August 2015
Published by the Department of the Environment. www.environment.gov.au
This work is licensed under the Creative Commons Attribution 3.0 Australia Licence. To view a copy of this license, visit http://creativecommons.org/licenses/by/3.0/au
The Department of the Environment asserts the right to be recognised as author of the original material in the following manner:
or
© Commonwealth of Australia (Department of the Environment) 2015.
While reasonable efforts have been made to ensure that the contents of this publication are factually correct, the
Commonwealth does not accept responsibility for the accuracy or completeness of the contents, and shall not be liable for any loss or damage that may be occasioned directly or indirectly through the use of, or reliance on, the contents of this publication.

• Transport emissions are projected to be 105 Mt CO
2
-e in 2019–20, an increase of 42 per cent on 1999–2000 levels, and 115 Mt CO
2
-e in 2029–30, an increase of 55 per cent on 1999–2000 levels.
– Growth in incomes, economic activity and the population are expected to lead to growth in transport activity, which is the main driver of projected growth in transport emissions.
– Projected improvements in road vehicle drive train efficiency and greater use of hybrid vehicles are expected to reduce the impact of increased road transport activity on emissions by 17 per cent by 2029–30.
– Emissions from road transport are expected grow more slowly than emissions from rail and aviation.
• In the 2013 Projections, emissions from transport were projected to be 99 Mt CO
2
-e in 2019–20. Emissions are now projected to be higher in 2019–20 because the oil price is assumed to be lower and this would result in less of a shift to low emissions fuels and hybrid vehicles.
• The transport projections cover road transport, domestic aviation, domestic shipping, rail and other transport
(pipeline transport and off road vehicles).
• Transport emissions were 17 per cent of Australia’s preliminary 2013–14 national greenhouse gas inventory, at
92 Mt CO
2
-e.
• Road transport produced 83 per cent of transport emissions in 2013–14.
Throughout this report:
1. Totals may not sum due to rounding.
2. Percentages have been calculated prior to rounding.
3. Years in charts and tables are financial years ending in the stated year.
Transport emissions projections 2014–15 2

• The baseline projection covers emissions from road transport, domestic aviation, domestic shipping, rail and other transport (pipeline transport and off-road vehicles).
• Transport emissions are projected to be 105 million tonnes of carbon dioxide equivalent (Mt CO
2
-e) in 2019–20:
– Road transport emissions are projected to be 87 Mt CO
2
-e in 2019–20, which would be 83 per cent of transport emissions in that year.
– Transport emissions are projected to grow as a result of projected increases in transport activity. Population and income growth are expected to lead to greater passenger travel, and economic growth is expected to lead to increases in freight transport.
– Projected improvements in the efficiency of internal combustion engines and greater use of hybrid vehicles, plug-in hybrid vehicles and electric vehicles are expected to moderate the effect of activity growth on road emissions by 5 per cent by 2019–20, and 17 per cent by 2029–30.
• Emissions are projected to be 115 Mt CO
2
-e in 2029–30 and 119 Mt CO
2
-e in 2034–35.
Sources: DoE 2015, DoE analysis.
Transport emissions projections 2014–15 3

2000 2014 2020 2030
Mt CO
2
-e Mt CO
2
-e Mt CO
2
-e
Increase on 2000 Mt CO
2
-e
Increase on 2000
Road
Domestic aviation
Domestic shipping
Railways
Other transport
2
0.6
Total 74
Sources: DoE 2015, DoE analysis.
64
5
2
3
1.0
92
77
8
3
4
1.0
105
87
10
3
2
0.4
31
22
5
1
5
1.1
115
93
13
3
3
0.5
41
28
8
1
• The 2014–15 transport projections include two measures: the New South Wales Biofuels Act 2007 and the 2014–
15 Budget fuel excise changes.
– Minimal abatement is expected from these measures by 2019–20.
– Cumulative abatement from these measures is estimated to be 28 Mt CO
2
-e over the period 2019–20 to 2034–
35.
• Projections of abatement from the Emissions Reduction Fund are not included to avoid disclosing potentially market sensitive information, and because the safeguard element of the Fund has yet to be decided.
• The Government will consider including estimates of abatement in future projections if it is possible to do so without reducing the effectiveness of the Emissions Reduction Fund auctions.
• In the 2014–15 Projections, projected transport emissions in 2019–20 are 7 Mt CO
2
-e higher than in the 2013
Projections. This difference arises because:
– Projected emissions are 8 Mt CO
2
-e higher because oil prices are assumed to be lower. This has resulted in a small increase in projected transport activity, and lower projected use of low emissions fuels and hybrid vehicles.
– Projected emissions are 1 Mt CO
2
-e higher because emissions from pipeline transport have been accounted under transport for the first time, in accordance with the 2006 IPCC Guidelines for National Greenhouse
Gas Inventories . In the 2013 Projections, emissions from pipeline transport were included under direct
Transport emissions projections 2014–15 4

combustion.
– Projected emissions are 2 Mt CO
2
-e lower due to weaker projected shipping activity.
Transport emissions projections 2014–15 5

Executive summary .................................................................................................................................... 2
Key points ................................................................................................................................................................. 2
Baseline projections ............................................................................................................................................. 3
Impact of measures ............................................................................................................................................... 4
Changes from the 2013 Projections ................................................................................................................ 4
1.0 Introduction ..................................................................................................................................... 8
1.1 Sources of emissions from transport ................................................................................................. 8
1.2 Recent trends—national greenhouse gas inventory .................................................................... 9
1.3 Projections scenarios ............................................................................................................................ 10
1.4 Outline of methodology ........................................................................................................................ 11
2.0 Projections results ...................................................................................................................... 14
2.1 Trends in the transport projections................................................................................................. 15
2.2 Road transport ......................................................................................................................................... 17
2.3 Domestic aviation ................................................................................................................................... 24
2.4 Domestic shipping .................................................................................................................................. 25
2.5 Rail transport ........................................................................................................................................... 26
2.6 Other transport (pipeline and off-road) ......................................................................................... 27
3.0 Sensitivity analysis ..................................................................................................................... 28
3.1 Oil price ...................................................................................................................................................... 29
3.2 Biofuels ....................................................................................................................................................... 30
3.3 High emissions and low emissions ................................................................................................... 31
Appendix A Transport abatement measures .......................................................................... 35
Appendix B Changes from the 2013 Projections .................................................................... 38
Appendix C Key assumptions ........................................................................................................ 40
Appendix D References ................................................................................................................... 42
Figure 1 Transport emissions 1989–90 to 2034–35 ................................................................. 3
Figure 2 Transport emissions by sector 1999–2000 to 2013–14 ........................................ 9
Figure 3 Projected change in transport activity and emissions intensity ...................... 16
Figure 4 Projected change in road vehicle technology ......................................................... 17
Figure 5 Private passenger vehicle emissions 1999–2000 to 2034–35 .......................... 18
Figure 6 Drivers of projected private passenger vehicle activity and emissions ....... 19
Figure 7 Private passenger vehicle fuel use 2013–14 to 2034–35.................................... 19
Figure 8 Light commercial vehicle emissions 1999–2000 to 2034–35 ........................... 20
Figure 9 Light commercial vehicle fuel use 2013–14 to 2034–35 .................................... 21
Figure 10 Heavy truck and bus emissions 2013–14 to 2034–35 ......................................... 22
Figure 11 Domestic aviation emissions 1999–2000 to 2034–35 ......................................... 24
Figure 12 Domestic shipping emissions 1999–2000 to 2034–35........................................ 25
Transport emissions projections 2014–15 6

