Australia’s leading technological academy has called for urgent action to reduce the country’s heavy reliance on diesel across key sectors including mining, road freight, agriculture, fisheries, and forestry.
In a new report by the Australian Academy of Technological Sciences and Engineering (ATSE) in partnership with Fortescue, five clear recommendations are made to drive decarbonisation through policy reform and technological innovation.
The report highlights the environmental and strategic risks posed by Australia’s current diesel dependence, which contributes about 17 per cent of the nation’s carbon emissions and hampers progress toward the climate goals of a 43 per cent emissions reduction by 2030 and net zero emissions by 2050.
Australia also imports nearly 29 billion litres of diesel annually, underscoring vulnerabilities in fuel supply due to limited domestic refining capacity.
ATSE CEO Dr Kylie Walker stressed the importance of adopting a new approach to fueling heavy industry to meet low-emission targets.
“There is an urgent need to decarbonise Australia’s most emissions-intensive sectors,” Dr Walker said. “By encouraging the application of mature clean fuel technologies, investing in fast-tracking clean tech in development, reducing the cost of green alternatives and increasing the cost of diesel in a targeted and balanced way, Australia can achieve its industrial decarbonisation.
“Early-stage research and development initiatives are also crucial in supporting the transition away from diesel.”
Central to the report’s recommendations is the call for the federal government to commission an independent review to reform financial incentives that currently support diesel use.
The Fuel Tax Credits Scheme (FTCS), which subsidises diesel consumption, is identified as a major barrier to achieving meaningful emissions reductions.
“By subsidising diesel use, the FTCS currently protects high-emitting sectors from the true cost of fossil fuel consumption and undermines national emissions reduction goals,” the report states.
Additional proposals include examining the introduction of carbon pricing or adjustments to the Safeguard Mechanism to better reflect diesel’s environmental impact.
The report also advocates for a comprehensive techno-economic assessment of decarbonisation pathways beyond electrification and urges government and industry to collaborate on strategies to bring clean fuel technologies to market.
ATSE Fellow and Fortescue Board Member Dr Larry Marshall highlighted the critical role of joint government-industry effort.
“Heavy industry wants to transition to cleaner fuels, but the current policy settings make it harder than it should be,” Dr Marshall said.
“Right now, the Fuel Tax Credit scheme effectively subsidises burning diesel, while companies that invest in clean alternatives face higher costs especially in this transition period.
“That imbalance holds back innovation and locks in emissions.”
He added: “The federal government has a critical role to play in fixing those settings and creating incentives that accelerate the adoption of clean technologies.
“At the same time, industry must step up and co-invest in the solutions that will cut emissions and deliver new green industries for Australia.
“If we want Australia to become a Clean Energy Superpower; if we want a Future Made in Australia; then we need a system that rewards smarter, cleaner choices.
“Emerging clean technologies need the right mix of policy, incentives and investment to make Australia’s green and gold vision a reality.”
Dr Walker concluded by emphasising the complexity and importance of the transition.
“The transition away from diesel while supporting thriving Australian freight, mining, agricultural, fisheries and forestry sectors is a complex challenge,” she said.
“It won’t be easy and there is no one-size-fits-all solution — it will need to be all-encompassing.
“But we have the technology; we can do it if we get the settings right.”
The report’s recommendations also include establishing a coordinated Future Diesel Strategy, investing in infrastructure to support the clean energy transition, and targeted research and development funding to accelerate progress toward a low-diesel future in Australia’s heavy industries.
