The Australian Academy of Technological Sciences and Engineering (ATSE) has urged key sectors of the economy, including mining, road freight, agriculture, fisheries, and forestry, to break their reliance on diesel. It is calling on these industries to accelerate the shift to cleaner alternatives.
In a new report, Decarbonising Diesel Industries, ATSE warns that diesel combustion accounts for about 17 per cent of Australia’s total carbon emissions, making it a major barrier to meeting the nation’s 2030 emissions reduction target of 43 per cent and net zero by 2050.
Beyond the climate impact, the report highlights Australia’s vulnerability to global fuel markets, with nearly 29 billion litres of diesel imported annually amid a declining domestic refining industry. This dependency exposes the economy to supply chain shocks and geopolitical risks.
Pathways Beyond Diesel
The report identifies three main alternatives to diesel, each with strengths and limitations. Biofuels can be used immediately in existing engines to cut emissions, particularly in freight and remote operations.
Electrification is increasingly viable for urban freight and some mining applications, but remains challenging for long-haul transport. Green hydrogen is viewed as a promising option for heavy-duty and off-grid applications, providing longer ranges and zero tailpipe emissions.
Despite these opportunities, ATSE said progress is being slowed by infrastructure gaps, high upfront costs, and subsidies that keep diesel artificially cheap.
In a press release, ATSE Chief Executive Dr Kylie Walker said urgent reform was needed to accelerate change.
“There is an urgent need to decarbonise Australia’s most emissions-intensive sectors,” Dr Walker said.
“By encouraging the application of mature clean fuel technologies, investing in fast-tracking clean tech in development, reducing the cost of green alternatives, and increasing the cost of diesel in a targeted and balanced way, Australia can achieve its industrial decarbonisation. Early-stage research and development initiatives are also crucial in supporting the transition away from diesel.”
Policy and Industry Action
The report calls for coordinated national action, including phasing out fossil fuel subsidies, strengthening emissions reduction policies, and creating a dedicated “Future Diesel Strategy” to align investments and regulations with net-zero goals. It also recommends reforms to the Fuel Tax Credits Scheme, which ATSE said shields high-emitting industries from the real costs of fossil fuel use.
ATSE Fellow, Fortescue Board Member and former CSIRO Chief Executive Dr Larry Marshall said current policy settings were holding back innovation.
“Heavy Industry wants to transition to cleaner fuels, but the current policy settings make it harder than it should be. Right now, the Fuel Tax Credit scheme effectively subsidises burning diesel, while companies that invest in clean alternatives face higher costs especially in this transition period. That imbalance holds back innovation and locks in emissions,” Dr Marshall said.
“If we want Australia to become a Clean Energy Superpower; if we want a Future Made in Australia; then we need a system that rewards smarter, cleaner choices. Emerging clean technologies need the right mix of policy, incentives and investment to make Australia’s green and gold vision a reality.”
Dr Walker added that the task ahead would be challenging but achievable with the right mix of policies and investment.
“The transition away from diesel while supporting thriving Australian freight, mining, agricultural, fisheries and forestry sectors is a complex challenge. It won’t be easy and there is no one-size-fits-all solution – it will need to be all-encompassing,” she said.
“But we have the technology; we can do it if we get the settings right.”
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