Figure 13 Rail transport emissions 1999–2000 to 2034–35 ................................................ 26
Figure 14 Oil price sensitivity analysis ......................................................................................... 29
Figure 15 Biofuels sensitivity analysis.......................................................................................... 31
Figure 16 High emissions and low emissions sensitivity analysis ...................................... 32
Figure 17 Light vehicle standards, total transport emissions .............................................. 33
Figure 18 Light vehicle technology share, key years ............................................................... 33
Figure 19 Comparison between the 2013 and 2014–15 Projections ................................. 39
Table 1 Baseline transport emissions, key years ....................................................................... 4
Table 2 Sources of transport emissions ......................................................................................... 8
Table 3 Projected transport emissions, key years .................................................................. 14
Table 4 Sensitivity analysis parameters ..................................................................................... 28
Table 5 Transport sensitivity analysis, key years ................................................................... 28
Table 6 Changes between the 2013 and 2014–15 Projections ........................................... 38
Table 7 Oil price assumptions (A$2014/bbl) ........................................................................... 40
Table 8 Biofuel production constraints (megalitres) ........................................................... 40
Table 9 Change to effective fuel excise rates from the 2014–15 budget
(A$2014/litre) ................................................................................................................... 41
Table 10 Domestic gas prices and production assumptions ............................................... 41
Table 11 New technology price assumptions – medium sized cars (A$2014’000) ..... 41
Transport emissions projections 2014–15 7

The 2014–15 transport projections are a full update of the 2013 transport projections. They use the results from transport greenhouse gas emissions projections 2014 to 2050, which was prepared for the Department of the
Environment by CSIRO (Graham and Reedman 2014 and 2015). The results have been scaled to align with Australia’s
National Greenhouse Gas Inventory September 2014 Quarterly update estimate of 2013–14 emissions
(DoE 2015).
The 2014–15 transport projections use the same definitions as the national greenhouse gas inventory, but road transport is disaggregated into private passenger vehicles, light commercial vehicles, rigid trucks, articulated trucks and buses. Australia’s transport emissions are defined in the national greenhouse gas inventory as emissions from the direct combustion of fuels in road transportation, railways, domestic shipping, domestic aviation, and off-road recreational vehicle activity.
The 2014–15 transport projections also include combustion emissions from pipeline transport, to align with the 2006
IPCC Guidelines for National Greenhouse Gas Inventories . Combustion emissions from transport pipelines are accounted for under direct combustion in earlier projections, and in the national greenhouse gas inventory .
Emissions from electricity used in electric vehicles and rail are accounted for under electricity generation. Emissions from the production and refining of oil-based fuels, including biofuels, are accounted for elsewhere in the inventory.
Source Description
Road transport
Domestic aviation
Domestic shipping
Rail
Other transport
Emissions from private passenger vehicles, light commercial vehicles, rigid trucks, articulated trucks and buses. Emissions from private on road motorcycle use are included with passenger vehicles.
Emissions from passenger and freight air transport that departs and arrives in
Australia—including emissions from take offs and landings. Emissions from flights between Australia and another country are not included.
Emissions from vessels of all flags that depart and arrive in Australia. Emissions from voyages between Australia and another country are not included. Emissions from fishing vessels are reported under direct combustion.
Emissions from rail transport.
Emissions from pipeline and off road transport. Pipeline transport includes the combustion emissions from the operation of compressors in natural gas pipelines.
Off-road transport includes emissions from off road recreational vehicles. Other offroad vehicles, such as farm vehicles and construction equipment are accounted for
Transport emissions projections 2014–15 8

Source Description under direct combustion.
Total transport emissions in 2013–14 are estimated to have been 92 Mt CO
2
-e, accounting for 17 per cent of
Australia’s total emissions (DoE 2015). Road transport is estimated to have produced emissions of 77 Mt CO
2
-e in
2013–14, which was 83 per cent of transport emissions.
Emissions from non-road transport are estimated to have been 15 Mt CO
2
-e in 2013–14, which was 17 per cent of transport emissions in that year.
Sources: DoE 2015, DoE analysis.
From 1999–2000 to 2013–14, transport emissions increased by 18 Mt CO
2
-e, or 24 per cent, an average of 1.6 per cent a year. Most of this increase was a result of increased transport activity.
Private passenger vehicles were the main source of transport emissions over the period 1999–2000 to 2013–14.
Emissions from private passenger vehicles grew more slowly than private passenger vehicle activity, because higher fuel prices (peaking in 2007–08) led consumers to prefer smaller more efficient vehicles.
Improved fuel efficiency resulting from use of alternative drive train technology and incremental technology
Transport emissions projections 2014–15 9

improvements has reduced emissions growth. Vehicle emissions standards in Europe and elsewhere have seen more efficient vehicles being sold in Australia because over 90 per cent of vehicles sold in Australia are imported. Changes in the type of transport used (for example, passengers travelling by air instead of road) and infrastructure development have also reduced transport emissions growth. Increases in road congestion, in contrast, have increased growth in transport emissions.
There was a temporary fall in domestic aviation emissions between 2000–01 and 2002–03, due mostly to the collapse of Ansett, and a reduction in tourism following fears of terrorism. Growth in other transport emissions was due to growth in emissions from pipelines used to transport natural gas.
In this report, road transport activity is measured using vehicle kilometres travelled.
In Australia (and elsewhere), vehicle kilometres travelled is one of the main variables used as a measure of a road network or vehicle fleet use. Estimates of vehicle kilometres travelled are used extensively in transportation planning for allocating resources, estimating vehicle emissions, computing energy consumption and assessing traffic impact (BITRE 2010).
Passenger transport activity in the rail and aviation sectors is measured in passenger kilometres travelled. For example, a train which carries 100 passengers a distance of 100 kilometres would account for 10,000 passenger kilometres travelled. Vehicle kilometres travelled is an inappropriate measure of activity for non-road transport because of the large variation in the capacity of ships and trains.
Freight activity is measured in terms of freight tonne kilometres—a measure of the amount of freight carried, and distances travelled. For example, an articulated truck that travelled 100 kilometres carrying 10 tonnes of freight, would contribute 1,000 freight tonne kilometres. Vehicle kilometres travelled is an inappropriate measure of freight transport activity because of the large variation in the capacity of freight vehicles.
The baseline scenario has been developed on the basis of current policies and measures that apply to transport. The effect of the fuel excise rates announced in the 2014–15 Budget, and the effect of the New South Wales Biofuels Act
2007 have been accounted for in the baseline scenario. The baseline scenario does not include the expected impact of the Emissions Reduction Fund for the reasons outlined above.
Sensitivity analysis has been conducted to indicate possible upper and lower bounds for projected transport emissions.
Changes in the assumptions, regarding higher or lower oil prices, and significant increases in the availability of biofuels, were examined in the high and low emissions scenarios. The results of the sensitivity analysis are presented in
Transport emissions projections 2014–15 10

Chapter 3.
The transport projection is based on projections of emissions from road, rail, domestic aviation and domestic shipping, developed by CSIRO using the transport module of its Energy Sector Model. Emissions from other transport were projected separately.
CSIRO’s Energy Sector Model is a linear programming model which determines the least cost fuel and vehicle mix to meet given transport activity levels. The initial vehicle stock, specified in terms of vehicle categories, drive trains and vehicle size, was imposed on the model, and the total cost of travel, including vehicle, maintenance and fuel costs was used to project how the drive trains and vehicle sizes embodied in the vehicle stock would change over the projections period. Of the constraints imposed on the model, the following are the most significant: vehicle emissions standards, preferences for smaller vehicles, scrappage rates, fuel efficiency improvements for internal combustion engines, and limits on the development of alternative fuel refineries.
The main task of CSIRO’s Energy Sector Model is to make choices about the types of fuel that would be used for road transport and aviation, and the types of drive trains that would be used in the road transport. Fuel choices for shipping and rail transport are imposed, and are a result of modelled outcomes for road transport and aviation. It is assumed that differences in rates of fuel excise that apply to road transport, and limited fuel choices for aviation, mean that users of these forms of transport would be prepared to pay more for fuel than rail and shipping operators.
Further, establishment of production and distribution infrastructure for biofuels is likely to depend on road and aviation customers, rather than the smaller shipping and rail customers.
Activity levels in the baseline scenario were projected by the Department of the Environment in consultation with
CSIRO, and imposed on CSIRO’s Energy Sector Model. Activity levels were projected for each of the major transport categories:
1. Private passenger vehicles (vehicle kilometres travelled by cars and motorcycles).
2. Commercial vehicles (vehicle kilometres travelled and freight tonne kilometres).
3. Buses and rigid and articulated trucks (vehicle kilometres travelled by buses and trucks, and freight tonne kilometres for trucks).
4. Rail (passenger kilometres travelled and freight tonne kilometres).
5. Marine (freight tonne kilometres).
6. Aviation (passenger kilometres travelled).
Short term activity forecasts were based on work done by Pekol Traffic and Transport for the Australian Transport
Facts 2014.
Pekol Traffic and Transport projected activity levels by estimating new vehicles sales on the basis of macro-economic projections, the Australian Bureau of Statistics’ 2013 projections of population growth and projections of the total cost of travel. Private passenger vehicles and light commercial vehicles in the initial vehicle stock were disaggregated into vehicle size (light, medium and heavy), on the basis of recent vehicle sales (ABS 2013).
The age of the vehicles in the initial vehicle stock were estimate on the basis of recent scrappage rates (PTT 2014).
The historical relationship between income and passenger travel activity has been used to project passenger travel activity in the medium term. For the longer term, projected population growth has a stronger influence on expectations of passenger travel activity than income growth (BITRE, 2010). Freight transportation activity was projected on the basis of bulk and non-bulk commodities projections, which were based on projections of economic activity (PTT 2014 and BITRE 2014a).
Transport emissions projections 2014–15 11

