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Every time a driver puts 10 litres of fuel in their car, they’re paying about $5 in tax that goes to the federal government.

That is, of course, unless they drive an electric vehicle. No petrol or diesel being bought means the government loses that 51c per litre.

Over recent years, the Productivity Commission has been calling for reforms on how revenue is raised from vehicles, and the Albanese government has been making noises that a road user charge could be put on EVs.

After the government’s economic reform roundtable this week, the treasurer, Jim Chalmers, said there was “a lot of conceptual support for road user charging” but said the details – including the type of charge and what vehicles would be included – were still to be determined..

State treasurers will discuss the concept when they meet next month.

According to the Electric Vehicle Council, about 298,000 battery electric vehicles and 81,000 plug-in hybrids have been sold in Australia so far. While that number is going up – EV sales were 13% of new car sales in the last quarter, the highest proportion on record – they still make up less than 2% of the 21.7m vehicles on the road.

“We’re still in the early adopter phase on EVs and well behind the adoption rates of other advanced economies,” says Prof Matt Burke, a transport expert at Griffith University and an EV owner.

He says there is “widespread agreement” and a “coalition of the willing” among policy experts and automobile clubs that a road user charge is coming.

But what it looks like is still up for debate. And some are worried that bringing a charge in too early could stymie the uptake of EVs.

Burke says governments could decide on a flat fee for EV users, or a fee related to how far vehicles drive that could also include an allowance for the weight of the vehicle.

“Electric vehicles don’t pollute in the same way as other vehicles, but they are a little bit heavier and that deteriorates the road surface a bit more,” he says.

Where the excise goes

But what is the fuel excise actually used for?

“People think that fuel excise pays for roads, but it doesn’t,” says Alison Reeve, director of the energy and climate program at the Grattan Institute.

According to the Parliamentary Budget Office, less than 6% of the fuel excise the government collects goes into a special account for states and territories to spend on road infrastructure.

Fuel excise is not what is known as a “hypothecated tax” – that is, a tax where the spending of the revenue is directed at a particular issue, like roads.

“[Fuel excise] hasn’t been hypothecated since 1992. But people still think it’s how it works,” says Reeve. “Some of that revenue might go to roads and some of it might go for new carpets in Parliament House.”

Falling revenue

The government’s revenue from fuel excise is definitely falling, but it’s not really because of EVs.

From a peak in the 1980s, the amount of fuel excise as a percentage of government revenue has fallen from about 11% to 4%, thanks largely to improved fuel efficiency.

The average passenger vehicle in Australia burned 11.3 litres of fuel per 100 kilometres in 2005. Now it burns only 6.9 litres, and with new efficiency standards in place for new vehicles, that number is likely to drop further.

A future dominated by electric cars would see a dramatic drop in the fuel excise. Right now, the government is left with about $15bn from the tax after it has given full rebates to fuel that was burned off roads – mostly on mining sites – and partial rebates for heavy vehicles.

There would be good arguments that the amount of tax collected for driving a vehicle should reflect its cost to society, such as the health impacts of cars that run on fossil fuels and the thousands of premature deaths each year caused by breathing in particulates. There’s also the accumulating damage to the climate from the release of greenhouse gases.

But Reeve says the amount of excise charged by the government “is just a number that the government thinks it can get away with”.

Right policy, wrong time?

The Electric Vehicle Council’s head of legal, policy and advocacy, Aman Gaur, says a road user charge “is going to be a reality” but it needs to be paid by all vehicles, not just EVs.

The council represents car companies making and selling electric cars and says EV drivers should be exempt from a charge until 30% of new vehicle sales are electric.

“Just hitting EV drivers will be counterproductive,” says Gaur. “We support a charge for all types of vehicles. We don’t want to see a model that slams the breaks on our transition to a cleaner transport economy.”

The New South Wales government has proposed its own road user charge which, if there is no federal scheme, could be introduced in mid-2027. The proposed fee would be 2.97 cents per kilometre for an EV and 2.37c for a plug-in hybrid.

An EV driver doing 10,000km would expect to pay $300 under that proposed scheme. New cars sold in Australia average 6.9 litres of fuel use per 100km. A driver of an average new petrol car doing the same distance pays about $352 in fuel excise.

“Paying $300 might not be the end of the world for an EV enthusiast, but we need to think about the average person looking to buy an EV. For those people, that $300 might be the difference [of them buying the car],” Gaur says.

But there are other advantages to a general road user charge, Burke points out. It can give a government the ability to give discounts for some people, such as pensioners or the unemployed, or incorporate congestion charging.

A big question will be whether revenue from a road user charge would go into the government’s general coffers or if it would be ringfenced. The Australian Automobile Association has suggested revenue from road user charges on EVs should go into transport infrastructure, including building more recharging stations.

Helen Rowe, the transport lead at the Climateworks Centre, says: “If designed well, [a road user charge] could do far more than just plug a revenue gap.

“It could help cut congestion, reduce emissions, lower infrastructure costs and improve the overall efficiency of Australia’s transport network.”

The project commenced offshore construction following the final federal approval from BOEM last year. The project is 80% complete with all offshore foundations installed and 45 out of 65 wind turbines installed.

Ørsted is evaluating all options to resolve the matter expeditiously. This includes engagement with relevant permitting agencies for any necessary clarification or resolution as well as through potential legal proceedings, with the aim being to proceed with continued project construction towards COD in the second half of 2026.

Revolution Wind is fully permitted, having secured all required federal and state permits including its Construction and Operations Plan approval letter on 17 November 2023 following reviews that began more than nine years ago. Revolution Wind has 20-year power purchase agreements to deliver 400 MW of electricity to Rhode Island and 304 MW to Connecticut, enough to power over 350,000 homes across both states to meet their growing energy demand. As a reference, South Fork Wind, which is adjacent to Revolution Wind and uses the same turbine technology, delivered reliable energy to New York at a capacity factor of 53% for the first half of 2025, on par with the state’s baseload power sources.

Ørsted is investing into American energy generation, grid upgrades, port infrastructure, and a supply chain, including US shipbuilding and manufacturing extending to more than 40 states. Revolution Wind is already employing hundreds of local union workers supporting both on and offshore construction activities. Ørsted’s US offshore wind projects have totalled approximately 4 million labour union hours to date, 2 million of which are with Revolution Wind.

Ørsted is evaluating the potential financial implications of this development, considering a range of scenarios, including legal proceedings. Ørsted will, in due course, advise the market on the potential impact of the order on the plan announced on 11 August 2025 (company announcement 12/2025) to conduct a rights issue. Existing shareholders and prospective investors are advised to await further announcements by the company. 

Global Media Relations
Tom Christiansen
+45 99 55 60 17
tomlc@orsted.com

Investor Relations
Rasmus Keglberg Hærvig
+45 99 55 90 95
IR@orsted.com

About Ørsted
The Ørsted vision is a world that runs entirely on green energy. Ørsted develops, constructs, and operates offshore and onshore wind farms, solar farms, energy storage facilities, and bioenergy plants. Ørsted is recognised on the CDP Climate Change A List as a global leader on climate action and was the first energy company in the world to have its science-based net-zero emissions target validated by the Science Based Targets initiative (SBTi). Headquartered in Denmark, Ørsted employs approx. 8,300 people. Ørsted’s shares are listed on Nasdaq Copenhagen (Orsted). In 2024, the group’s revenue was DKK 71.0 billion (EUR 9.5 billion). Visit orsted.com or follow us.  

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