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The pathway to a low-carbon economy in regional Australia’s key industries

Some industries will face a more difficult pathway in the transition to net zero, particularly in regional Australia, where there is a heavy reliance on fossil fuels. The transport, mining, agriculture, and civil engineering industries are considered particularly difficult to decarbonise. How these industries reduce emissions will have a significant impact on the total transition experience of regional Australia. 

There is unlikely to be a universal, singular alternative non-fossil fuel source – at least over the short-to-medium term. Within each subsector of each industry, there is likely to be a different ideal energy source. It is not simply a matter of hydrogen vs electrification vs low carbon liquid fuels, but rather what is best for each industry in each place. 

There are also a number of constraints on the pathway to decarbonisation. These include relevant skills and knowledge of users; vehicle life cycle and long-term contractual arrangements; level of remoteness of the community; cost – both upfront and ongoing; grid capacity for, and location of, charging stations in regional areas; and notably, the reliance upon foreign technological transformation. 

Regrettably, little of the research and production of these future technologies will occur within Australian borders. Global supply chains, and Australia’s current limited manufacturing capabilities result in much of the equipment being imported. For better or for worse, Australia is bound by the timeframes of our international partners. As a consequence, the decarbonisation pathway of many vulnerable communities in regional Australia will be subject to global trends. There are, however, some opportunities for Australian policy intervention. 

Recent developments in Australia’s political enabling environment have put Australia on good footing for achieving net zero emissions by 2050, however this will require an unprecedented global technological push. Opportunities for Australian policy intervention include supporting the rollout of charging stations; incentives for electric vehicles; a price for carbon; and an emissions trading system. Many of the renewable energy technologies require economies of scale and scope to be an economically viable alternative. In many of the small, vulnerable communities in regional Australia, this will require a collaborative regional approach rather than relying on action undertaken purely at an individual community level. Working with local communities, their surrounding regions, and supporting place-based initiatives will be critical for government and industry over the coming decades.

At a glance: Fossil fuel heavy regional industries

 Transport and Freight 

  • Regional Australia relies heavily on a functional and affordable freight sector. 
  • Almost 80% of non-bulk domestic freight in Australia is carried by trucks. 
  • The most prominent alternatives to fossil fuel in this sector are hydrogen-based fuels and electrification. 
  • It is likely these technologies will continue to develop in parallel. Bespoke technology solutions will be adopted to meet different needs. 

Mining and Extractive Industries 

  • Australian mining and extractive industries are actively preparing for decarbonisation. 
  • Decarbonising mobile machinery will be the biggest challenge for the sector due to high energy needs and usage patterns that do not allow for significant downtime. 
  • The challenge could be addressed by conversion to hydrogen, or battery technology with appropriate battery swap systems. 
  • Incentive and penalty mechanisms may be required to bring forward change in this sector. 


  • The agriculture sector is simultaneously resistant to change and highly innovative. 
  • Primarily driven by financial and environmental sustainability, it is likely that many farmers will rapidly change practices if the risk is low enough and profitability high enough. 
  • The diversity of the agriculture sector means that a wide range of decarbonisation strategies will be required, tailored to individual streams within the sector. 

Civil Engineering 

  • At this stage, there is limited uptake of decarbonisation in the civil works sector. 
  • However, the uptake of electric or hydrogen-fuelled machines could happen quickly if suppliers can reach a cost-competitive capital expense, or subsidies reduce the gap, particularly for smaller plant. 

Heavy Industry 

  • Achieving net zero for heavy industry will be difficult and requires a significant capital expense spread across both private and public infrastructure.

This article is an excerpt from the Towards Net Zero- Decarbonising Pivotal Industries in Regional Australia report, which was released in March 2024 under the Intergovernmental Shared Inquiry Program.

The report was funded by the Australian Government through the Department of Infrastructure, Transport and Regional Development, Communications and the Arts; the Victorian Government Department of Jobs, Skills, Industry and Regions; the South Australian Government Department of Primary Industries and Regions; the Western Australian Government Department of Primary Industries and Regional Development; and the Queensland Government Department of Regional Development, Manufacturing and Water.

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