Policy note – Fuel security through freight electrification

The report addresses the levers available to the government to accelerate electric freight and structural reforms needed to secure Australia’s supply chains from future oil market shocks. Implementing all short-term options would displace a maximum of 15 to 25 megalitres of diesel per month, equating to roughly two percent of national consumption. The report advises against anchoring the government response to short-term electric truck deployment. Instead, it suggests preventing future crises by targeting a five-year, $3 billion programme to deploy 30,000 to 50,000 trucks, which could displace up to one billion litres of diesel annually.

The case for looking beyond shovel-ready projects

Rapidly increasing battery electric truck (BET) uptake requires focusing on companies with existing infrastructure, which may penalise early movers and miss smaller fleets vulnerable to diesel shocks. Fast-tracking deployment limits market options to currently available models, bypassing future battery price decreases estimated at 25 to 35 percent by 2030. Rushed spending also misses opportunities to leverage private capital; a properly structured Clean Energy Finance Corporation (CEFC) and Australian Renewable Energy Agency (ARENA) deal could achieve a three to four times leverage, mobilising up to $2 billion. Furthermore, reliance on current supply chains introduces risks of hidden maintenance costs and potential buyer’s regret due to anticipated technological improvements.

Top 5 Moves to sequence 3B in spend and free up 1BL of diesel annually

The report recommends implementing no-cost regulatory reforms, such as harmonising road access, passing national mass concessions, relaxing curfews for electric trucks, and adjusting trailer width rules to 2.6 metres. It suggests allocating $500 million for time-limited subsidies of 20 to 30 percent of the manufacturer’s suggested retail price for immediate deployment. Another $500 million should fund charging infrastructure on key freight routes. A structural $2 billion five-year plan should focus on grants and residual value support via CEFC funding to reach small and medium-sized enterprises. Finally, charging infrastructure should be elevated as a national priority, with a strike team to fast-track commercial transport projects above one megawatt.

Appendix 1: Industry context

The freight industry faces extreme pressure, with road transport business closures reaching 8.46 percent in November 2025. Over 90 percent of trucking businesses operate on a median two percent profit margin. The recent closure of the Strait of Hormuz caused terminal gate oil prices to peak at $3.11 per litre. Consequently, more than 70 percent of operators face insolvency within six months, and only 34 percent can pass increased fuel costs to customers.

Appendix 2: Policy context

The government must balance stabilising fuel supply, cushioning the industry through cash flow relief, and accelerating the transition away from diesel. Current measures focus on financial relief and supply stabilisation, such as halving fuel excise and releasing strategic reserves. However, the report suggests structural reform is essential. Deployment constraints remain a significant challenge, as companies face issues regarding charging infrastructure, route planning, and potential buyer’s regret.

Conclusion

A $3 billion package can materially reduce diesel dependency over five years. A phased approach minimises stranded asset risks and maximises additionality. Every electric truck deployed frees diesel for operators unable to electrify, supported broadly by major freight organisations.