As diesel prices surge, freight operators face mounting pressure, highlighting the urgent need for immediate support and a longer-term shift to electrified transport.
Voters may not blame Anthony Albanese for Donald Trump’s foolish decision to whack their access to fuel. But they do expect him to fix it.
The trucking sector is right to be frustrated at the time it is taking for promised government support to be delivered to freight operators with urgency when their diesel bills now hitting their inboxes have doubled in a month.
But Angus Taylor and Matt Canavan, members of a government which bent over backwards to sabotage electrification, are being deliberately and dangerously disingenuous when they dangle suggestions before truckers that economically viable reserves of oil would be available if only we would start drilling.
The fact is that Canavan, when he was Resources Minister, issued exploration licences for the Great Australian Bight. But the licences were handed back because the companies found it geologically too difficult and too expensive.
Equally, exploitation of the Bowen Basin would already have proceeded had promoters and investors thought it economically viable.
The fact is that China, having absorbed the lessons of the supply shock of the Global Financial Crisis, now nearly two decades ago, kickstarted electrification of its transport sector.
Such is the success that last year alone China put 250,000 electric trucks on the road, double the size of Australia’s entire truck fleet.
Back here, the government’s ad campaign is asking consumers to “play their part” to reduce their fuel use. Unfortunately, 80 per cent of passenger transport runs on petrol, which is not interchangeable with the diesel our road freight operators depend on.
Even among the minority who drive diesel cars, a 10 per cent reduction in driving would free up less than 1 per cent of national diesel demand.
Even in good times, freight operators run on incredibly tight 1-2 per cent average margins. They are the archetypal small businesses which politicians love to invoke. Ninety eight per cent employ fewer than 20 people. Seventy per cent own only a single truck.
And these are not good times. Insolvency rates were already up 40 per cent year on year in November last year. One in 12 freight businesses closed their doors. And now that the price of diesel has almost doubled we need to get serious both about supporting trucking companies through this crisis and helping them avoid the next one.
There are powerful levers within the government’s reach to strengthen our energy sovereignty and reduce our dependence on imported diesel. The most important of which is helping freight operators afford the switch to electric.
Electric trucks are 1.5-2.5 times more expensive to buy, but much cheaper to run – up to 85 per cent cheaper under real world conditions. Over the operating life of the truck those savings outweigh the higher purchase cost.
To help small-and-medium businesses climb over the upfront cost hurdle the Prime Minister could mobilise existing funding within the Clean Energy Finance Corporation and the Australian Renewable Energy Agency. It’s off budget so deploying it won’t worsen the deficit, or crowd out more immediate support options.
We’ve already seen this work with lower interest loans and residual value support at the centre of a landmark $70m CEFC deal with Volvo in December. But it needs to be scaled up to higher levels of support and made accessible to the smaller fleet operators who need it most.
At scale, this type of support would be sufficient to get enough electric trucks on the road so that by 2030 we could be saving one billion litres of diesel a year. That’s almost half the diesel used by our entire farming sector.
At this moment everyone has a stake in it. Because every litre of diesel saved by someone who can go electric, is a litre left over for someone who can’t.
As we get asked to think about the small steps we as individuals can take to preserve fuel in this crisis, remember this: far bigger pay offs are at the Prime Minister’s finger tips if he takes up the mantle.
Bruce Hardy
Bruce Hardy is Executive Director of Energy Futures Foundation and formerly General Manager – Emerging Business for AGL