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Australia should wean itself off fossil fuels in response to the current fuel crisis, experts say, but politicians have other ideas.

Andrew Hastie, the opposition spokesperson for sovereign capability, wants Australia to produce liquid fuels from coal, a move that would entrench reliance on fossil fuels and ratchet up emissions in the process.

The prime minister, Anthony Albanese, announced plans to halve the fuel excise, subsidising fuel consumption while doing little to shake the problem of car reliance.

Others – including Nationals senator Bridget McKenzie – have promoted the use of ethanol as an alternative fuel.

How do these ideas stack up as a solution to the current crisis? And what about the urgent need to cut transport emissions to address global heating?

Should we turn coal into liquid fuels?

“We have an abundance of coal,” Hastie told ABC’s Insiders program. “We could do coal-to-liquid in this country, we could have coal-to-liquid refineries that produce diesel and aviation gas and that could prevent us from being vulnerable in a war or a crisis.” 

As Michael Brear, a professor of mechanical engineering at the University of Melbourne, explained, the process for converting coal into liquid fuels is known as the Fischer-Tropsch (or FT) process. 

Developed in Germany during the 1920s, the FT process was used to supplement the country’s fuel supplies during the second world war. It was also relied on in apartheid-era South Africa when the country faced sanctions, he said.

A variation of the process could also be used to convert fossil gas into liquid fuels.

While it was theoretically possible for Australia to produce fuel from coal, FT plants were “not a fix to our current energy situation”, Brear said. It would require a massive and complex industry, which would take a long time to establish.

“Here’s the other big kicker: the life cycle emissions of turning coal into diesel, petrol or jet fuel is significantly higher than if you just use crude oil,” he said.

Studies suggested fuel produced from coal or gas could increase – and potentially even double – the emissions associated with petrol or diesel, and there would be significant capital costs and long-lead times involved in establishing FT plants.

Substituting imported fuels with alternatives produced from coal would significantly increase transport emissions, Brear said, and the economic argument to do so was questionable. “You can make more money selling coal and natural gas as coal and natural gas, than you can turning it into something that competes with crude oil.”

Could halving the fuel excise help?

Albanese announced the government would halve the fuel excise on petrol and diesel for three months, starting Wednesday, reducing the cost per litre by 26.3 cents.

“We’re making fuel cheaper today, because we understand that Australians are under serious pressure,” he said. “However, we really also want to encourage Australians who can to take public transport, to help save fuel for the areas and industries that need it.”

But Prof Jago Dodson, who researches urban policy at RMIT University, said Australia already had one of the lowest rates of fuel excise in the world, and halving it would simply subsidise drivers, encouraging more driving than would otherwise be the case. 

“It’s just taking money out of revenue to fund people to drive their cars or their trucks.”

It acted like a price signal, he said. In general, a lower rate encouraged more driving, while a higher rate encouraged the uptake of alternatives like public transport, walking or cycling.

“What that means in turn is that we tend to see higher rates of public transport use, walking and cycling, in societies with higher fuel excise,” he said.

“The evidence shows that countries that do have higher fuel excise on an ongoing basis are more resilient to fuel price shocks.” 

When first introduced about a century ago, the fuel excise was designed to cover the costs of building roads, particularly in rural and regional areas. However, since 1959, the money raised has contributed to general revenue rather than being allocated specifically to transport, Dodson said.

“Ideally road excise would be set to recoup all of the negative externalities of road use and car use, including environmental externalities like climate change and air pollution,” he said – but the current rate was not sufficient to cover those costs.

“Everyone who’s experiencing the consequences of climate change is effectively paying for the failure to price motor vehicle travel or fuel consumption at an appropriate level.”

Rather than broad-based excise cuts, a better approach in the current situation would be to target rebates for essential forms of transport, he said, like emergency services or freight used for food deliveries.

What about substituting imported fuels for locally produced ethanol?

Bridget McKenzie is among those to have promoted the greater use of ethanol in fuels, a move supported by motoring advocates like the NRMA.

“Every litre of E10 sold, basically 10% ethanol, which is produced domestically, is taking pressure off the supply chain,” said NRMA spokesperson Peter Khoury. “We should be encouraging people to reach for the E10 pump.” 

E10 is a blend of unleaded petrol with up to 10% ethanol, a biofuel produced from agricultural byproducts like molasses or wheat starch. Ethanol consumption was about 0.2% of Australia’s oil consumption, according to government data.

Australian petrol vehicles can already operate on fuels containing up to 10% of ethanol by volume. But some countries, like Brazil and the United States, have so-called “flex fuel vehicles” capable of running on very high ethanol content – some up to 100% – using fuel mostly produced from sugar cane and corn.

Ethanol was not a like-for-like substitution, Brear said, with each litre of ethanol containing less energy than a litre of petrol.

Incorporating a higher share into Australian fuel supplies would be “no quick fix”, he said, as some engines would need to be reconfigured. “If you put ethanol blend into a vehicle that’s not designed to run on that, then the potential downside is you’d damage your vehicle.”

Added to the challenge were the limited supplies produced by the country’s two ethanol refineries, in Queensland and NSW, which were “nowhere near large enough to displace our [petrol] consumption”, he said. 

Despite ethanol and other biofuels not helping much in the short term, there were potential benefits, Brear said, depending on how the ethanol was produced. 

“For example, Brazilian ethanol has very low well-to-wheel emissions. It has much, much, much lower life-cycle greenhouse gas emissions than gasoline.”

But there were “much bigger opportunities” for reducing transport emissions in the short to medium term, he said, which included shifting to electric cars, hybrids and smaller vehicles, increasing the number of people travelling in each car, and alternative modes of travel. 

Australia should be doubling down on those measures, he said.