April 21, 2014, 11:42 am
Biodiesel the big winner out of the Carbon Tax
Tuesday, 26 July 2011 10:00

By now you will have had time to digest the recent Carbon Tax announcements from the Federal Government. It looks like Treasury modelling is banking on trucking to propel the investment in cleaner technologies with biodiesel expected to displace diesel as the most commonly available fuel to power heavy vehicles and generators.

The treasury modelling is available on www.treasury.gov.au

carbon-table-2The modelling anticipates that biodiesel will begin to supplant conventional diesel from 2020. As the road transport sector is responsible for 85% of the total of transport emissions, Treasury expects that emission abatements will come from changes in 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 modelling suggests. “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.”

Treasury quite rightly highlights that the uptake of electric alternatives will be limited in the heavy vehicle sector – mainly through rigid trucks and buses – but anticipates that electric alternatives will flow-through 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,” the modelling says. Treasury also highlights that 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. Currently the average heavy vehicle has a life span of 14 years, compared to 9 years for the lighter vehicles.

carbon-table-1Treasury argues that rigid truck emissions will be about 75% 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 believes that this shift will occur regardless of a carbon tax, which the modelling suggests will increase diesel prices by 6.85 cents per litre when it applies to trucking from July 1, 2014. The Centre for International Economics says a $30 carbon tax will increase the cost of diesel by about 8 cents per litre based on the current price of around $1.50 per litre.

It remains to be seen how all of this will intersect with the Fuel Tax Credit scheme and the Road User Charges. Watch this space.