Fueling the Fleets

Introduction

The Australia Institute reports that Australia is reliant on imports for 91% of its fuel consumption, which means that the country’s fuel supply is exposed to international price fluctuations and supply chain constraints.ⁱ

Under the Long-Term Emissions Reduction Plan to achieve net zero emissions by 2050, the Australian Government introduced the $250 million Future Fuels Fund to provide co-investment for innovative charging and refuelling infrastructure projects. The Fund is supplemented by the 2021 Future Fuels and Vehicles Strategy which aims to encourage the uptake of electric, hydrogen, biofueled or hybrid vehicles.

Electric

As noted in our article Driving it Home: How Australia Can Make the Switch to Electric Vehicles, various stakeholders are working towards a smooth transition to electric-fuelled vehicles (EVs). This includes the development of critical infrastructure, financial incentives and other policy instruments at both the State and Federal level.

The private sector is heavily invested in this transition. For example, Janus Electric recently unveiled what it claims to be Australia’s first electric prime mover fleet comprised of four heavy haulage vehicles. The key feature of the company’s technology is its ability to take existing vehicles and convert them into EVs as opposed to purchasing new vehicles. This circumvents the high upfront purchase price of EVs.

In Victoria, Volgren released two fully electric buses for the Department of Transport and bus operator, Kinetic.  A further 34 buses will be rolled out over the next three years. Kinetic has also contracted with the Melbourne Bus Franchise (MBF) to replace more than half of its fleet with low or zero-emission models.

The New South Wales government recently committed $219 million to achieve an 8,000-strong, zero emission public bus fleet by 2047. This would lead to a 78% reduction of Transport for NSW’s current emissions.ⁱⁱ

Hydrogen

Another key focus area of the Future Fuels and Vehicles Strategy is the commercialisation of hydrogen as a transport fuel. To achieve this goal, the program will support projects developing renewable hydrogen transport solutions, particularly fuel cell electric vehicles (FCEV) which operate using a fuel cell powered by hydrogen.

For example, Emerald Coaches, based in Queensland, recently committed to convert 120 vehicles from diesel fuel to hydrogen fuel by 2040 at an estimated cost of $100 million.

Substantial progress is also being made to scale up the production and supply of renewable hydrogen as a source of fuel. Hydrogen Fuels Australia intends to develop Australia’s first modular hydrogen production and integrated FCEV refuelling operation in Truganina, Victoria. Projected to become operational in the third quarter of this year, the site will initially produce 60-90kgs of green hydrogen from its own solar array, enough to fuel up to 3 vehicles per day. Eventually, the plan is to scale up the site to supply up to 3,000kg of hydrogen daily, with capacity to refuel 100+ vehicles per day.

Biofuels

Liquid fuels (including biofuels) are one of the more commonly used fuels in the heavy freight, shipping and aviation industries due to its high-density energy and ease of storage and transportation compared to electricity and hydrogen. Furthermore, biofuels can more easily be substituted for traditional fuels. Many vehicles designed to run on conventional diesel, for example, will have no problem running on biodiesel alternatives without the need to convert the vehicle.

Biofuels however have high manufacturing and energy costs, and the focus of future developments will be on making biofuels more cost-effective and economically viable. Pilot programs are underway to produce the next generation of commercial biofuels, including the Northern Oil Advanced Biofuels Laboratory project and the Oceania Biofuels renewable diesel and sustainable aviation fuel biorefinery in Gladstone, Queensland.

Funding

To support the above, the Australian Renewable Energy Agency (ARENA) recently launched Round 2 of the Future Fuels Program with $127.9 million in funding to support commercial fleets to shift to zero emissions vehicle technology by 2026.

The Clean Energy Finance Corporation offers additional funding to clean energy projects on behalf of the Australian government, having invested over $450 million in projects and funds aimed to reduce emissions in the transport sector. The Corporation also partners with external organisations to facilitate co-financed projects.

Funding at the State-level is also available, such as the Hydrogen Industry Development Fund in Queensland that contributed to the Emerald Coaches hydrogen project mentioned above.  In New South Wales, the Electric Vehicle Strategy offers a cash rebate of $3,000 on 25,000 eligible vehicles to encourage the greater uptake of EVs.

Western Australia has allocated $60 million to accelerate the use of zero emission vehicles in the 2022-23 State Budget. This funding includes:

• A $3,500 rebate for Western Australians if they purchase an electric or hydrogen fuel-cell vehicle; and
• $22.5 million towards charging infrastructure.

The Future

Australia has a renewed focus on securing readily available sources of fuel for its domestic transport needs – specifically via electricity, hydrogen and biofuels. While the transition to renewable fuels is a work in progress, an increase in the number of renewable energy projects, available funding and other incentives for both developers and consumers means there has never been a better time to ‘fuel’ a more sustainable transportation industry in Australia.

The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.