By Scott Hamilton and Michael Nolan
Amidst the COVID-19 global health and economic shock we have seen Australia’s vulnerable supply chains exposed. As an island country with 98% of our international trade reliant on shipping, we are more at risk than most other nations. Global oil supply markets are shaky and dependence on importing essential vehicle fuels from other countries is a major concern.
As of the end of May 2020, Australia has just over two weeks (18 days) diesel storage supply and we have limited heavy oil reserves (26 days) to produce our own diesel and petrol. Our heavy vehicles such as trucks, tractors and freight rail are dependent on diesel. What would happen if the global supply is unable to reach us due to global conflicts, trade disputes or pandemics?
The truck industry would be hardest hit from a shortage in diesel supply. This risk isn’t the burden of the trucking sector alone. They provide an essential service, especially for food security. Diesel supplies are also critical supplies in mining and manufacturing around the country. Sure, the Minister for Energy has recently purchased crude oil reserves while the prices are low, a strategic petroleum reserve – but they are located on the other side of the world and would take about three weeks to get here. And that’s crude oil – not diesel or petrol!
There would be a real and sustained loss of food at the local supermarket, a real loss of crucial medical supplies in pharmacies – not just a COVID-19 panic buy. There would be limited trade of goods, closure of industries, farms and supply chains. The remaining diesel would be prioritised for ambulance, fire trucks and military. The Australian economy would grind to a halt, probably when it needs to accelerate in response to global conflict or other crises.
Reducing our dependence on diesel and other fuel imports has multiple benefits and can help make Australia a renewable energy exporting superpower rather than a net vehicle fuel importer.
The primary solution is a transition of freight transport (trucks and trains) to locally produced cleaner fuel sources – electric, hydrogen and biodiesel alternatives. This is also an emerging focus globally in the pursuit to reduce greenhouse gas emissions from the freight sector which is the only sector projected to increase carbon intensity in the coming decades.
An early opportunity would be to develop a series of low emission heavy and passenger vehicle charging developments along the Hume Highway between Melbourne and Sydney and along the Pacific Highway between Sydney and Brisbane. Re-imagine hydrogen or electric trucks across the Nullabor and 21st century road trains up the centre of Australia. Innovative public private partnerships, creating thousands of jobs and giving Australia fuel security in a post COVID-19 world.
We can learn from elsewhere. COPEL (power company) and the State of Parana in Brazil worked together to maximise transition to electric vehicles by investing in re-fuelling developments that included commercial, residential and government services. COPEL had determined that it could make more money from selling coffee at refuelling stations than it would ever make from selling electricity for vehicles, therefore it made sense to invest in the developments themselves and offer a 10-year guarantee for free electric vehicle re-fuelling.
Our proposal accelerates the purchase of new electric vehicles, boots local manufacturing of electric vehicles, brings forward the hydrogen economy and diversifies the power company’s revenue. The model also allows for government services, accommodation, professional and recreational facilities integrated into the developments up and down Australia’s energy and mobility spines.
Government(s) would need to contribute to by providing a 10-year guarantee of zero (or low) cost power for the refuelling stations and the private sector invests in the trucks and the new commercial developments. This approach would incentivise private investment from the major trucking companies and other financial investors such as superannuation funds to transition their truck fleets off diesel.
The added industry bonus for Australia, is our internationally recognised truck design and development industry can leverage this opportunity to further advance R&D in retrofitting existing trucks, fuel cell and battery technology suited to this global freight transition that is inevitable in the coming decades. Australia is at the cross-roads and we have the chance to secure our energy supplies for the long-haul post COVID-19.
Australia needs to tackle emissions from freight, mining and manufacturing, and when you consider the imperative for food security, transport of goods and the economy – we must ditch our dependence on diesel imports for our island home to have a resilient future.
Michael Nolan and Scott Hamilton are Melbourne based consultants.
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