Expensive Petrol Alone Will Not Cut Australia’s Transport Emissions, Research Finds

A 20.9 per cent jump in petrol prices in early 2026 is expected to reduce consumption by just 2.4 per cent, according to new analysis from the National Institute of Economic and Industry Research (NIEIR).

The findings point to a persistent gap between fuel price signals and actual changes in driving behaviour, with NIEIR arguing that Australia’s transport emissions will continue to grow unless governments invest in alternatives to private car use.

Price makes driving costly, not optional

Brad Vakulcyzk from NIEIR framed the issue in blunt terms.

“Higher fuel prices make driving expensive, not optional,” Vakulcyzk stated. “Without real alternatives – charging networks, transit, cycling infrastructure – people just pay more to pollute. Policy settings will determine whether emissions actually fall.”

The 2026 oil price shock has served as a test case. Even with a significant increase in the cost of filling a tank, Australians have barely changed how much they drive. NIEIR’s analysis of petrol consumption and vehicle sales data suggests this pattern will hold as long as viable alternatives remain out of reach for most households.

An urban-rural divide in EV ownership

The research highlights a growing gap in electric vehicle adoption between cities and regional areas. Urban residents are four times more likely to own an EV than rural Australians.

NIEIR argues this reflects where charging infrastructure has been built to date – concentrated in wealthier urban areas while regional and lower-income communities are left behind. New housing developments in car-dependent areas often have limited charging access and no viable public transport alternatives.

Without investment in charging infrastructure for apartments and regional towns, the institute warns that gap will continue to widen.

Fleet turnover too slow for 2035 targets

Even if EV sales accelerate, the age of Australia’s existing vehicle fleet presents a significant constraint. The average vehicle on the road is 10 years old, meaning cars purchased today will still be in use in 2035.

Of new cars currently being sold, 85.4 per cent remain petrol or diesel. Internal combustion engines still make up 98 per cent of all vehicles on the road.

NIEIR’s position is that Australia cannot electrify its fleet fast enough to meet 2035 emissions targets through market forces and consumer choice alone. Fleet turnover, without accompanying policy intervention, will not close the gap.

Three areas where government action is needed

The research identifies three areas where simultaneous government action is required to shift the trajectory of transport emissions.

The first is EV charging infrastructure, particularly in apartment buildings and regional areas rather than only in wealthy suburban pockets.

The second is freight optimisation, including consolidation hubs, micro-mobility options and delivery planning. NIEIR notes that diesel use in freight will not decline without deliberate intervention.

The third is what the institute describes as transit-first planning – investment in public transport, cycling and walkability. The argument is that not all Australians can afford an EV, and new car-dependent suburbs currently offer no alternatives to private vehicle use.

A narrow window to act

NIEIR contends that the current environment of high fuel prices and supply concerns has created a window of public support for action on transport infrastructure.

Governments and organisations that move now will have systems in place before 2035 targets tighten, the institute argues. Those that delay face the prospect of higher costs and unmet emissions commitments.

Last Updated on April 29, 2026 by Nick Ross