Jun 13 2024

Transport Sectoral Plan – A breakdown of how the transport industry will reach net zero

Transport emissions are on track to become Australia’s largest source of greenhouse gas emissions by 2030. To address this, the Federal Government has published its Transport and Infrastructure Net Zero Consultation Roadmap, outlining the steps to be taken to align transport with Australia’s efforts to reach net zero emission by 2050.

The Australian Government has an ambitious climate agenda, legislating to reduce national emissions by 43 per cent on 2005 levels by 2030 and net zero by 2050 in line with the global goal to keep warming to well below 2°C and pursue efforts to keep it to 1.5°C. For Australia to meet these targets, all sectors of the economy will need to do their part in reducing emissions. To help drive this, the Federal Government has committed to developing six sectoral plans, to give industry a clear decarbonisation pathway. One of these is transport.

Decarbonising transport – what makes it so challenging?

One of the biggest challenges facing the transportation sector is growth in Australia’s population and economy which will lead to increased transport activity. This presents a challenge, as while transport activity is expected to grow, the sector needs to be significantly reducing transport emissions. When coupled with falling emissions in other sectors, transport’s contribution to Australia’s total emissions is projected to be 26 per cent of all direct emissions without further action by 2030, resulting in transport being Australia’s highest emitting sector (Figure 1).  Even if the transportation sector policies currently in consultation are realised (i.e. the New Vehicle Efficiency Standard), it is still projected that it will be Australia’s second highest emitting sector, only 1 per cent behind stationary energy.

Figure 1: Percentage share of Australia’s emissions by sector in 2030

 Source: DCCEEW, Australia’s emissions projects 2023

The Department of Infrastructure, Transport, Regional Development, Communications and Arts (DITRDCA) analysed over 130 transport emission reduction strategies both locally and internationally and reviewed submissions from previous government consultation processes on transport decarbonisation policy to come up with the roadmap. They consulted across governments and with stakeholders to understand the key themes relating to decarbonisation and the challenges in doing so. The roadmap has been designed using five guiding principles: =

  • Maximise emissions reduction
  • Value for money
  • Maximise economic opportunity
  • Inclusive and equitable
  • Evidence-based.

The intent is to work in partnership with state and local governments, industry and communities across multiple timeframes, considering actions that can be achieved in the short-term (2024-2030), medium-term (2030-2040) and long-term (2040-2050).

Rethinking our transport networks and systems

A net zero pathway for the transport sector will require a substantial increase in the use of active (e.g. physical activity like running and cycling)[i] and public transport. For this to be achieved, significant policy and investment will be needed, by all levels of government. The roadmap outlines two key ways the government can support this transition

  • As a leader: As the government has done with the energy sector, it expects the setting of national goals to achieve higher rates of active and public transport and encourage action from local and state government, as well as industry. The roadmap argues urban planning policies could be revised to prioritise active and public transport, for example by creating more walkable and bike-friendly communities. Technological innovations would help support more active transportation. Innovations in mobile applications and data analytics could allow people to more efficiently plan their journeys, while innovations in electric mobility could see a greater use of e-bikes and e-scooters. To encourage and promote active and public transport, the roadmap sees that government could play an advocacy role and highlight the benefits of a shift to more active and public transport.
  • As an investor: It sees a role for modernising and expanding the public transport network by increasing the frequency and coverage of services and by transitioning the public transport fleet to electrification. It expects this to help encourage greater use of public transport, reduce the need for private car travel and decrease the sector’s emissions. The Federal Government could also collaborate with local and state governments to improve active transport infrastructure, such as additional cycle lanes, walkways, shared paths and secure bike parking facilities. Financial incentives, such as reducing fares, as recently announced by the Queensland Government, is expected to allow users to save money on transport costs and encourage them to select active and public transport options.

Net zero pathways for each transport mode

Road – light vehicles

The Federal Government’s main policy focus is understandably decarbonising light vehicles, which make up 60 percent of transport’s total emissions. Electric vehicles (EVS) are considered the pathway to net zero for light vehicles. Incentivising the purchasing of EVs, better accessibility to EVs and charging stations and advancement in battery technology are actions the government can take in the short term to help reduce light vehicle emissions. The Federal Government has already unveiled its vehicle efficiency standards which is designed to support the shift towards more EVs. In the medium-term, all Australians will need to be able to access charging when they need it, requiring substantial investment in charging infrastructure. This investment is expected to be continue to be needed in the long-term, with bi-directional charging and vehicle to grid capabilities to be evolved to support grid stability and demand flexibility.

