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  "description": "Australian taxpayers pay $5 billion a year to miners, including highly profitable giants like BHP.",
  "path": "/for-44-years-australia-has-subsidised-diesel-use-is-it-time-to-stop/",
  "publishedAt": "2026-05-29T02:02:57.000Z",
  "site": "https://www.boilingcold.com.au",
  "tags": [
    "Ray Wills",
    "The University of Western Australia",
    "Peter Newman",
    "Curtin University",
    "come under fire",
    "controversial decision",
    "$5 billion subsidy",
    "build and maintain",
    "rebate scheme",
    "Fuel Tax Credits Scheme",
    "cushion farmers",
    "rising fuel costs",
    "buying diesel",
    "far smaller",
    "about half",
    "fossil fuel subsidies",
    "one analysis",
    "using off-road fuel",
    "fund the Civil Aviation Safety Authority",
    "government halved on April 1",
    "Federal plan delivers three times more gas to WA than BrowseAustralia’s most gas-dependent state can be well supplied for decades without drilling near Scott Reef or fracking the Kimberley, according to an exclusive analysis by Boiling Cold.Boiling ColdPeter Milne",
    "fuel package",
    "fuel reserve",
    "share of revenue",
    "is notoriously weak",
    "extraordinarily high",
    "solar, batteries",
    "electric vehicles",
    "During a fuel crisis",
    "road user",
    "The Conversation",
    "original article"
  ],
  "textContent": "By Ray Wills, The University of Western Australia and Peter Newman, Curtin University\n\nMining giant BHP has come under fire for spending hundreds of millions of dollars on new diesel trucks in the Pilbara, despite promising a transition to electric trucks in its climate strategy.\n\nLike other mining companies, BHP’s diesel-driven fleet is eligible for fuel tax credits on diesel. The company’s controversial decision to shelve its plans raises the pressing issue of the diesel fuel rebate.\n\nThis rebate began as targeted support for a struggling agricultural sector in the 1980s, but has morphed into an almost $5 billion subsidy for some of the nation’s most profitable corporations.\n\nSo, what is the diesel fuel rebate? And is this fossil fuel subsidy still fit for purpose?\n\n## Why do we have a diesel rebate?\n\nSince federation in 1901, diesel and petroleum products imported into Australia have been subject to import taxes. Since 1929, tax collected from the petrol pump has been earmarked to build and maintain the nation’s road network.\n\nAustralia’s diesel fuel rebate scheme was introduced in 1982. The Fuel Tax Credits Scheme, as it’s officially known, was designed to cushion farmers from rising fuel costs.\n\nFarm and mine businesses buying diesel for off-road uses like tractors, harvesters and irrigation pumps could claim a rebate. At the time, Australia’s mining sector was far smaller.\n\nNow, 44 years later, the rebate scheme still allows businesses like agriculture and mining to claim back the federal fuel tax paid on diesel used in eligible machinery, equipment and heavy vehicles.\n\nToday, the mining industry receives about half of the diesel rebate.\n\n## Diesel up, petrol down\n\nSince 2010, Australia’s consumption of liquid fuel has changed dramatically, with official statistics showing falling petrol demand and rising diesel use over the past decade. Petrol use has gradually declined as vehicle efficiency has improved. In contrast, diesel consumption has nearly doubled.\n\nThis surge in diesel consumption reflects Australia’s growth in freight, heavy vehicles and, particularly, mining. The diesel rebate scheme is now one of Australia’s largest fossil fuel subsidies, alongside tax concessions for aviation fuel and a range of support measures for coal and gas production, with recent analysis putting its annual cost at around $11.2 billion by 2026–27.\n\nMining is by far the largest beneficiary, claiming about $5 billion a year in diesel rebates according to one analysis. This includes roughly $1.5 billion for coal mining alone. Agriculture receives only a fraction of the total.\n\nWhat began as support for farmers using off-road fuel has become a standing subsidy for Australia’s most profitable miners.\n\nMeanwhile, aviation fuel pays little excise – about 3 cents per litre – to fund the Civil Aviation Safety Authority. This compares to a fuel excise rate of 52c per litre on petrol and diesel, which the Australian government halved on April 1 this year in response to fuel price spikes from the US-Israeli war in Iran.\n\nSince 1992, the formal link between petrol and diesel excise and road funding has ended, with fuel tax now flowing into general revenue rather than a dedicated roads fund. The rebate was originally justified on fairness grounds – off‑road users were not meant to subsidise public roads – but once fuel tax stopped being a dedicated roads charge, that logic largely evaporated.\n\nFederal plan delivers three times more gas to WA than BrowseAustralia’s most gas-dependent state can be well supplied for decades without drilling near Scott Reef or fracking the Kimberley, according to an exclusive analysis by Boiling Cold.Boiling ColdPeter Milne\n\n## Fuel tax cuts in response to war\n\nThe May 2026 federal budget fuel package was worth more than $10 billion, centred on a permanent government-owned fuel reserve.\n\nThese are reminders Australia’s fuel security problem is immediate, not theoretical. The government’s response has been to buy and store more fuel, rather than reduce our structural dependence on imported oil and support a shift to electrification and renewable energy.\n\nAustralia’s fuel rebate entrenches higher diesel use. But the “we need more fuel” argument ignores the fact Australia’s economy is decisively decoupling from fossil energy consumption.\n\nUncoupling from oil is not a theoretical future possibility – it is slowly happening. Oil consumption in particular has plateaued since the early 2000s, even as GDP has roughly doubled. If Australia wants to meet its emissions-reduction commitments, it should hasten the shift away from fossil oil, not maintain a subsidy for it.\n\n## A fair share of resources\n\nAustralia has long failed to gain a fair share of revenue from our finite mineral wealth. Our petroleum resource rent tax is notoriously weak.\n\nMining companies argue tougher taxes will drive investment offshore. But Australia has some of the world’s highest-grade iron ore, coal and critical minerals. A tax regime would have to be extraordinarily high to make extraction unprofitable.\n\nWe are now in the fourth major oil crisis.\n\nUnlike the others, this one arrives with cheaper renewable alternatives readily available. Wind, solar, batteries and electric vehicles are now cheaper than fossil alternatives and faster to deploy.\n\nDuring a fuel crisis, we should scrutinise where our finite tax revenues are directed. The fuel rebate was designed mostly for farmers, when the mining industry was a fraction of its current size.\n\nDoes the policy need to return to its original aim? Or is a new form of road user tax required?\n\nWhatever the mechanism, it makes sense to direct revenue towards electrification, not lock in another decade of diesel dependence.\n\n* * *\n\n## Response from BHP:\n\n_In a statement, a spokesperson for BHP said it has net zero goal for reducing its scope 1 and 2 greenhouse gas emissions to net zero by 2050._\n\n_Despite this progress, many of the technologies the resources industry will need to achieve net zero are not yet ready to be deployed, BHP said._\n\n_“For example, no Australian mining operation is currently utilising critical 240-ton battery-electric haul trucks as the technology is not advanced enough to scale to an operational fleet,” the spokesperson said._\n\n_BHP is partnering with equipment producers to run trials of battery-electric equipment, including two 240-ton battery electric haul trucks, on a BHP site in the Pilbara, and four battery-electric locomotives which we plan to commence trialling in coming months._\n\n* * *\n\nRay Wills, Adjunct Professor, The University of Western Australia and Peter Newman, Professor of Sustainability, Curtin University\n\nThis article is republished from The Conversation under a Creative Commons license. Read the original article.",
  "title": "For 44 years, Australia has subsidised diesel use. Is it time to stop?",
  "updatedAt": "2026-05-29T02:02:57.919Z"
}