Freight Transport needs a Finkel clean energy target

As another Australian energy policy neglects Transport, our highest energy using sector, we now await the outcomes of the climate change policies review to arrest the sector’s rising emissions intensity and declining fuel security.

Under our Paris Agreement commitments we need to halve per capita emissions and a two-thirds reduction in emissions intensity of all economic activity, so for the freight and passenger transport sectors to contribute their shares, ambitious, effective and integrated government policies at many levels will be critical. To reach the required emissions reduction trajectory, one estimate is that one billion tonnes CO2-e needs to be reduced from the Australian economy by 2030. With Transport contributing about 18% of Australia’s current annual emissions (93 of 527 Mtco2e), its share would be 180 million TCO2e reduced by 2030, roughly 12 million tonnes pa.

Current Policies Inadequate

Under the Emissions Reduction Fund transport methods, only three projects have been contracted to deliver a total of 1.2 million tonnes CO2-e contracted over 7 years, averaging 170,000 TCO2-e p.a., about 1.5 per cent of the average required annual mitigation for the transport sector. Greater mitigative action from the sector is needed, and quickly, because the long lives of transport vehicles such as trucks, buses, trains and ships, and their enabling infrastructure, means that decisions made over the next few short years may lock-in emissions-intensive transport equipment for decades.

Use of low carbon transport fuels such as biodiesel, natural gas and ethanol has declined significantly in recent years, due to a variety of factors including low oil price, technology performance and a lack of refuelling infrastructure and supply chain development, and the continued closure of local refining capacity means imported fossil-based fuels are relied upon for freight transport more than ever. An assessment of transport energy productivity growth, like those undertaken for other critical networks in the electricity, water and gas sectors, would better inform climate change policy development for transport generally, showing productivity growth or deterioration trends in network efficiency and its impact on national productivity and emissions.

New Policies & Infrastructure

Enhanced incentives and support are needed to dramatically improve emissions reduction activities in a sector that will grow 25% in the next decade. Freight transport needs policy leadership and strategic vision with clear objectives for energy use and emissions reduction with a single source of overall responsibility to integrate programs at all levels.

Significant freight infrastructure capacity building projects that dramatically improve the business case for shifting freight to less emissions-intensive modes should be of the highest priority to change business-as-usual growth in road freight and its consequences for greenhouse gas emissions, congestion, air pollution and road safety. Initiatives could include increasing rail payload capacities and more dedicated rail lines between ports and hinterland intermodal terminals, while re-building capacity for domestic shipping will need strategic investment in dedicated coastal shipping terminals for intermodal and roll-on/roll-off cargoes and regulatory change that currently limits is use.

Key policies required to effectively and sufficiently encourage emissions reduction in freight transport include:

1. Establish an explicit carbon pricing mechanism
2. Make the ERF more financially attractive for transport projects
3. Encourage mode shift with full cost-reflective road pricing, specific mode shift incentive schemes and including key opportunities under the ERF land and sea transport method
4. Fuel-efficiency standards for light commercial and heavy vehicles
5. Incentives for accelerated retirement of older rail and heavy road vehicles
6. Measure productivity and productivity growth in the transport energy network
7. Freight transport efficiency remains one of the largest opportunities for additional initiatives under the National Energy Productivity Plan, and the 2XEP Freight Roadmap details a list of 70 initiatives that could also be included in the NEPP or other existing policies for government and industry to action together. A key for these will be piloting the use of the Australian Standard for Transport Energy Audits, a world-best practice standard developed by an Australian government-industry partnership that will underpin many emissions reduction measures.

Taking a Finkel-like approach by establishing clean energy targets and a single point of responsibility for their achievement are critical first principles for freight transport to help Australia reach its emission reduction goals for 2030 and beyond.

Clean road transport game plan

Enjoyed reading Prime Mover magazine’s recent sustainability report series. Signing the COP21 Paris accord certainly does accelerate the need for a commercial road transport industry game plan to lead Australian business and government policy responses or we’ll be left wondering what happened post-2020. The language has changed: “low carbon” ambitions of last century are obsolete; specific, measurable “zero carbon” goals are in.

