Economic impact of renewable diesel on Australia’s fishing industry
Economic impact of renewable diesel on Australia’s fishing industry
Australia’s appreciation for seafood is undeniable, but the industry’s reliance on fossil fuel poses a significant challenge in the fight against climate change. Fortunately, the emergence of renewable diesel, which could be supported by domestic production and appropriate rebates, would significantly reduce carbon emissions and ensure a more sustainable future.
Commercial fishers in New South Wales (NSW) have become the first in Australia to trial renewable diesel as part of a NSW Government research project aimed at decarbonising the commercial fishing sector. This aligns with the State Government’s Net Zero plan to reduce emissions by 30 per cent by 2030. Our economics team was tasked by the NSW Department of Primary Industries and Regional Development to evaluate the potential impact of rising fuel prices associated with a transition to renewable diesel. Leading NSW fishing businesses are increasingly committed to decarbonisation, as wild-capture fishing businesses spend $16 million annually on diesel, emitting 2.6kg of carbon per litre.
Our report’s findings were made possible through our fisheries economic and social indicator monitoring projects, which provided the necessary information for us to explore the impacts on the NSW fishery industry.
What is renewable diesel?
At a current global market size of $5 billion (AUD), renewable diesel (HVO100) has been gaining momentum over the last decade. Although synthetically produced, it serves as a perfect substitute for existing diesel engines while emitting one-quarter of the emissions, with the potential to nearly eliminate fossil diesel entirely. However, with no current domestic production, renewable diesel comes at a hefty price of almost $5 per litre compared to fossil diesel at just under $2 per litre.
Our team estimates that for every additional 10 per cent of fossil diesel replaced by renewable diesel, emissions are expected to reduce by 0.2kg per litre. Therefore, reducing carbon emissions by 30 per cent requires a 40 per cent blend of renewable diesel. However, this would cause fuel prices to rise to $3 per litre, representing an almost two-thirds increase.
Chart source: BDO analysis of data from Refuelling Solutions
A way to incentivise the use of renewable diesel could be a short-term government rebate, like that applied to fossil diesel. This would ease the financial burden on fishing businesses and encourage the adoption of this innovative product.
Impact on fishing businesses
Building on our fisheries economic and social indicator monitoring results, we identified a strong connection between fuel dependency and financial vulnerability. Fishing businesses that are heavily reliant on fuel can spend up to a quarter of fishing costs on fossil fuel. For these businesses, a transition to a 40 per cent blend would decrease their profitability almost entirely. Alternatively, lower fuel-dependent fishing businesses experience a much smaller impact, with some seeing minimal effect on their profits.
The push for domestic production
As commercial fishing businesses are only marginally profitable, the excessive cost of imported renewable diesel becomes a significant deterrent for the transition, particularly for those more fuel -reliant businesses. Fortunately, there is hope in the fishing industry. The opportunities for domestic production have recently been explored in the CSIRO’s February 2025 report, ‘Opportunities and Priorities for a Low Carbon Liquid Fuel Industry in Australia’.
The Australian Government's Department of Climate Change, Energy, the Environment and Water has signed a Memorandum of Understanding for the exploration of a domestic renewable fuels facility which supports the Australian Government’s broader target of net zero emissions by 2050.
The government is also investing:
- $250 million into the Low Carbon Liquid Fuels industry as part of the $1.7 billion invested into the Future Made in Australia Innovation Fund
- A $18.5 million certification scheme for renewable fuel production.
We anticipate these investments will help accelerate the development of domestic production resulting in a significant drop in domestic retail prices of renewable diesel, which will hopefully make renewable diesel commercially viable for Australian commercial fishing business.
Though tax rebates and domestic production are still on the horizon, Australians should have hope for a future where their seafood choices can support a cleaner, more sustainable fishing industry.
How can BDO help?
Our team of economics experts provide a wide range of economic and social research services across commercial fisheries in Australia. Contact us to discuss your organisation’s needs, or for expert commentary enquiries, contact our media team.