Changes to activity levels were examined in the sensitivity analysis. Cross price elasticities of demand were derived from the literature, and used to project the effects of competition between private passenger vehicles and public transport, and between trucks and rail freight. Own price elasticities were used to project change in transport activity in response to changes in the total cost of transport. For each mode of transport, CSIRO assumed that a 1 per cent increase in the total cost of travel would lead to a 0.2 per cent decrease in activity.
Choice of vehicle type is related to the following road vehicle drive train technologies:
• Vehicles with internal combustion engines (ICE), including
– conventional petrol vehicles
– diesel vehicles
– compressed natural gas (CNG) / liquefied natural gas (LNG) vehicles and liquefied petroleum gas (LPG) vehicles
– LNG articulated trucks.
• Hybrid vehicles, including
– petrol and diesel electric hybrids
– plug-in hybrid electric vehicles
• Electric vehicles.
• Hydrogen fuel cell vehicles.
CSIRO’s modelling framework is based on the assumption that more efficient vehicle types will be purchased if it makes economic sense to do so. That is, more efficient vehicles will be purchased if the discounted payback from the fuel cost savings offsets the difference in price between a conventional petrol vehicle, and the alternative vehicle type within five years.
CSIRO used local and global price data to establish representative vehicle costs for each vehicle type in its Energy
Sector Model. The difference in price between conventional petrol vehicles and other types of vehicles is expected to decline by around 50 per cent by 2049–50, with the exception of diesel vehicles, which have already achieved significant cost reductions. Representative vehicle costs for private road vehicles are outlined in Appendix C.
Fuel efficiency was estimated separately for each travel mode. The estimates were based on research by industry, and on CSIRO’s expert judgement regarding fuel efficiency trends and expected technology changes.
Three sources of fuel efficiency improvements were included in the modelling. Preferences for smaller vehicles which use less fuel, and fuel efficiency improvements in internal combustion engines were imposed on the model. The third source of efficiency improvements, use of alternative vehicle types, was determined under the modelling framework.
In CSIRO’s Energy Sector Model, the type of fuel that is purchased follows from the type of vehicle that is used, although there are a few exceptions. Petrol which has been blended with ethanol can be used in vehicles with conventional petrol engines (including petrol hybrids), and diesel which has been blended with biodiesel can be used in diesel engines. Blending is projected to occur as a function of fuel prices and requirements of the New South Wales
Biofuels Act 2007 . Synthetic diesel is a perfect substitute for diesel.
The type of fuel that is used also depends on availability. The availability of biofuels and synthetic diesel was constrained in the model, based on expectations regarding oil prices and the timing of new refinery construction.
For non-road transport, fuel efficiency improvements are imposed on the model. Projections of fuel efficiency
Transport emissions projections 2014–15 12

improvements were based on the total technical potential for improvement as described in Cosgrove et al.
(2012), and the historical relationship between the oil price and fuel efficiency improvements.
The carbon dioxide, nitrous oxide and methane emissions from fuel use were calculated using methods consistent with the national greenhouse gas inventory. Emissions were calculated by multiplying the amount of each fuel by the national greenhouse accounts factor for that fuel.
Emissions from other transport were not projected using CSIRO’s Energy Sector Model.
Emissions from off-road recreational vehicles were projected based on their historical relationship with population.
Off-road vehicles are assumed to use conventional petrol internal combustion engines, without any further improvements in fuel efficiency.
Emissions from pipeline transport were projected based on the historical relationship between the volume of natural gas transported in the pipeline network, and emissions. Expansion of the pipeline network was projected based on known natural gas projects and projected residential gas demand.
Transport emissions projections 2014–15 13

Relative to 2013–14, transport emissions are projected to increase by 14 per cent to 105 Mt CO
2
-e in 2019–20.
Transport emissions are projected to reach 115 Mt CO
2
-e in 2029–30 and 119 Mt CO
2
-e in 2034–35.
Road transport produced 83 per cent of transport emissions in 2013–14 and is projected to continue to grow steadily as a source of emissions. However, by 2034–35, relatively strong growth in emissions from domestic aviation, from a low base, is projected to reduce road transport’s share of transport emissions to 80 per cent.
2000 2014 2020 2030 2035
Road
Private road
Light commercial vehicles
Heavy trucks and buses
Domestic aviation
Mt CO
2
-e Mt CO
2
-e Mt CO
2
-e
Increase on 2000 Mt CO
2
-e
Increase on 2000 Mt CO
2
-e
Increase on 2000
64
40
77
43
87
44
22
3
93
46
28
6
95
48
30
8
9
15
5
13
20
8
16
27
10
7
12
5
17
29
13
8
14
8
16
30
14
7
15
10
Domestic shipping
Railways
2 3
2 3
Other transport
1 1
Total 74
Sources: DoE 2015, DoE analysis.
92
3
4
1
105
1
2
<1
31
3
5
1
115
1
3
<1
41
3
5
1
119
0
4
<1
45
Transport emissions projections 2014–15 14

Transport emissions are projected to grow by an average of 2.2 per cent a year from 2013–14 to 2019–20, faster than the rate of 1.6 per cent a year that was observed from 1999–2000 to 2013–14. Over the period 2019–20 to 2034–35, transport emissions growth is projected to slow to an average of 0.8 per cent a year.
All transport activity levels are assumed increase over the projection period (Figure 3). Passenger transport is assumed to increase in line with growth in population and incomes, and freight transport is assumed to increase in line with economic growth.
Over the period 2014–15 to 2019–20, improvements in the emissions intensity of the road vehicles is expected due to improvements in the efficiency of petrol and diesel internal combustion engines. Global light vehicle emissions standards and ongoing efforts to reduce the cost of passenger and freight transport are expected to lead to improvements in engine efficiency.
Over the period 2019–20 to 2034–35, improvements in the emissions intensity of the road vehicles is expected mainly due to greater use of hybrid, plug-in hybrid, and electric vehicles. Increases in projected oil prices over the period
2019–20 to 2034–35, and decreases in the cost of hybrid, plug-in hybrid and electric vehicles, are expected to improve the viability of these vehicle types.
Use of liquefied petroleum gas, natural gas, and compressed natural gas is expected to fall to negligible levels by
2028–29. Higher prices for gas based fuels, and relatively low oil prices are expected to reduce the viability of these fuels. Relatively low oil prices would be likely to limit use of biofuels to less than 1 per cent of total fuel use over the period to 2034–35.
Small improvements in fuel efficiency are projected for non-road transport over the period to 2019–20. Greater improvements in the emissions intensity are expected over the period 2019–20 to 2034–35, as a result of equipment replacement. Non-road equipment is replaced much less often than road vehicles, which means there are fewer opportunities for upgrades. Projected improvements in the emissions intensity of non-road transport are partly due to small improvements in operational efficiency.
Transport emissions projections 2014–15 15

Source: DoE 2015, DoE analysis.
Figure 4 shows that vehicles with hybrid drive trains are expected to become more common over the projections period. Over the period 2019–20 to 2034–35, more trucks and buses are expected to be diesel hybrid vehicles, and fewer trucks and buses are expected to be equipped with internal combustion engines. Buses and rigid trucks, which are used for shorter trips, are also expected to make increasing use of electric drive trains.
Transport emissions projections 2014–15 16