With an old truck fleet averaging 14+ years of age, half our technology is last century too. Fuel is such a critical and volatile cost; why the lack of fleet renewal in Australia? Especially when new fuel-efficient trucks promise substantial operating cost savings and liquid capital markets offer the cheapest interest rates in memory. Perhaps it’s the difficulty accessing capital when thin profit margins produce long paybacks on capital intensive equipment?

To help operators buy new trucks, government funds are available from the Clean Energy Finance Corporation and the Emissions Reduction Fund, but there’s been little take-up. If these programs don’t suit the industry, we need to understand what policies will work and advocate accordingly. Without effective government assistance we’ll continue falling further behind the rest of the world. Reducing fuel tax credits for trucks over 13 years old and using the money saved to help operators buy new trucks is a great idea.  

The US SuperTruck program shows the critical role government can play, not only in R&D but also supporting market adoption of new technologies at scale. The USA has many policies that may work here: fuel efficiency standards; standards for renewable and low carbon fuels; vouchers to help buy efficient trucks; co-investment in alternative fuel infrastructure and vehicle technology; and a Smartway partnership between government and industry that tests, benchmarks and informs operators on green transport technologies, so successful there’s now similar programs in Europe, Asia and Brazil. Meanwhile the enormous carbon reductions possible through biodiesel use in Australia have previously been constrained by perverse government policies. While Scania and Volvo show biofuel blends all the way up to B100 are technically viable, fuel tax credits only apply up to a B20 blend limit.

The commercial road transport industry needs targets. Aviation is the first transport sector to set a global goal, aiming for carbon-neutral growth after 2020. Key to this is a target of 1.5% fuel efficiency improvement each year, currently being over-achieved at 2.9% p.a. While emerging technologies featured in Prime Mover’s report may help a clean energy transition in the future, fuel efficiency remains the best action we can take now using current technologies. Key to this will be using the growing daily flood of data coming from each modern truck.

Transport is Australia’s largest energy user, so action in the road freight sector will be critical to achieving the Paris COP21 zero carbon goals. Doubling energy productivity, using clean fuels and offsetting residual emissions is the way forward. Carbon neutral engine oil is a brilliant start; zero carbon transport is the new goal. Making it happen, to use Prime Mover’s June editorial theme, is now the challenge. Creating a game plan with the industry’s green and clean solutions for input to the 2017 Australian climate policy review, rather than taking the policies we’re given, will take collaboration and leadership, and the time to start is now.

Carbon Neutral Transport webinar

The “Carbon Neutral Transport” webinar I ran recently for the Chartered Institute of Logistics & Transport Australia was well received and the discussion afterwards generated some ideas for the future.

For those who missed it, here’s a link to the recording, based on the following brief:

 

What advantages does going Carbon Neutral offer the Transport industry?

To be Carbon Neutral a transport operator must save fuel relentlessly, use clean fuels and offset their residual emissions.

Saving fuel means saving money, and our customers increasingly demand energy-efficient and low carbon transport.

So why isn’t every transport firm going Carbon Neutral?

In this webinar, you will:

–          Learn what Carbon Neutral means in the transport sector;

–          See what’s being done to break down the barriers; and

–          Find out how the Business Case for Carbon Neutral Transport really stacks up!

Shell’s Geelong Refinery – Can we turn Doom & Gloom into a Clean Fuel Boom?

With Shell seeking buyers for its 59-year old refinery, deemed uncompetitive in the traditional hydrocarbons market due to its small scale and old technology relative to Asian competitors, what innovative options can Shell and the Geelong community explore to develop a sustainable asset for long term community wealth?

California provides a guide. A petroleum refinery there is being revamped as an advanced biofuel refinery, with United Airlines underwriting the investment through commercial commitment to buy its renewable jet fuel.

The lesson for Geelong is that partnerships between large fuel users, refiners and biofuel technologists offer the opportunity to use waste and non-food organics to produce low-carbon “drop-in” fuels. Feedstocks would be sourced locally. Ready-made pipeline and terminal infrastructure will efficiently get product to market. Victoria positions itself as renewable fuel hub for international and domestic airlines, land and sea transport operators, miners, farmers and industrial customers.

Sounds like win-win-win, but who can pull it together?