If the carbon price is repealed, what impact will its replacement policy – the Emissions Reduction Fund (ERF) – have on Australian transport emissions?

No one will argue with the ERF’s two key design principles for lowest cost and genuine emission reductions – they are surely mandatory features of any climate change policy. Yet how the ERF proposes to implement these principles will make it difficult for transport operators to access funding due to the inherent nature of emissions in the sector.

Purchase lowest cost emissions

Being so highly energy-intensive, fuel efficiency has been core business for transport operators since the 1974 oil price shock, and most low hanging fruit will be long-gone for those who have survived the fuel price volatility of recent times.

That’s why carbon and energy efficiency opportunities in Transport generally have longer paybacks than other industries (4+ years according to Energy Efficiency Opportunities program data).

So it’s unlikely that transport applications for ERF funding via competitive tenders and reverse auctions will beat the required benchmark price in terms of dollars per tonne CO2e reduced.

Genuine emissions reduction

Discrepancies occur between projected performance and real-world implementation of new technology due to differences between operating conditions where technology is made in Europe, USA and Asia and those in Australia.

It’s also difficult to isolate and measure benefits from a particular initiative due to the number of variable influences on fuel consumption, such as weather (wind, rain and heat), route, road/track quality, payload and driver behaviour.

Companies will need an approved emissions reduction methodology to prove achievement of emission reductions financed by the ERF. This may require an industry-wide method via technology or fuel suppliers aggregating their customers’ emissions savings, unless companies want to individually pursue their own methodology approvals. It’s a complex area which needs to accommodate the diversity of transport applications for freight and passengers across road, rail, air and sea transport modes.

Impact on Transport Emissions

Are we really going to leave it to engine fuel efficiency and emissions standards to do the heavy lifting as Transport emissions continue to climb faster than economic growth? The freight task alone will double by 2030 while other industry sectors benefit from Emission Reduction Fund assistance. Under this framework Transport’s 16% share of Australian emissions can only grow.