Cyan Ventures analysis finds an alternative to the fuel tax credit scheme (FTC) that boosts fuel security by supporting mining companies to reduce reliance on expensive diesel by reinvesting rebates back into the industry, while helping the budget and the climate.
“This is a solution everyone can work around. Our proposed Fuel Security Reinvestment Mechanism would provide policy certainty for large mining companies to invest and help smaller mining companies build their competitiveness now and into the future, all while reducing our diesel dependence, providing budget relief and cutting climate pollution,” said Shaun Chau, Co-Founder and Managing Partner of climate and energy advisory and project development firm Cyan Ventures.
The FTC, which refunds fuel taxes paid by eligible businesses, entrenches reliance on imported diesel at a time when prices have been up 111 per cent and energy security is top of mind. It’s not good for the climate nor the Federal Budget, with the cost of the tax-break growing 70 percent faster than other budget spending. The mining industry is the single biggest beneficiary of the FTC.
“By lowering the effective cost of diesel, the FTC reduces the financial savings miners can achieve by switching to alternatives. One large diesel mining haul truck could receive $7 million of rebates over a 14-year operating life. That shows the scale of support tied to diesel consumption,” said Pulkit Athavle, an analyst at Cyan Ventures.
“Imported diesel leaves miners and regional communities exposed to price shocks and supply disruptions,” added Mr Chau. “Reinvesting diesel rebates into alternatives would help turn that vulnerability into long-term fuel security.”
The proposed Fuel Security Reinvestment Mechanism would leave the first $50 million in annual fuel tax credits claimed by each mining corporate group unchanged. Above that threshold, 65 per cent of credits would remain available subject to reinvestment in eligible projects that reduce diesel dependence. A further 10 per cent would fund a dedicated reinvestment package for junior and mid-tier miners, with the remaining 25 per cent contributing to budget repair or energy security support for farming and trucking. The changes would be phased in over four years. Cyan Ventures’ proposal applies only to miners, excluding other sectors like farming, fishing, trucking and tourism.
It’s the only reform option that provides dedicated and guaranteed support to smaller players to help them adopt the technologies needed for energy security and ongoing competitiveness.
“Larger miners generally have greater capacity to finance decarbonisation. Smaller companies can face significant capital and infrastructure barriers, even when the long-term investment case is attractive,” Mr Chau said.
“We spoke to junior miners as part of our analysis and energy security is front of mind,” added Mr Athavle. “The reinvestment package would help smaller operators access electrification and other diesel alternatives that can lower their energy costs and emissions. Acting fast before fleet purchase decisions are made also prevents locking in costly diesel for the next 12-18 years.”
