On 7 May 2018 the then Minister for the Environment and Energy, the Hon Josh Frydenberg, announced a review of Australia’s fuel security which was to be completed by end of 2018 but no results of the inquiry have been made publicly available. Reports of the limited period attached to reserve holdings of liquid fuel alarmed members: at the time the review was announced reserves of diesel were at three weeks.
We raised the issue of fuel security in our Pre-Budget submission made earlier this year to Treasury. Our main concern was the potentially highly negative effects of any failure in the supply of liquid fuel, or its rationing, on the road transport industry.
On 2 May, NatRoad made a submission to the federal Department of the Environment and Energy in relation to its work on securing Australia’s liquid fuel supply.
In producing this initial report, the Department has recognised that liquid fuel, especially diesel, accounts for 98 per cent of transport needs. This means transport is the sector that is most vulnerable to impacts from liquid fuel disruptions. As one of NatRoad’s members commented to us in the development of our submission; without access to fuel stocks, we don’t have an industry.
We support the finding in the Report that diesel fuel will be an important energy source for Australia beyond 2040. The reality is that diesel remains a critical fuel type for Australia, with demand growing faster than the economy since 2009–10.
In 2017–18, on-road diesel consumption was just over half the total national diesel consumption. Road freight accounts for much of the rest of this demand, with diesel being used by 99 per cent of heavy freight vehicles. Demand for diesel in the freight sector is expected to remain high, with the freight task expected to grow by 52 per cent between 2016 and 2036.
On the other hand, there are several barriers to the adoption of alternative fuels at the current stage of their development including lower energy density, higher price, reduced driving range or lower thermal efficiency. For electric vehicles, it is the lack of infrastructure especially for long haul vehicles and the current and projected length of “down time” for re-charging.
That is not to say we don’t support the development of alternatively fuelled technology. But in reality, for these technologies to have an impact on the day-to-day operations of members is still a decade or two away. That time scale reinforces the need for the Government to have in place policies which secure Australia’s access to liquid fuels.
NatRoad supports an examination of how fuel is supplied and used in Australia, including the country’s resilience to withstand disruptions from both within and outside the country. The Government’s review into fuel stocks should be fast-tracked as should returning Australia to holding 90 days’ worth of oil stocks, noting that the Government has committed to returning to compliance with the International Energy Agency’s emergency stockholding obligations by 2026.
It is high time the Government made increase of Australia’s fuel reserves a priority.