Infrastructure Gaps Persist Despite Cost Increases
In 2026, petrol prices surged by 20.9%, yet Australian petrol consumption is expected to decline by merely 2.4%. This indicates that price increases alone are not enough to significantly lower transport emissions.
The National Institute of Economic and Industry Research (NIEIR) stresses the importance of policy and infrastructure changes to tackle emissions. Urban dwellers are four times more likely to own electric vehicles (EVs) than those in rural regions, revealing a significant infrastructure gap.
On average, vehicles are 10 years old, and 98% still use combustion engines. This slow fleet turnover poses a challenge to meeting the 2035 emissions targets, emphasizing the need for government intervention.
Key Areas for Government Action
Government action is crucial in three areas: expanding EV charging infrastructure, optimizing freight systems, and implementing transit-first planning, according to NIEIR. These strategies are essential for reducing transport emissions.
“Higher fuel prices make driving expensive, not optional,” said Brad Vakulcyzk from NIEIR. “Without real alternatives, such as charging networks, transit, and cycling infrastructure, people just pay more to pollute. Policy settings will determine whether emissions actually fall.”
In response to the 2026 oil price shock, it was evident that despite higher petrol costs, driving habits changed little. This suggests transport emissions will continue to rise unless alternatives to driving are developed by governments.
City dwellers are significantly more likely to own EVs compared to rural Australians. This disparity shows that EV infrastructure development is concentrated in wealthy urban areas, leaving rural and lower-income communities behind.
New residents in car-dependent areas have limited charging access and lack viable transit options. Without improved charging facilities in apartments and regional areas, the gap between urban and rural areas will likely widen.
Fleet turnover is a major bottleneck. Vehicles bought today will likely be on the roads until 2035. Even with increasing EV adoption, 85.4% of new cars remain petrol or diesel-powered. Combustion engines constitute 98% of vehicles, highlighting a critical constraint. Australia cannot electrify swiftly enough to meet 2035 targets without policy changes.
Market forces alone will not reduce transport emissions. Governments must simultaneously expand EV charging infrastructure, especially in apartments and regional areas, optimise freight systems, and implement transit-first planning. These measures are necessary because diesel usage will not diminish by accident.
Current concerns about fuel prices provide an opportunity to accelerate necessary infrastructure changes while fuel prices and supply issues remain significant concerns.
For more insights, NIEIR’s Local Energy and Emissions Monitor (LEEM) tracks energy transition, emissions, and transport trends across Australia’s Local Government Areas.
Last updated: 30 April 2026, 12:19 am