Sources: DoE 2015, DoE analysis.
Over the period 2014–15 to 2019–20, the proportion of private passenger vehicles and light commercial vehicles that use diesel engines is expected to decrease, and the proportion that uses petrol engines is expected to increase. This is expected to occur because oil prices are assumed to be low relative to the period prior to 2014–15, and this would change the economics of upgrading to a more efficient diesel vehicle.
Over the period 2019–20 to 2034–35, the number of private passenger vehicles and light commercial vehicles that use petrol hybrid engines is projected to increase. Sales of light vehicles with petrol hybrid engines are expected to exceed sales of vehicles with diesel engines after 2019–20, although petrol hybrid sales are unlikely to exceed petrol vehicle sales until later. Petrol hybrids are projected to replace petrol light commercial vehicles before 2029–30, and they are projected to replace petrol private passenger vehicles after 2029–30. Light commercial vehicles are generally driven further than private passenger vehicles, which would improve the viability of more efficient alternative drive trains.
Light commercial vehicles are also expected to be equipped with plug-in hybrid and fully electric drive trains not long after 2019–20.
Road transport emissions were 77 Mt CO
2
-e in 2013–14, 83 per cent of total transport emissions. Of this, private passenger vehicles (cars and motorcycles) accounted for 43 Mt CO
2
-e, light commercial vehicles contributed
13 Mt CO
2
-e, and heavy road vehicles (rigid trucks, articulated trucks, and buses) contributed 20 Mt CO
2
-e. Road transport emissions are projected to be 87 Mt CO
2
-e in 2019–20, and increase steadily over the period to 2034–35.
Transport emissions projections 2014–15 17

Private passenger vehicles are the largest source of road transport emissions, and accounted for 47 per cent of total transport emissions in 2013–14. Over the period to 2034–35, private passenger vehicle activity is projected to increase as a result of population and economic growth, causing emissions to increase from 43 Mt CO
2
-e in 2013–14, to
48 Mt CO
2
-e. The effect of projected increases in private passenger vehicle activity on emissions is expected to be partially offset by improvements in the fuel efficiency of internal combustion engines, and greater use of petrol hybrid vehicles.
Sources: DoE 2015, DoE analysis.
Projections of private passenger vehicle activity are informed by trends observed in Australia and overseas.
Historically, increases in population and incomes, and improvements in vehicle affordability have led to increases in the number of cars. At the same time, people have needed to travel for longer because cities have expanded and traffic has increased.
There is a limit to the amount of time that people will spend travelling each day before they make arrangements to prevent their travel time from increasing, or reduce it. For example, people may change their place of work, work from home, move house or work less in order to travel less. Other factors, such as increasing urban density, better public transport, and the internet, have also allowed people to travel less. Once people reach their limit, in terms of time spent travelling each day, population growth is likely to have a greater effect on private passenger vehicle activity than increases in income.
Recent research by the Bureau of Infrastructure, Transport and Regional Economics shows that per person daily travel has decreased in recent years. The decrease is strongly associated with events of the mid 2000s, such as higher petrol prices, and the effects of the global financial crisis. Given that the effect of these events may well be temporary, it is expected that economic growth will continue to have an effect on private passenger vehicle activity, although its influence is likely to decrease (BITRE 2014b). As shown in Figure 6, private passenger vehicle activity is projected to grow at an average rate of 2 per cent a year, faster than population growth but slower than economic growth over the same period.
Figure 6 also shows that emissions from private road transport are projected to grow by less than activity. The
Transport emissions projections 2014–15 18

emissions intensity of cars is expected to improve at an average rate of 1 per cent a year across the projection period.
As new cars replace retired vehicles, emissions growth would slow because the efficiency of the entire car fleet would improve.
Sources: ABS 2013, DoE 2015, DoE analysis.
The primary fuel efficient vehicle types for use in the private passenger vehicles fleet are:
• vehicles with diesel internal combustion engines, which are approximately 20 per cent more fuel efficient than petrol equivalents
• hybrid electric vehicles:
– Conventional hybrids, which use an electric motor and batteries to store and reuse energy generated from the internal combustion engine, and are typically 10 to 40 per cent more fuel efficient.
– Plug-in hybrids, which are similar to conventional hybrids, but can be charged with an external electricity source.
• electric vehicles.
Until 2019–20, projected fuel efficiency improvements are almost entirely driven by expected improvements in the efficiency of petrol internal combustion engines and greater use of diesel internal combustion engines. The projected increase in diesel use reflects the adoption of many European fuel standards in Australia, which have allowed diesel vehicles manufactured in Europe to be sold in Australia, and higher sales of sports utility vehicles, which are often available with diesel engines to offset their higher fuel consumption. Depending on distances travelled, petrol hybrids are expected to offer greater savings than vehicles with diesel internal combustion engines from 2021–22, and this would result in more petrol and electricity use, and less use of diesel.
Transport emissions projections 2014–15 19

Sources: DoE 2015, DoE analysis.
The proportion of hybrid vehicles in the private passenger vehicle fleet is projected to increase from 9 per cent in
2024–25, to 20 per cent by 2034–35, as technological advancements and economies of scale lead to lower prices.
Despite this, the relatively high price of plug-in hybrid and fully electric vehicles means that petrol vehicles are projected to dominate the private passenger vehicle fleet over the period to 2034–35.
Oil prices are assumed remain at around $85/barrel (USD2014). At this level, synthetic diesel, biofuels and LPG are unlikely to be competitive with conventional diesel or petrol. New refineries capable of producing synthetic diesel or biofuels would be unlikely to be constructed, which also reflects the constraints in supply chain development. Supply chain challenges include technological immaturity in primary energy resource extraction, refinery processes and delivery systems.
Prior to 2024–25, use of ethanol (blended with petrol in the form of E10) and biodiesel reflects the assumed effect of the Biofuels Act 2007 (NSW) and small amounts of biofuel use in other jurisdictions. Private road vehicles and light commercial vehicles are expected to use more biofuels than other forms of transport as a result of favourable fuel excise arrangements.
Light commercial vehicles are vehicles with less than 3.5 tonnes gross vehicle mass, for example: panel vans and utilities. Light commercial vehicles accounted for 17cent per of road emissions in 2013–14 (13CO Mt
2
-e), and their emissions are projected to reach 16CO Mt
2
-e by 2019–20. Emissions are projected to peak at 17CO Mt
2
-e by 2024–25, and decline to 16CO Mt
2
-e by 2034–35.
Transport emissions projections 2014–15 20

Sources: DoE 2015, DoE analysis.
Growth in light commercial vehicle activity is driven by growth in commercial services and urban freight delivery, which in turn are driven by projected economic growth. Light commercial vehicle activity is projected to grow by an average of 1 per cent a year between 2013–14 and 2034–35. Prior to 2019–20, light commercial vehicle emissions are expected to increase as a result of projected activity growth. Beyond 2024–25 the projected adoption of more efficient vehicle types would lead to a decrease in emissions despite continued activity growth.
Although light commercial vehicle operators have many of the same opportunities as private motorists to reduce travel costs, they are expected to adopt efficient vehicles faster than private motorists because they travel greater distances, and would save more as a result. Light commercial vehicle operators are projected to use hybrid vehicles from 2019–20 and electric vehicles and plug-in hybrid vehicles from 2023–24. Petrol hybrids are projected to make up
18 cent per of the light commercial vehicle fleet in 2024–25 and 41 cent per in 2034–35. In contrast, hybrid vehicles are projected to be 20 cent pe r of the private passenger vehicle fleet in 2034–35.
Also in 2034–35, plug-in hybrid vehicles are projected to account for 12 per cent of the light commercial vehicle fleet, and fully electric vehicles 7 per cent. In contrast, plug-in hybrid vehicles and fully electric vehicles are projected to be a negligible proportion of the private passenger vehicle fleet.
Light commercial vehicle operators and private passenger vehicle owners receive the same fuel excise benefit from using biofuels. Although, as a proportion of total fuel use, more biodiesel is used in light commercial vehicles than private passenger vehicles, reflecting the larger proportion of diesel engines in the light commercial vehicle fleet.
Figure 9 shows the projected changes in the light commercial vehicle fuel mix to 2034–35. Over the period to 2021–22,
LPG is projected to decline and diesel use is projected to increase. In energy equivalent terms LPG is expected to become more expensive than petrol and diesel. While LPG did offer an opportunity for lower cost transport for light commercial vehicles travelling long distances, petrol hybrid vehicles are projected to offer lower transport costs in the future.
Transport emissions projections 2014–15 21

