Productivity Commission Highlights Renewable Diesel as Key Solution for Heavy Vehicles

The latest Productivity Commission’s Investing in Cheaper, Cleaner Energy and the Net Zero Transformation has placed a spotlight on renewable diesel as a critical pathway to reducing emissions in Australia’s heavy vehicle sector. While some details are lacking, the repeated emphasis on renewable diesel marks a significant step forward in recognising its role in Australia’s net-zero transition.

As the Commission notes, transport produced 19% of Australia’s total emissions in 2023-24, with heavy vehicles accounting for roughly one-quarter of the sector’s impact. Heavy vehicles represent a particularly hard-to-abate sector due to their reliance on diesel and the long operational life of fleets.

The Commission’s report focuses on three core themes:

• Lowering the cost of meeting emission reduction targets

• Streamlining approvals for new energy infrastructure

• Unlocking private investment in adaptation, particularly for housing and transport sectors

In line with its focus on cost‑effective abatement, the Commission highlights renewable diesel as an immediate, proven solution, with the Commission identifying renewable diesel as an immediate and effective way to cut heavy vehicle emissions.

Unlike other technologies still in development, renewable diesel is a proven drop‑in fuel that can be used immediately with no need for new infrastructure or upgrades. This makes it especially valuable for long‑distance freight and heavy industry, where equipment is typically replaced only at the end of its lifecycle.

In these industries, early replacement of vehicles or machinery is rarely economical and often carries significant balance sheet implications. Renewable diesel offers a practical bridge, delivering cuts now while longer‑term technologies mature.