Decarbonising Australia’s road freight network
27.03.2026 - 04:43
Mandala’s latest research, prepared for Energy Futures Foundation, sets out a policy roadmap for decarbonising Australia’s road freight network which could help to drive economic, environmental and social benefits. Emissions in the transport sector grew 0.3 Mt CO2-e in 2025. Emissions in all other sectors fell. Australia has a critical window to decarbonise its road freight network, but the current policy settings have Australia on the wrong track. A policy suite that targets cost, infrastructure and regulatory barriers could add an additional 1.5 million battery electric trucks to the road by 2050 and be cost neutral for the budget. Setting up the right policies now could deliver $138 billion in economic growth over the next 25 years, create 900 thousand jobs by 2050 and reduce emissions by 181 Mt CO2-e – equivalent to 41% of Australia’s 2025 annual emissions. These policies would also save 3,300 lives and reduce externality costs associated with heavy vehicles by $18.5 billion by 2050.
Road freight underpins the Australian economy and is driving increasing emissions in the transport sector. As Australia’s economy grows, so does our freight task. Our freight task is forecast to grow by 15% by 2050.
Australia has a critical window to decarbonise its road freight network. 2.4 million vehicles are over 10 years old, accounting for 48% of the fleet. Together, these vehicles account for 31.6 Mt CO2-e annually. Emissions in the transport sector grew 0.3 Mt CO2-e in 2025. Emissions in all other sectors fell. This increase is being driven by road freight which is set to overtake passenger vehicle emissions by 2039.
Analysis shows that electrification is the most prospective decarbonisation solution for the majority of road freight. Battery electric vehicles (BEVs) can already meet payload and distance requirements for urban and most regional cohorts. 77% of trips today can be covered by BEVs based on distance and payloads. This will increase to 88% by 2030 as the technology frontier for BEVs improves. Other solutions such as low-carbon liquid fuels will continue to play an important role for hard-to-electrify truck cohorts.
Nevertheless, regulatory, cost and infrastructure barriers need to be addressed to support increased adoption of battery electric vehicles and these barriers differ depending on truck use cases.
A policy suite that targets cost, infrastructure and regulatory barriers could add an additional 1.5 million BEV trucks to the road by 2050 and be cost neutral for the budget. Regulatory policies, such as introducing concessions for weight thresholds, are low-cost, high-impact policies to support BEV adoption. The introduction of an efficiently priced road user charge could also help fund targeted subsidies.
These policies will drive productivity and deliver $138 billion in economic growth and an additional 900 thousand jobs by 2050. This does not include the substantial benefits of increased fuel sovereignty during crises. Improving BEV adoption will reduce emissions by 181 Mt CO2-e by 2050 – equivalent to 41% of Australia’s 2025 annual emissions. These policies would save 3,300 lives and reduce externality costs associated with heavy vehicles by $18.5 billion by 2050.
Read the full report here.
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