Sources: DoE 2015, DoE analysis.
From 2025–26, the projected adoption of plug-in hybrid vehicles and fully electric vehicles is expected to lead to the consumption of a modest amount of electricity. While the amount of electricity consumed appears small on a petajoule (PJ) basis, it displaces several times its equivalent energy in liquid fuels because the energy losses that occur during fuel combustion happen at the power station rather than in the engine 1 . Overall, however, emissions are lower as a result. Similar to the projected trend in private passenger vehicle fuel consumption, diesel consumption is projected to fall and petrol consumption is projected to increase from 2021–22 onwards, as diesel vehicles are expected to be replaced with petrol hybrids.
Trucks and buses are defined as vehicles with more than 3.5 tonnes gross vehicle mass. There are two categories of heavy truck: rigid trucks, which have a fixed load carrying area, and articulated trucks, which consist of a prime mover linked to one or more trailers.
Emissions from trucks and buses were 26 per cent of road emissions in 2013–14 at 20 Mt CO
2
-e. Articulated trucks contributed 11 Mt CO
2
-e, over half the total emissions from trucks and buses. Rigid trucks contributed 7 Mt CO
2
-e and buses contributed 2 Mt CO
2
-e.
Emissions are projected to grow by an average of 5 per cent per year between 2013–14 and 2019–20 to reach
27 Mt CO
2
-e. Between 2019–20 and 2034–35, emissions growth is projected to slow to an average 0.8 per cent per year.
1 Emissions from the generation of electricity used in transport are accounted for under electricity generation.
Transport emissions projections 2014–15 22

Sources: DoE 2015, DoE analysis.
Steady growth in rigid and articulated truck activity is projected over the period to 2034–35 because projected economic growth would lead to greater demand for freight transport. Bus activity is projected to increase in line with population growth.
Beyond 2019–20, fuel efficiency of trucks and buses is projected to improve faster than in the preceding period.
Improvements in engine efficiency are expected to be greater than projected increases in weight carried per truck, leading to an overall increase in the fuel efficiency of the truck and bus fleet. By 2024–25, diesel hybrids are expected to be 29 per cent of the articulated truck fleet, 4 per cent of the rigid truck fleet, and 15 per cent of the bus fleet. By
2034–35, diesel hybrid use is expected to increase to 81 per cent of the articulated truck fleet, 54 per cent of the rigid truck fleet, but only 1 per cent of the bus fleet. Diesel is better than petrol for heavy vehicles because diesel engines can provide greater torque.
Articulated trucks, which carry freight between cities, are unlikely to be able to use fully electric vehicles. Fully electric rigid trucks are projected to reach no more than 15 per cent of the fleet over the projection period, which is the proportion of rigid trucks driving primarily in urban areas. Rigid truck operators would be able to use fully electric drive trains in urban environments where their limited range is less of a constraint, and they would also be able to use hybrid technologies, for example regenerative braking 2 .
Buses are projected to use less LNG over the projections period, because the price difference between natural gas based fuels, diesel and petrol would fall as a result of lower assumed oil prices, and higher assumed gas prices. By
2034–35, buses are not expected to use any natural gas based fuels. By 2034–35, half of the bus fleet is projected to use diesel hybrid drive trains, a third of the bus fleet is projected to use diesel internal combustion engines. The rest of the fleet is projected to use fully electric drive trains.
2 A regenerative brake is an energy recovery device which slows a vehicle by converting its kinetic energy into another form, which can be either used immediately or stored until needed. Energy is therefore accumulated during braking, and is returned to the vehicle when accelerating
(Cosgrove et al 2012).
Transport emissions projections 2014–15 23

Emissions from domestic aviation were 9 per cent, or 8 Mt CO
2
-e, of total transport emissions in 2013–14. Emissions from domestic aviation are projected to reach 10 Mt CO
2
-e in 2019–20, 13 Mt CO
2
-e in 2029–30, and 14 Mt CO
2
-e in
2034–35.
Sources: DoE 2015, DoE analysis.
Recent strong growth in domestic passenger numbers is expected to continue throughout the projection period. Air travel is projected to continue to grow faster than population or incomes, and faster than other modes of passenger travel. A combination of falling airfares due to increased competition and lower oil prices, and the relative convenience and speed of air travel are expected to support this growth. As a result, emissions from domestic aviation are projected to continue to rise steadily out to 2034–35, at an average of 2.8 per cent a year. Air freight is not an important source of projected aviation emissions growth.
Domestic aviation fuel efficiency is projected to increase at an average of around 0.5 per cent a year until 2034–35.
Improvements in air traffic management, reductions in aircraft weight, and technology improvements are projected to occur in the absence of specific policies as the high cost of aviation fuel means that fuel cost savings generally outweigh upfront costs.
Transport emissions projections 2014–15 24

Domestic shipping includes emissions from coastal freight and small pleasure craft. Most domestic shipping emissions come from ships transporting bulk freight long distances around the coast, which is projected on the basis of bulk commodity production forecasts.
Domestic shipping emissions were 3 Mt CO
2
-e in 2013–14, which was 3 per cent of total transport emissions.
Emissions from domestic shipping are projected remain at that level over the period 2034–35.
Sources: DoE 2015, DoE analysis.
Average annual emissions growth is projected to be 1.5 per cent a year between 2013–14 and 2019–20, and
0.9 per cent a year between 2019–20 and 2029–30. Emissions growth is projected to slow after 2019–20 due to projected declines in domestic coastal petroleum and iron ore production.
From 2032–33 to 2034–35, emissions from domestic shipping are projected to fall because there are a small number of coal powered ships in Queensland that projected to reach the end of their lifespan. It is expected that these ships would be replaced with new, efficient diesel powered ships, which would reduce the emissions intensity and overall emissions of domestic shipping.
Transport emissions projections 2014–15 25

Rail transport emissions included in the transport projections include only those emissions arising from non-electric rail 3 . Non-electric rail is mostly used for hire and reward freight and ancillary freight activities, such as transporting bulk commodities to port for export, and a small amount of passenger rail.
Emissions from non-electric rail transport were 4 per cent of transport emissions in 2013–14 at 3 Mt CO
2
-e. Emissions are projected to reach 4 Mt CO
2
-e in 2019–20, and grow to 5 Mt CO
2
-e by 2034–35.
Sources: DoE 2015, DoE analysis.
Between 2013–14 and 2019–20, rail transport emissions are projected to grow by 1 Mt CO
2
-e, an average increase of
3 per cent each year, driven mainly by projected increases in freight activity. Freight rail activity is expected to increase slightly faster than passenger rail activity over the projection period, as result of demand for freight from iron ore and coal mining projects.
Emissions growth is projected to average 1.9 per cent a year from 2019–20 until 2034–35. The emission intensity of rail transport is projected to improve slightly over that period, although only slow improvements are expected as trains are replaced infrequently. Small improvements from more efficient journey scheduling would also be expected to occur.
The electric rail network is projected to expand with the electrification of the South Australian passenger rail network from 2012–13 onwards. However, increases in diesel use elsewhere mean that the emissions intensity of the rail network is unlikely to fall.
3 Emissions associated with electricity generated to power electric rail are accounted for under electricity generation.
Transport emissions projections 2014–15 26

Other transport emissions are projected to increase by 12 per cent over the projection period, from 1.0 Mt CO
2
-e in
2013–14 to 1.1 Mt CO
2
-e in 2034–35.
The projections of emissions from off-road recreation vehicles are based on the historical relationship between activity and population growth. Many of these vehicles are similar to private passenger vehicles and use similar fuels.
Emissions from off-road recreation vehicles are expected to remain under 0.1 Mt CO
2
-e a year throughout the projection period.
Pipeline transport emissions in Australia result from the combustion of natural gas to drive in-line compressors in transmission pipelines. Growth in pipeline transport emissions is primarily driven by growth in domestic gas production and transmission. Emissions are projected to grow both due to capacity expansion projects on existing pipelines and the construction of new pipelines, such as the proposed Great Northern Pipeline in Western Australia.
Emissions from pipeline transport are projected to increase by 11 per cent over the projection period, to reach
1 Mt CO
2
-e in 2034–35.
Transport emissions projections 2014–15 27

