost emissions reductions to be identified and purchased by the Emissions Reduction Fund."

But the trucking industry believes much more planning needs to be done as details may be overlooked.

"The cost curve in the Emission Reduction Fund Green Paper confirms that trucking businesses can save money and reduce their greenhouse gas emissions at the same time by using more efficient vehicles," Australian Trucking Association Government Relations and Communications National Manager Bill McKinley says.

"The problem is that trucking operators are often prevented from using these vehicles by government regulation.

"In the ATA’s submission on the terms of reference for the Green Paper, we argued that the Government should set up a joint taskforce to review the vehicle standards and other regulations that prevent the trucking industry from increasing its energy efficiency.

"We’ll be putting the same argument forward in our submission on the Green Paper."

One observer points out that cleaner trucks tend to have heavier axle weights, which complicates any operator approach to the issue.

At the start of the Emissions Reduction Fund, on July 1, businesses can submit bids at any time and, at regular intervals, the CER could run tender rounds to select eligible offers on a lowest-cost priority basis up to a benchmark price.

This benchmark would be commercial-in-confidence to encourage businesses to submit their lowest price.

The opportunity for the transport sector is that "car and light commercial" and "large articulated truck" efficiency improvements are the leading sectors "with thepotential for financial savings even after the upfront costs of capturing them have been factored in", according to cost curve in work by research body ClimateWorks Australia, which the Green Paper uses.

According to the Government, activities that could reduce transport emissions include:

  • switching to lower emissions fuels, using more efficient vehicles; improving management practices (for example, driver training or supply chain optimisation);
  • shifting between transport modes (for example, from road to rail).

Transport emissions reductions could be measured using a generic method that compares reductions in emissions with a baseline.

"Different metrics could apply to different subsectors; for example, buses and trains could be rewarded for reducing emissions per passenger per kilometre, and fleet operators could be rewarded for reducing emissions per tonne of freight per kilometre," the Green Paper states.

"This is similar to the approach used in the Quantification Protocol for Fuel Switching in Mobile Equipment approved for use under Alberta’s Offset Credit System.

"The advantage of this approach is that it would enable emissions reductions to be calculated easily across different modes of transport and emissions reduction activities, and it could be applied to fleets of different sizes.

"This approach could encourage logistics and fleet managers in a variety of settings to consider a range of emissions reduction opportunities, including upgrading technology, converting existing fleet to lower emission fuels and adopting more fuel-efficient driving practices. It could also encourage aggregators (for example, technology or fuel suppliers) to work with transport companies to collectively achieve a greater amount of emissions reductions than could be delivered by individual fleet or vehicle operators."

The Green Paper can be found here.

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