Australia has an obvious way to reduce its vulnerability to disruption of fuel supplies: making battery-electric locomotives the standard means of freight-rail traction and, through resulting cost savings, draw more long-distance goods transportation onto trains. The federal, state and territory governments should promptly adopt policies that encourage this.
If Australia relied less on trucks and more on battery-electric trains, its stocks of diesel would last longer during an import interruption and the risk of cascading economic disruption from fuel‑starved transport links would be reduced. Carbon‑dioxide emissions would decline as well, and lower operating costs over time would offset much of the upfront investment in new rail assets.
The opportunity needs to be seized now not just because, amid disruption in oil supply through the Strait of Hormuz, the country has been getting a lesson on its overreliance on fuel imports. Much of the diesel locomotive fleet is coming up for replacement – about half by 2032 to 2037, the Australian Railway Association estimated in 2024.
Freight transport by road and rail uses 20 billion to 25 billion litres of diesel a year, well over half of Australia’s consumption. Rail handles almost 60 percent of the domestic freight task, measured by tonne‑kilometres, but mainly because it dominates heavy bulk haulage of grain, iron ore, coal and other minerals. It has only a small share of general freight between cities.
Australia has several major battery‑electric locomotive pilot projects underway on heavy‑haul networks in the Pilbara and Queensland, but there is no firm plan for general use of the technology.
On key interstate general‑freight corridors, electric locomotives connected to battery tenders with energy capacity of 7 to 14 megawatt-hours could achieve practical ranges of several hundred kilometres. At suitably spaced hubs, trains could swap exhausted battery tenders for waiting units that had been recharged from the grid or by nearby mid-sized solar farms.
Australia has coordinated a national rail transformation before. Governments standardised the rail gauge for key interstate routes in the 1960s and 1970s. A new National Freight Energy Authority could do the same to transition railways’ energy source by coordinating the federal government, the Australian Rail Track Corporation, major freight operators and clean‑energy financiers such as the government’s Clean Energy Finance Corporation (CEFC) and Australian Renewable Energy Agency (ARENA). Priority corridors would be those handling general intercity freight, the great variety of which reflects the breadth of sectors that rely on it – and potential breadth of disruption in a fuel crisis.
First up would be the Melbourne–Sydney line. The National Freight Energy Authority would co-fund dedicated solar hubs along the route – at some cost to the national budget that could be recovered from hub usage fees and in any case would be justified by the reduction in import dependence. Prospective operational savings look strong, because utility‑scale solar is now the lowest‑cost new electricity in Australia. Swapping about A$15,000 dollars of diesel consumed on a typical Melbourne–Sydney freight trip for perhaps A$5,000 dollars of solar power would save more than A$40 million dollars a year on this corridor.
On this priority line, a joint federal–state program using ARENA, CEFC and state decarbonisation funds, governments could back three grid‑connected solar hubs with generating capacity of around 50 MW at Goulburn, Wagga Wagga and Albury–Wodonga. This might cost A$200 million in capital that could be repaid from diesel savings in around five years. With typical solar equipment lives of 25 to 30 years, that would amount to buying 25 years of low‑cost freight energy for the equivalent of about five years of today’s fuel spending, while sharply reducing exposure to imported fuel disruptions.
Although battery‑electric locomotives cost more to buy than diesels, their lower maintenance costs make their total cost of ownership comparable. In addition, supplying these locomotives with electricity rather than diesel fuel is much cheaper, so they deliver a clear overall cost advantage.
Once intercity freight corridors are successfully transitioned to battery‑electric rail, shifting more freight onto rail should become economically compelling. The remaining first‑ and last‑mile task, for which trucking is unavoidable, is itself undergoing electrification.
The Melbourne–Sydney corridor is economically attractive but represents only a small portion of the overall conversion task for freight traction. Heavy‑haul mining and bulk‑freight rail, which already lead Australia’s early experiments with battery‑electric locomotives, account for by far the largest share of traffic and fuel use. Transitioning these operations is essential to reduce pressure on diesel reserves during supply disruptions and to safeguard the export revenues generated by the bulk commodities they carry to port.
The National Freight Energy Authority would also steer fleet replacement. Operators’ purchase decisions can be directed towards battery‑electric locomotives through concessional finance, standardised procurement and clear interoperability standards. But the prospective economy of battery-electric railway traction suggests that only a bit of policy push may be needed.