The future values of key parameters and emissions drivers such as economic growth, fuel prices and the availability of biofuels are not known with complete certainty. Sensitivity analyses have been conducted to inform plausible upper and lower bounds for the projections.
The sensitivity analyses were conducted by running CSIRO’s Energy Sector Model with alternative values for key parameters, shown in Table 4. Assumptions regarding oil prices and the availability of biofuels underpinning the baseline scenario and sensitivity analyses are outlined in Appendix C.
Parameter Parameter variations
Oil price
Biofuels
Derived from the International Energy Agency (IEA) World Energy Outlook 2014
OECD crude oil price projections
Higher biofuel availability
Light vehicle CO
2
-e emission standards
Introduction of mandatory emissions standards for all new light vehicles from 2018
In the baseline scenario, activity levels were imposed on CSIRO’s Energy Sector Model. In the sensitivity analyses, price elasticities of demand were used to project how transport activity would respond to changes in the costs of transport.
Sensitivity analyses were conducted for road, rail, domestic aviation and domestic shipping. Other transport was not included in the sensitivity analysis. A lower assumed oil price provides the upper bound on the emissions projections, while a higher assumed oil price and increased availability of biofuels are used to model the lower bound on the emissions projections. Lower availability of biofuels was not considered over the period to 2034–35 because existing refineries are unlikely to reduce production over that period. The results for each sensitivity analysis are shown in
Table 5.
2020 Change from baseline
2030 Change from baseline
Projection
Baseline scenario
High emissions (low oil price)
Mt CO
2
-e
105
105
Mt CO
2
-e
0
Mt CO
2
-e
115
116
Mt CO
2
-e
1
Transport emissions projections 2014–15 28

2020
Projection
Low emissions
High biofuels
Mt CO
103
105
High oil price 103
CO
2
-e standards
Sources: DoE 2015, DoE analysis.
103
2
-e
Change from baseline
Mt CO
2
-e
-2
0
-2
-2
2030
Mt CO
2
-e
109
114
111
99
Change from baseline
Mt CO
2
-e
-6
-1
-4
-16
High and low oil price scenarios have been modelled to provide an indication of the sensitivity of the transport emissions projections to oil prices. Although the oil price accounts for a significant portion of travel costs, transport activity is relatively inelastic with respect to the oil price in the short term, as transport operators and motorists have few options to drive less or switch transport modes, and the decision to buy a more efficient vehicle generally occurs over the longer term. Historically high oil prices, peaking in 2007–08, contributed to rapid improvements in petrol engines, a consumer shift to smaller, more efficient vehicles, and to a decrease in per person passenger vehicle activity. The results of the high and low oil price sensitivity analyses are shown in Figure 14.
Sources: DoE 2015, DoE analysis.
The baseline oil price forecast underpinning the 2014–15 projections is based on the IEA World Energy Outlook
Transport emissions projections 2014–15 29

2013 ‘low oil price’ scenario. The IEA projection of an international oil prices around $80 a barrel (USD2012) is consistent with recently observed increases in supply by the United States of America and OPEC.
In the high oil price scenario, which is based on the IEA World Energy Outlook 2014 ‘450ppm’ scenario, oil prices are projected to be $100 a barrel (USD2013) over the period to 2034–35. Higher oil prices have a small impact on road transport activity. Under the high oil price scenario, Road vehicle activity is projected to be 0.8 and 0.2 per cent lower than the baseline scenario in 2019–20 and 2034–35 respectively.
A higher oil price would increase the viability of electrification. By 2034–35, electricity would be expected to account for 1.5 per cent of road transport fuel use, compared with 1.1 per cent of the road transport fuel use in the baseline scenario. Oil prices at the assumed levels would also lead to lower consumption of petrol, and higher consumption of diesel. By 2029–30, use of petrol hybrids would be lower than in the baseline, and use of diesel hybrids would be higher. Use of plug-in hybrids and electric vehicles would also be higher.
Higher oil prices would lead to higher overall transport costs, which would see more people use public transport. By
2019–20, bus activity is projected to be 1.7 per cent lower than in the baseline, and by 2034–35, bus activity is projected to be 0.8 per cent lower than in the baseline.
By 2034–35, high oil prices are projected to reduce emissions from road transport, domestic shipping and domestic aviation by 5 per cent, and emissions from rail by 3 per cent.
Compared to the baseline scenario, increased electrification and lower road vehicle activity under the high oil price scenario would reduce total transport emissions by 2 per cent in 2019–20, 4 per cent in 2029–30 and 5 per cent by
2034–35.
The low oil price scenario is based on an oil price that is 85 per cent of the baseline scenario. Oil prices at this low level would reduce the viability of electrification, which would eventually lead to higher road transport costs and lower road transport activity relative to the baseline. By 2034–35, low oil prices would be expected to lead to a 6 per cent reduction in use of electricity, and a 0.6 per cent reduction in total road activity relative to the baseline.
Under the low oil price scenario, road transport emissions are projected to be 0.5 per cent higher than the baseline over the period 2019–20 to 2034–35. Less electrification is expected to offset the effect of lower activity on emissions.
Low oil prices would also result in lower prices for gas based fuels, and a corresponding increase in the number of vehicles that can use those fuels. By 2034–35, articulated trucks would with LPG hybrid drive trains would be expected to make up 7 per cent of the articulated truck fleet. Articulated trucks would not be expected to use any gas based fuels in the baseline scenario. From 2024–25, 2 per cent of light commercial vehicles would be expected to use LPG under low oil prices.
Emissions from the rail and domestic shipping and domestic aviation are assumed not to change in response to low oil prices. Changes in types of fuel used in non road transport, with the exception of biofuel use in aviation, are unlikely to be viable as a result of the assumed low oil price because of the expensive engine modifications that would be required.
The estimated impacts include only the direct effects of oil prices on transport emissions. This analysis does not include any effects of higher or lower oil prices on the underlying structure of the economy, or economic activity.
Transport emissions projections 2014–15 30

The availability, timing and costs of large volumes of biofuels in Australia are highly uncertain, and will depend on second generation biofuels refinery construction. Second generation or advanced biofuels are produced using nonedible feedstocks of lignocellulose and tree or plant oils. Under the oil prices assumed in the baseline scenario, the availability and use of large amounts of biofuels in Australia is unlikely.
A high biofuels scenario has been modelled to provide an indication of the sensitivity of the transport emissions projections to increased biofuel availability. Lower availability of biofuel was not modelled because existing biofuel refineries are unlikely to reduce production below current levels.
Biofuel use reduces transport emissions because emissions of carbon dioxide from biofuel combustion are considered to be part of the natural carbon cycle, and do not count as transport emissions 4 . The reduction in emissions from biofuel use depends on the emissions intensity of the fuel it replaces.
Sources: Graham and Reedman 2015, DoE 2015, DoE analysis.
Figure 15 shows that transport emissions are only marginally affected by the assumed increase in biofuel availability.
In 2029–30, biofuel consumption in the high biofuels scenario is projected to be double the baseline scenario, and emissions are projected to be 1 Mt CO
2
-e lower than the baseline scenario as a result. By 2034–35, biofuel consumption in the high biofuels scenario is projected to be three times higher than in the baseline scenario, and emissions are projected to be 3 Mt CO
2
-e lower than the baseline scenario as a result.
The overall high emissions and low emissions sensitivity analysis is shown in Figure 16. The high emissions scenario was determined from the low oil price scenario, and the low emissions scenario was developed by combining a higher assumed oil price, and increased availability of biofuels. Light vehicle CO
2
standards were not considered in the low emissions scenario because the light vehicle CO
2
standards scenario indicates the sensitivity of transport emissions to
4 Land sector emissions arising from the growth and harvest of biofuel crops are accounted in the land-use, land-use change and forestry sector.
Emissions from the refining of biofuel crops to produce biodiesel and ethanol are accounted for under direct combustion.
Transport emissions projections 2014–15 31

