- Freight companies and vehicle manufacturers are progressing their plans to decarbonise, but need stronger policy support from government.
- Building charging infrastructure will require collaboration among all stakeholders in the transport and energy sectors.
- Truck drivers may initially resist the switch to electric vehicles, in the same way many were reluctant to shift from manual trucks to automatic.
Road transport is vital to Australia’s economy but creates about 16% of the nation’s greenhouse gas emissions, according to the latest government figures1. Although the sector is making significant progress with its plans to curb emissions, Volvo Group Vice President of Emerging Technology Business Development, Paul Illmer, said Australia needs stronger government policy to accelerate the transition to greener transport.
Speaking at the recent CommBank Momentum conference on sustainability, Illmer said that in Europe policymakers have imposed mandates for lower emissions vehicles.
The European Union (EU) has laid out ambitious emission reduction targets, including a November 2022 agreement to reduce greenhouse gas emissions2 in the road transport sector to 40% of 2005 levels by 2030. It has also effectively banned the sale of new diesel and petrol-engine cars3 and vans from 2035.
“In Europe, the zero emission momentum started with government policy and worked its way down to industry and customers,” Illmer said.
Policy reforms needed for a green change
In some cases, Australian policy around transport is actively impeding progress, said Heather Bone, ESG director for Team Global Express (formerly Toll Global Express).
Bio-derived fuels such as biodiesel and renewable diesel are available now, but the Australian Government’s single biggest source of income is still fuel excise from fossil fuels. “There is no policy framework encouraging the use of low emission fuels and there is an inherent conflict of interest that fossil fuels are such a huge income source for government” Bone said.
“Indeed under current tax guidelines4, if you use renewable diesel, it’s still considered to be 100% fossil fuel for tax purposes. We would be using renewable diesel now if we could get it in bulk in Australia and our customers are absolutely demanding low carbon solutions”.
“We are also limited in Australia in our biodiesel use to 20% for the fuel tax credit. Not because our engines can't take a higher blend, but we are limited by our fuel tax credit regime,” Bone explained. “That’s one policy thing that really riles me up.”
Even where Australia’s policies match European guidelines, there are often delays in implementing them.
Daimler Truck’s Romesh Rodrigo, who is Senior Manager – Homologation, VPC [vehicle processing] and Regulatory Affairs, lamented that vehicle emissions standards imposed in Europe in 2015 were only legislated in Australia this year.
Australia will see ADR80/04 emission standards, equivalent to Euro 6 requirements5, phased in from 1 November 2024. Manufacturers will finally have to implement fuel-saving technologies used overseas on trucks sold in Australia – but we still don’t have a fuel efficiency standard to really take advantage of these changes
Rodrigo said introducing more specific policy measures sooner helps create better outcomes.
“It’s really important to talk about policy, not incentive. I’m really not a believer in incentives; policy is, for me, what drives investment and planning.”
Australian infrastructure in need of an upgrade
Policy will play an important role in reshaping Australia’s infrastructure to support greener options.
Charging an electric truck requires different equipment and significantly more space than charging a car. Solving this issue won’t be achieved by individual freight companies or vehicle manufacturers on their own; everyone in the transport and energy ecosystem will need to be involved.
It’s already pushed many competitors to become collaborators. Volvo and Daimler, for example, have created a joint venture exploring hydrogen fuel cell technology, Illmer said.
“It's a really interesting space at the moment,” he noted. “It really is a technology that lends itself to collaboration. And it's just a matter of finding like-minded partners who are willing to take the first step.”
Rodrigo added that it’s not just charging infrastructure that will need to adapt to these challenges, but roads as well. He said that trucks are currently limited in their total weight capacity, partly due to road and bridge load limits. That means payloads need to be limited, making it tougher on freight operators to make a profit.
New tech has a people problem
The transport industry also faces an additional hurdle, said Bone – its own people. She recalled the reaction when the industry transitioned from manual transmissions to automatic in the early 2000’s.
“If you picture the Australian truck driver – and this is an absolutely gross generalisation, please forgive me – they hated going from manual to automatic,” she said. “You weren't a “real man” if you were driving an automatic truck.”
There could be a similar pushback with the rollout of electric trucks. But, she added, this new breed of vehicle may also be an opportunity to attract more female drivers.
“[Electric trucks] are great fun to drive, but you can’t overstate how this is going to be the biggest change to our industry since the internal combustion engine was invented,” she said.
Our transport experts
Heather Bone is the Director of ESG for Team Global Express (formerly part of Toll), one of Australia’s largest intermodal transport and logistics operators with 7,000 vehicles, 41 planes and two ships. Heather is the Chair of the ALC’s Sustainability Committee and is also the Deputy Chair of Bioenergy Australia.
She has more than 20 years’ experience in renewable energy, environment and sustainable development, strategic and business development, safety, marketing and communications in mines, energy, waste, transport, logistics and manufacturing in Australia and internationally.
Paul Illmer is the Vice President, Emerging Technology Business Development at Volvo Group Australia. He is responsible for Emerging Technology at Volvo Group Australia and holds the position of Vice President with responsibility for electric, hydrogen and automated truck commercialisation. Paul is also a member of the Swedish Automotive Chamber of Commerce, Australian Industry Group, Australian Logistics Council, Australian Trucking Association and Volvo Group Australia Dealer Council. He is also a board director with the Electric Vehicle Council.
Romesh Rodrigo is Senior Manager – Homologation, VPC [vehicle processing] and Regulatory Affairs, Daimler Truck. He re-joined Daimler Truck in 2016, taking on a Senior Manager role within FUSO Truck and Bus where he oversaw engineering and product strategy along with technical support for the brand. In 2019, he changed roles within Daimler Truck Australia taking on responsibility for homologation and regulatory affairs for all three Daimler brands. Much of his current role involves regulatory planning around Daimler Truck Australia’s future product with specific focus on Zero Emission Vehicles strategy. Future perspective is a key focus for him where efficiency, safety and the advanced technologies offered by Daimler Truck Australia products will play an important role in supporting Australia’s future freight task.
To watch this session on-demand or explore other content from CommBank Momentum 2022, visit Momentum.
To learn more from leading industry experts about Australia’s transition to a net-zero economy, head to CommBank Foresight™ – insights for future-facing businesses.