A report published by independent think tank Climate Energy Finance calls for Australia to limit the off-road diesel rebates currently going to the mining sector. The report recommends capping the diesel fuel tax credit (FTC) at $50 million per year per company. Around eight mining companies would be affected, including BHP, Rio Tinto and Glencore.
The aim of the proposed policy change is to encourage mining companies to prioritize the use of electric trucks in line with Australia’s emissions reduction commitments. Diesel imports are estimated to contribute nearly a fifth of the country’s greenhouse gas emissions. Limiting diesel subsidies to mining companies would save $14 billion by 2030, which could be used to support the development of an electric truck and battery manufacturing industry.
Although Australia is a relatively small market for electric vehicles, it is a promising market for electric trucks due to the size of the mining industry. Due to the high demands of their operation, these trucks would have to replace the battery every year.
The report suggests that redirecting diesel subsidies to electric truck manufacturing could encourage advanced manufacturers such as Liebherr, Komatsu and Caterpillar to set up production lines in Australia. This would position the country as a center for new electric truck technologies.
Previous calls for the diesel rebate to be scrapped or halved have been rejected due to concerns about the impact on farmers and food costs. However, the report notes that setting a cap on refunds for mining companies would not have a negative impact on the agricultural sector or the cost of transporting goods.
Australia is being asked to take a leadership role in electrification and emissions reductions, particularly in its largest companies. By limiting diesel rebates and supporting the development of an electric truck industry, Australia could usher in the electric truck era and reduce its reliance on emissions-intensive diesel vehicles.