ALRTA Weekly Update: Feb 6

Welcome to this week's news

Fuel Tax Credits, Renewable Diesel and the Reality Check We Can’t Ignore

Over the past six months, there has been growing momentum in policy circles to describe Fuel Tax Credits (FTCs) as a “fossil fuel subsidy” that should be phased out as part of Australia’s emissions reduction effort.

On the surface, that language sounds simple to anyone not operating a truck.

But as we all know, this risks getting the freight decarbonisation discussion horribly wrong.

ALRTA has been working on this issue well before it became public commentary, because for livestock and rural transport operators, the consequences would be immediate, material, and difficult to unwind.

The core principle remains clear: There can be no structural change to costs or taxation until reliable, affordable alternatives actually exist.

Fuel Tax Credits Are Not a Free Pass

Fuel Tax Credits are not a subsidy. They are a realignment of the road user charge.

Heavy vehicles pay for road use through fuel excise and the Road User Charge. At present:

• Diesel excise is 51.6 cents per litre
• The Road User Charge is 32.4 cents per litre
• The on-road Fuel Tax Credit is the difference: 19.2 cents per litre

This credit corrects fuel excise collected beyond the road user charge. It is not a free pass for the industry.

Removing FTCs would not “level the playing field”.

It would impose a new cost equivalent to a carbon price of approximately $70–71 per tonne of CO₂, almost double Australia’s former carbon price.

That cost would flow directly into freight rates, food prices, and national supply chains.

Renewable Diesel: The Uncomfortable Truth

A key assumption behind calls to remove Fuel Tax Credits is that alternative fuels will be ready to step in.

They are not.

ALRTA has examined the available data on renewable diesel (HVO), and the numbers are sobering:

• Australia uses around 32 billion litres of road diesel each year.
• Even a 10% replacement would require 3.2 billion litres of renewable diesel annually.
• Domestic feedstocks (tallow, used cooking oil and waste oils) total well under 1 million tonnes per year.
• Those same feedstocks are already being aggressively competed for by the EU, the United States and Asia.

To put the scale challenge into perspective, supplying just 10% of Australia’s diesel demand from canola-based renewable diesel would require around 7 million tonnes of canola seed. That equates to more than 4 million hectares of cropping land, greater than Victoria’s entire cropping area.

That land simply does not exist without displacing food production or exports.

Even with current government investment, the most realistic outcome is only 5–10% renewable diesel penetration by 2035.

That is progress, but it is nowhere near a full transition for heavy road freight.

Put bluntly: Renewable diesel does not exist at any meaningful scale today, and it will not for a very long time.

Why Removing FTCs Now Would Miss the Target

Removing Fuel Tax Credits before alternatives are available would:

• not change fuel supply,
• not accelerate technology uptake,
• not reduce emissions meaningfully in the short to medium term,

but it would operate like a carbon tax on essential freight.

Council was clear that this risks becoming a revenue measure rather than a transition measure, raising costs first and hoping solutions arrive later.

That is not how you decarbonise a system that underpins food security and national economies.

Productivity Is the Lever That Works Now

Importantly, this is not ALRTA resisting change.

The Government’s own Transport and Infrastructure Net Zero Roadmap identifies the most effective near-term emissions reductions for freight as coming from:

• Safer high-productivity truck combinations,
• The National Automated Access Scheme (NAAS), and
• Targeted rural road and bridge upgrades.

These reforms reduce emissions per tonne moved by cutting trips, fuel use and congestion, delivering permanent gains while cleaner fuels scale gradually.

This is the sensible sequencing: productivity first, fuels in parallel, taxation last - not the other way around.

ALRTA commends the Federal Department of Transport, Regional Development, Communications, Sports and the Arts for recognising this reality. Senior officials in Minister Catherine King’s office clearly understand that productivity and access reform are the foundation of any credible freight transition.

The challenge now is ensuring this same operational understanding is reflected across the whole of government, particularly within Treasury and in how Productivity Commission recommendations are interpreted. Good fiscal policy must support transition rather than run ahead of it.

ALRTA Leadership and ATA Alignment

ALRTA raised these risks early with government and industry, and formally briefed the Australian Trucking Association last year on the dangers of premature FTC reform.

That work is now aligning nationally.

ATA CEO Mat Munro and Chair Mark Parry have both publicly called on the Government to reject the Productivity Commission’s recommendation to phase out Fuel Tax Credits.

That alignment matters. A united industry voice is essential to ensure emissions policy does not cause unintended damage to regional Australia.

Why This Matters to Members

Livestock and rural transport is an essential service. When freight costs spike suddenly, the impacts cascade through producers, processors, regional communities and ultimately consumers.

Members have already seen what happens when governments talk about “transition” without first ensuring viable alternatives are in place. The live sheep export phase-out showed that when change runs ahead of capability, funding can be diluted through consultants, administration and advertising, while the people most directly affected are left to absorb the impact.

ALRTA is determined that freight decarbonisation does not follow the same path.

For us, transition does not mean forcing change and hoping solutions follow. It means no structural change to costs or taxation until reliable, affordable alternatives actually exist on the ground.

That is why ALRTA’s position is clear:

• transition must be practical,
• evidence-based, and
• fair to the operators carrying the task today.

We will continue working constructively with industry and government to ensure decarbonisation policy reflects operational reality, not assumptions or aspirational timelines.

This is not about delaying change.

It is about refusing to repeat the mistake of changing the rules before the system is ready.

Until next week, stay safe.