As the AEC has explained elsewhere, EV uptake will have ramifications for the management of Australia’s electricity grid (higher electricity demand, load shifting to meet minimum and maximum demand, managing voltage limits). It is therefore important these sector plans are properly integrated so these challenges can be recognised and addressed.

Road – heavy vehicles

Heavy vehicles will likewise require a shift to low and zero emissions technologies and fuels although the technology options for this (e.g. renewable diesel, hydrogen powered vehicles) are not currently commercially mature. The Federal Government recently released consultation on unlocking Australia’s low carbon liquid fuels opportunity, which looks at how to fast-track these technologies. Even so, heavy vehicles are generally considered a hard-to-abate sector and their decarbonisation is a long-term prospect.  Part of the puzzle will be rolling out a refuelling infrastructure network to support battery and hydrogen fuel cell charging.


The decarbonisation of rail faces similar challenges and timeframes as heavy vehicles.  Zero emission technologies will need to be rolled out and incentives will need to be in place to shift demand away from diesel locomotives. In the short term, the Government will need to support trials and testing of hydrogen and battery technologies to establish where they can be best used. Following this, it is hoped hydrogen and battery technologies are commercial enough to begin being used, alongside the development of a national refuelling and charging network. In the long-term, the complete reduction of fossil fuels will require widescale adoption of the above technologies. Absent that, some offsets might be needed.


To support the net zero pathway, technological improvements and pilot projects will be needed in the short-term to help determine the pathway for medium and long-term solutions. In the medium-term, adoption of electric vessels for short route tasks and hydrogen fuels for long routes should be more widely used.  In the long-term, zero-emission port and vessel infrastructure will be required as will a complete shift to electric vessels and hydrogen fuels.


Sustainable aviation fuel (SAF) will be relied on heavily by the aviation sector to help reach net zero. In the short term, SAF will be deployed in blended form using conventional technology. Electric and hydrogen-powered technology pilots will also need to be supported and will require investment from government. In the medium-term, the use of SAF will have increased and hydrogen and electric propulsion flights will move from demonstration to small aircraft use cases. By 2040, the majority of aviation fuel used in Australia is expected to be SAF, with infrastructure at Australian airports to support short range hydrogen and electric flights.

Supporting transports net zero pathways

Almost 3 per cent of Australia’s total emissions comes from transport infrastructure, and so decarbonisation of this will be important to Australia achieving its net zero goals. Emissions come from the building, operating and decommissioning of the infrastructure, such as roads and bridges, with emissions stemming from the production of construction materials such as cement, aluminium and steel.  Transport infrastructure can also enable various sectors, and decisions about what infrastructure to build and where influences the emissions emitted by certain transport sectors (eg. the building of roads will increase emissions from light and heavy vehicles). The government’s Infrastructure Policy Statement sets decarbonisation as a priority outcome for its transport infrastructure investments, with productivity, liability and sustainability being the three priorities the government has flagged for investment.

For transport infrastructure to decarbonise, in the short term, reducing embodied emissions (from the use of infrastructure) is seen as a priority of the government. In the medium term, eliminating existing operational emissions will be a priority for the government, while in the long term, the government hopes to have low and zero carbon concrete and steel available for infrastructure projects


The sheer size of Australia adds to the significance of the transport sector. In 2020-21, the transport sector’s total contribution to economy was $164.4 billion or 7.9 per cent of Australia’s GDP, second behind the mining sector. Additionally, last financial year there were an estimated 241.8 billion tonne kilometres of freight moved by road, 445.3 billion tonne kilometres moved by rail and 91.3 bill tonne kilometres moved by coastal shipping, highlighting Australia’s reliance on the transport sector to help fuel the economy. For Australia to meet its emission targets, it must transition both rail, road, sea and air transport to lower emissions technologies – an incredibly difficult task.

The transport sectoral plan is an important framework for the transportation industry to work towards net zero emissions. As with the other key sectors, the transportation sector has a major task ahead, with all of industry and government needing to buy in to make these goals possible.

This plan provides a framework for how the sector might transition, but still requires large investment from government and industry, to find solutions to meet the path set out. Without a sectoral plan that sets the direction for coming years, the challenge of reaching net zero becomes near impossible. The transport sectoral plan is in its early stages, but it is an important step to ensuring Australia is able to tackle the net zero transition.


[i] Active transport refers to physical activity such as cycling and walking.

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