a proposed measure, and not the sensitivity of emissions to uncertainty around input parameters (see 3.4).
Sources: DoE 2015, DoE analysis.
In 2019–20, emissions under the low scenario are projected to be 103 Mt CO
2
-e, or 1.7 per cent lower than the baseline. By 2029–30, emissions are projected to be 109 Mt CO
2
-e, or 5 per cent lower than the baseline scenario, and by 2034–35 emissions are projected to be 111 Mt CO
2
-e, or 7 per cent lower than the baseline scenario.
In the low emissions scenario, the projected decrease in emissions below the baseline is more than the sum of the decreases under the high oil price and high biofuels scenarios. This is because high oil prices are projected to lead to faster increases in the availability of second generation biofuels, which would increase the impact of the high biofuels scenario on emissions.
2
Light vehicles include all four-wheeled road vehicles up to 3.5 tonnes gross vehicle mass (passenger cars, sports utility vehicles, utilities, vans, light goods vehicles and light buses). In these projections, those vehicles are included in private passenger vehicles and light commercial vehicles. Since 1972, Australia has had road vehicle emission standards for new on-road light vehicles which limit air pollutants such as carbon monoxide, oxides of nitrogen and particulates. Currently, Australia does not have standards limiting carbon dioxide emissions from light vehicles.
Mandatory carbon dioxide emissions standards for new light vehicles offer the potential for significant emissions reductions. The magnitude of abatement depends on the level, timing and design of the target, as well as the baseline fuel efficiency improvements in the light vehicle fleet.
For this sensitivity scenario, mandatory light vehicle emissions standards were assumed to apply from 2017–18, by which time the domestic manufacture of automobiles is expected to have ceased.
1. A standard of 105 g/km was modelled in 2024–25, which is broadly in line with standards in the United States.
2. The standard was assumed to decrease to 75 g/km in 2029–30, which is broadly in line with standards in the
European Union with a 10 year delay.
Transport emissions projections 2014–15 32

3. From 2029–30, the standard was assumed to be 75 g/km.
It is important to note that the standards chosen were for analytical purposes only rather than being derived from a specific policy proposal.
Modelling indicates that such a standard could result in 2 Mt CO
2
-e of abatement in 2019–20 and 16 Mt CO
2
-e of abatement in 2029–30. By 2034–35 annual abatement is projected to be 24 Mt CO
2
-e as vehicles meeting the 2029–
30 standard become a greater proportion of the vehicle fleet (Figure 17).
Sources: DoE 2015, DoE analysis.
Standards are projected to have a minor impact by 2019–20 as standards only apply to new vehicle sales, and it takes some time for older vehicles to be retired. Between 2019–20 and 2024–25 the standard is projected to lead to an increase in the efficiency of internal combustion engines, as well as an increase in the use of hybrid and electric vehicles, which, on an activity basis, would be expected to reach a 24 per cent share of the light vehicle fleet by 2024–
25. By 2034–35, 41 per cent of the light vehicle fleet is projected to have a hybrid or electric drive train (Figure 18).
Transport emissions projections 2014–15 33

Sources: DoE 2015, DoE analysis.
Under the standard, light vehicle activity is projected to be the same as the baseline scenario in 2019–20, and
3 per cent lower in 2034–35.The reduction in travel reflects the increased expenditure on alternative drive train vehicles, which are required to meet the standard, and would not be completely offset by lower fuel and operating costs. Heavy vehicle activity is projected to be unchanged as heavy vehicles are not affected by the standards.
Transport emissions projections 2014–15 34

The baseline scenario includes the impacts of all measures except the Emissions Reduction Fund. This appendix identifies the reduction in projected emissions from all included measures.
The objective of the Biofuels Act 2007 (NSW) was to provide for a minimum ethanol content requirement of
2 per cent of the total volume of petrol sales in the State, at the primary wholesale level.
The Biofuels Act 2007 (NSW) was amended by the Biofuel (Ethanol Content) Amendment Act 2009 (NSW) to:
• increase the minimum ethanol content to 4 per cent from 1 January 2010, and 6 per cent from 1 January 2011
• require all regular grade unleaded petrol to be e10 (10 per cent ethanol blend petrol) from 1 July 2011. This requirement was subsequently removed by the Biofuels Amendment Act 2012 (NSW)
• provide a minimum biodiesel content requirement of 2 per cent of the total volume of diesel sales in the State, at the primary wholesale level. The minimum biodiesel content was to increase to 5 per cent from 1 January 2012, but the increase was suspended indefinitely by New South Wales Government Gazette, in December 2011, in line with the provisions of the Biofuels (Ethanol Content) Amendment Act 2012 (NSW).
There are exemptions to the minimum ethanol and biodiesel requirements of the Biofuels Act 2007 (NSW):
• The minimum ethanol content requirement only applies to non premium grade petrol.
• Retailers who are committed to a long term business plan for biofuels can be exempted from the requirements.
• The Biofuels Further Amendment Act 2012 (NSW) provided exemptions for retailers who could not reasonably source biofuels at economic rates.
The Biofuels Further Amendment Act 2012 (NSW) also increased f ines for non-compliance with the Act.
The New South Wales Office of Biofuels reported that the biodiesel content of primary diesel sales at the state level increased from close to 1.1
cent per in 2012–13 to close to 1.5
cent per in 2013–14. The ethanol content of primary petrol sales decreased from close to 3.8
cent per in 2012–13 to close to 3.5
cent per in 2013–14.
Road transport activity is assumed to be unaffected by the New South Wales biofuels target because the target is not expected to have a large effect on travel costs.
Based on observed substitution of premium petrol for biofuel blends since the introduction of the Biofuels Act 2007
(NSW), and current rates of biofuel sales, the maximum projected ethanol content in future New South Wales primary petrol sales is 4.5 per cent. CSIRO has loosened the biofuel use constraints in its Energy Sector Model accordingly. As a result, the Biofuels Act 2007 (NSW) is estimated to result in very little abatement from 2013–14 to 2019–20, mainly because biofuels are unlikely to be competitive with conventional fuels at the low oil prices assumed over this period.
Over the period 2019–20 to 2034–35, oil prices are assumed to be slightly higher, and the New South Wales biofuels target is projected to lead to 3 Mt CO
2
-e of abatement. Steady increases in ethanol and biodiesel sales would be expected over this period, allowing biofuels to remain 1 per cent of national road transport fuel use over the period
2019–20 to 2034–35. In the absence of the New South Wales biofuels target, sales of biofuels would be expected to fall from 1 per cent of national road transport fuel use in 2019–20, to 0.75 per cent in 2034–35.
Transport emissions projections 2014–15 35

The New South Wales biofuels target is projected to lead to lower consumption of petrol, and higher consumption of diesel: by 2034–35, the proportion of road transport fuel consumption that is petrol is expected to be 3 percentage points lower, and the proportion of road transport fuel consumption that is diesel is expected to be higher by a corresponding amount. Lower consumption of petrol would be expected because:
1. ethanol and biodiesel consumption would displace petrol and diesel consumption given that road transport activity is not expected to change
2. the rate at which petrol must be blended with ethanol is higher than the rate at which diesel must be blended with biodiesel under the New South Wales biofuels target
3. petrol consumption is much higher than diesel consumption.
In the absence of the New South Wales biofuels target, it’s likely that more of the available biomass would be used to produce biodiesel for blending with diesel, and less would be used to produce ethanol for blending with petrol, because biodiesel attracts less fuel excise than ethanol on an energy adjusted basis.
The baseline scenario includes the changes to the fuel excise treatment of fuels, the removal of the Cleaner Fuels
Grant Scheme and the Ethanol Production Grants Programme. These changes were announced by the Australian
Government in the 2014–15 Budget, and mainly affect light vehicles (private passenger vehicles and light commercial vehicles). Trucks and buses with a gross vehicle mass of less than 4.5 tonnes would also be affected, but other heavy vehicles are shielded from fuel excise through the system of fuel tax credits for business.
The modelled changes to effective fuel excise rates are shown in Table 9, Appendix C, and include the following:
• Re-introducing the indexation of fuel excise and excise-equivalent customs duty for fuels (excluding aviation fuels).
Indexation will occur bi-annually, in February and August each year, to coincide with the releases of Consumer
Price Index data by the Australian Bureau of Statistics.
• Cessation of grants under the Ethanol Production Grants Programme and the Cleaner Fuels Grant Scheme, from 1
July 2015, and reducing the rates of fuel excise on biofuels to zero from 1 July 2015.
• From 1 July 2016, the fuel excise on biofuels will be increased each year for five years, until the rate reaches 50 per cent of the energy content equivalent tax rate.
• Increasing fuel tax credit rates for business, for most fuel uses, further shielding heavy vehicle operators from the effect of the fuel excise changes.
These changes took effect from November 2014.
While the purpose of these changes is not to reduce emissions, they are expected to have that effect, through impacts on consumer decisions regarding alternative drive train vehicles. Ongoing indexation mean that the effects of the fuel excise changes will increase over the projections period. By 2029–30, petrol hybrids are expected to be 25 cent per of private passenger vehicles and light commercial vehicles, 10 percentage points higher than without the fuel excise changes. Small increases in the proportion of the private passenger vehicles and light commercial vehicles that use plug-in hybrid, fully electric, or diesel engines are also expected as a result of the fuel excise changes.
Total transport emissions are expected to be 0.2
cent per lower by 2019–20 as a result of the fuel excise changes. By
2029–30, transport emissions would be expected to be 1.5
cent per lower, and by 2034–35, transport emissions are projected to be 2.1
cent per lower as a result of the fuel excise changes.
Higher fuel costs as a result of the fuel excise changes are projected to reduce total road transport activity by
0.1
cent per by 2034–35. Use of more efficient vehicles is expected to offset some of the increase in fuel costs that would result from the fuel excise changes.
Transport emissions projections 2014–15 36

The effective rates of fuel excise applied to biofuels are expected to have the following effects:
1. Light vehicle operators would find biofuel blends cheaper than hydrocarbon based fuels due to lower fuel excise rates, although biofuel prices would be expected to tend towards the energy adjusted price of hydrocarbon based fuels.
2. Heavy vehicle operators would find biofuels more expensive than hydrocarbon based fuels, because they are entitled to fuel tax credits for a large portion of the fuel excise paid on hydrocarbon based fuels, which would likely more than offset the price difference.
As a result, private passenger vehicles and light commercial vehicles are projected to use more biodiesel as a result of the fuel excise changes, and trucks and buses are projected to use less. Total volumes of projected biodiesel use are unchanged.
Transport emissions projections 2014–15 37

The transport emissions projections are a full update of the 2013 Projections. The changes from the 2013 Projections are presented in Table 6 and Figure 19.
2014 2020 2030
Road transport
Mt CO
2
-e
-2
Mt CO
2
-e
7
Mt CO
2
-e
9
Domestic aviation
Domestic shipping
Rail
Other transport
>-1
-2
<1
1
0
-2
<1
1
1
-3
1
1
Total -2 7 9
Sources: DoE 2015, DoE analysis.
The 2014–15 Projections are based on a slightly different modelling approach than the 2013 Projections. Both projections were modelled using CSIRO’s Energy Sector Model, but the source of transport activity levels was different.
For the 2013 Projections, activity levels in the baseline scenario were projected using a whole-of-economy model, the
Monash Multi Regional Forecasting Model. In the 2014–15 Projections, activity levels in the baseline scenario were projected on the basis of analysis conducted by the Bureau of Infrastructure, Regional and Transport Economics and
Pekol Traffic and Transport.
There are also differences in assumptions used for each modelling exercise. For example, lower forecasts of world oil price, higher fuel excise rates, lower availability of biofuels and faster vehicle efficiency improvements were used in the 2014–15 Projections.
On the whole, differences in assumptions and methodology result in a small increase in emissions between the two publications:
• Road transport emissions are projected to be higher than in the 2013 Projections in the period to 2019–20, primarily due to lower projected availability of biofuels. The New South Wales biofuels target is projected to be less effective than before, and the construction of a large scale biofuel refinery is no longer expected because lower assumed oil prices would reduce returns on investment in second generation biofuel production.
• Between 2019–20 and 2034–35, road transport emissions are projected to be higher than in the 2013 Projections.
Transport emissions projections 2014–15 38

Lower assumed oil prices are expected to lead to increased road transport activity, and lower adoption of alternative vehicle types, despite faster projected improvements in fuel efficiency and relatively higher rates of fuel excise on hydrocarbon based fuels. Lower uptake of gas based fuels is projected due to faster projected convergence between the global oil and gas prices.
• Emissions from domestic aviation and rail are projected to be higher post 2019–20 than in the 2013 Projections due to lower projected uptake of low emissions fuels.
• Domestic shipping emissions are projected to be lower than in the 2013 Projections, as a result of lower projections of petroleum and iron ore movements.
• Emissions from other transport are around 1 Mt CO
2
-e higher than in the 2013 Projections over the projection period. The 2014–15 projection of other transport includes combustion emissions from pipeline transport, which were accounted under direct combustion in 2013.
Sources: DoE 2015, DoE analysis.
Transport emissions projections 2014–15 39

Tables 8 to 12 list the major assumptions underpinning the modelling for the transport projection. Further details on assumptions can be found in the CSIRO’s modelling report (Graham and Reedman, 2014 and 2015).
Projection 2020 2025 2030 2035
Baseline
High oil price
97
140
99
136
Low oil price 82
Source: IEA 2013 and 2014, DoE analysis
84
2020 2025
100
132
85
2030
103
127
87
2035
Baseline
High biofuels
0
0
0
0
0
1500 Megalitres, expanding by 80
Megalitres a year.
0
1900ML
Source: Graham and Reedman 2015, DoE 2015, DoE analysis
Transport emissions projections 2014–15 40

Prior to budget changes Under 2014 –15 Budget changes
July 2015 July 2020 July 2015 July 2020
Petrol 0.38 0.26 0.38 0.38
0.38 0.26 0.38 0.38 Diesel
Liquefied petroleum gas
0.13 0.09 0.13 0.13
Natural gas
Ethanol
0.26
0.00
0.18
0.00
0.26
0.00
0.26
0.13
Biodiesel 0.00 0.00 0.00
Source: Graham and Reedman 2014
2020 2025 2030
Netback gas price
(A$2014/GJ)
Sources: IEA 2013, DoE analysis
8.44 8.76 8.92
0.13
2035
9.24
2020 2025 2030 2035
Conventional internal combustion engine
LPG
Hybrid vehicle
25
Plug-in hybrid vehicle 36
Electric vehicle
Source: Graham and Reedman 2014
52
27
27
25
27.5
26.5
33.5
42
25
27
32
28
26
25
28
26
27
31.5
Transport emissions projections 2014–15 41

ABS 2013, Population projections Australia, 2012 (base) to 2101 , table B9. ‘Population projections, by age and sex,
Australia – Series B’, time series spreadsheet, cat. no. 3222.0, Australian Bureau of Statistics
BITRE 2011, Road vehicle kilometres travelled: estimation from state and territory fuel sales, Bureau of
Infrastructure, Transport and Regional Economics Canberra ACT.
BITRE 2014a, Freightline 1 – Australian freight transport overview, Canberra ACT.
BITRE 2014b, Information Sheet 61 Saturating Daily Travel, Canberra ACT.
Cosgrove, D., Gargett, D., Evans, C., Graham, P.W and Ritzinger, A. 2012, Greenhouse gas abatement potential of
the Australian transport sector: Technical report, CSIRO, Canberra.
DoE 2015, Australian National Greenhouse Accounts: Quarterly Update of Australia’s National Greenhouse Gas
Inventory September Quarter 2014, Department of the Environment, Canberra, ACT.
Graham, P.W. and Reedman, L. J. 2014, Transport Sector Greenhouse Gas Emissions Projections 2014–2050, Report no.
EP148256, Commonwealth Scientific and Industrial Research Organisation, Australia.
Graham, P.W. and Reedman, L. J. 2015, Transport Sector Greenhouse Gas Emissions Projections 2014–2050:
Supplementary results for revised oil prices, Commonwealth Scientific and Industrial Research Organisation, Australia.
International Energy Agency 2013, World Energy Outlook 2013, Paris, France.
International Energy Agency 2014, World Energy Outlook 2014, Paris, France.
PTT 2014, Australian Transport Facts 2014 Centre for Transport, Energy and Environment, Pekol Traffic and
Transport, Brisbane, Australia.
Transport emissions projections 2014–15 42