The costs and environmental impact of transport in 2021

People sitting on a train wearing masks, considering the cost and sustainability of different transport options.

After a year of travel and transport restrictions, Australians are slowly moving around on the roads and rails once more. A question many may be asking during this transition is how to approach transport in the most sustainable and cost-effective way possible post-COVID.

At the end of 2020, Infrastructure Australia released a report detailing how the country’s transport habits had evolved across the year. At the start of the pandemic public transport use fell to within 10-30% of normal levels, settling at 60-70% of usual capacity in the second half of the year. 

Meanwhile, road use rebounded quickly to pre-pandemic levels. The report recorded an uptick in secondhand car purchases, which could potentially point to a sustained shift toward driving over public transport use.

On the flipside, cyclists and walkers were joined by fresh faces throughout 2020, with Infrastructure Australia finding more people choosing human-powered transport for localised trips.

Each of these modes of transport can have vastly different environmental impacts and financial costs, depending on how they’re used. 

The environmental cost of transport 

When it comes to carbon emissions from transport, Australia doesn’t have a great track record. 

In 2017, the Climate Council of Australia recorded transport as the nation’s third-highest source of greenhouse gas emission (17%), and that Australia’s per-capita transport emissions were 45% higher than the OECD average.

At the end of 2019, transport was still third in the carbon polluter race, accounting for 18.9% of Australia’s emissions according to the National Greenhouse Gas Inventory. University of Wollongong fellow Philip Laird noted that, while overall emissions had remained flat since 2013, transport emissions had increased by 64% since 1990 – the largest percentage increase of any sector.

While the Inventory saw pandemic travel restrictions result in a massive 10.2% drop in transport emissions during 2020, most reports point to this figure surging back up to and even beyond pre-COVID levels.

But this is just a broad overview. For more detailed data around the environmental impacts of different modes of transport we’ll look to the UK, as national Australian data isn’t as comprehensive or up to date.

Graph of emissions caused by different types of transport.

After plane travel, cars only carrying a single person (i.e. the driver) produce emissions at the highest rate, according to the UK’s Department for Business, Energy and Strategy’s report.

So, let’s start by exploring how using different kinds of cars impacts your wallet and the planet.


The type of car, its age, how you use it and how often you drive will all impact your transport bill and carbon footprint. While we can’t account for all these factors, we can look at how this breaks down across the different power and fuel types.

Different types of cars, with different costs.

Electric Vehicles (EV)

While a Tesla may set you back six figures, other new EVs and hybrid car prices start at more manageable levels (between $26,500 and $47,500). 

NRMA spokesperson Peter Khoury says EV maintenance costs should be much lower than petrol or diesel-powered cars, as they have fewer, more durable moving parts.

“But the real savings will be at the charger, as opposed to the bowzer,” he says.

“To give an example, the average price of regular unleaded petrol is about to hit $1.52 in Sydney. If you drive a 55 litre engine you’re paying about $90 to fill up your car. Alternatively, it’s only a few dollars to fully charge an electric vehicle – it’s incomparable,” Khoury says.

In terms of emissions, Khoury points to the widely reported benefits of EVs, even while operating on the current electrical grid that’s still tied to coal.

“I’ve read reports that in parts of Australia still heavily reliant on coal, you’re talking about a 30% or 40% carbon reduction by using EVs. Then you go down to Tasmania where there’s a bigger spread of energy supply from greener sources, and it’s up to 60%,” he says. 

“So even if you do nothing at all with the grid, you’re still going to see savings in carbon emissions with the more EVs you have on the road as opposed to petrol and diesel.”

The NRMA recently partnered with the government to start rolling out an EV fast-charging station network in regional areas, which Khoury says will be powered entirely by renewable energy. 

When it comes to car insurance, EVs can attract a slightly high premium. In the 2020 Mozo Experts Choice Awards for Car Insurance^, we looked at how much it might cost to insure ten different electric vehicles. 

Using seven different scenarios to calculate 67 car insurance quotes on cars with an average market value of $120,000, our research team found the average yearly insurance premium for these EVs would be around $2,515.

If you take the generally pricier Teslas out of the mix, premiums dropped to around $1,415. For context, the average car insurance premium calculated by Mozo across all vehicles in 2020 was $952.

In a previous Mozo interview, policy and communications officer for the Electric Vehicle Council, Alexandra Kelly said that higher insurance costs came from a lack of understanding around EVs.

“The [insurance] provider will say, ‘well there are too many unknowns for us to do this competitively and confidently, so we’ll increase the premium and that covers any risk we might come across in terms of financing future operations,’” Kelly said.

However, she noted more insurance companies are becoming aware of these kinds of vehicles, and that lower EV running costs are still likely to outweigh high insurance premiums. 

Petrol vs diesel-powered

Drivers have long debated which fuel-powered car is superior: petrol or diesel. A lot of this comes down to how you use each kind of car and, as we’ve established, neither is likely going to trump EVs on emissions or long-term affordability.

The NRMA has a handy pros and cons list outlining this topic which we will divide into two areas: the sustainability debate and the cost debate.

Sustainability debate: Generally, diesel cars are more fuel-efficient and emit less carbon dioxide. However, this efficiency can be reduced if you use your car for short trips in urban areas. Diesels use something called a particulate filter (DPF) to reduce air pollution caused by driving, but again by driving mostly in urban areas these can get easily clogged and create harmful pollutants. 

Cost debate: Depending on the car and circumstances, diesels usually cost more to buy, service and repair than their petrol cousins. This can translate to a higher car insurance premium, as car value, parts and repairs costs do affect premium calculations. When it comes to filling up, petrol is also slightly cheaper on average. But if you’re using your diesel car for longer trips or for greater pulling power, you should see the fuel efficiency overtake the cheaper cost of petrol.

The verdict: At the end of the day, we can’t put a gold medal on either type of car, as emissions from each and purchase and running costs all depend on how you use the vehicle. If you require a fuel-powered car, your best bet is to match your choice to your location and driving habits.

Public transport

Public transport costs and environmental impact.

While buses sit above a passenger car with four occupants on the emissions scale from the UK government report, public transport remains more sustainable than cars when travelling alone.

Light rails and trams in particular have the sustainable edge, as they run on electricity, which in some cities like Melbourne is being powered by solar energy plants.

While Khoury says this type of transport will invariably be cheaper, reliability and ease of use impact how viable public transport is for many.

“We’re seeing things improve in some cities to the point where vehicle ownership in those areas is falling per capita. People are waiting longer to get their licence and they’re buying cars later in life, so more people are using public transport in areas where they have reliable access,” he says.

“But once you get out of those inner city spots, people need to travel longer distances and there can be almost no public transport in some areas.”

Making public transport more sustainable and accessible is becoming a priority moving forward. State and territory government plans like this NSW strategy revolve around renewable energy supply, more weather resilient infrastructure, and a larger transport network reaching regional and remote communities.

Cycling and Walking

Last and certainly not least is good old fashioned human power. As you might expect, strapping on your walking or riding shoes and moving yourself from A to B is going to be the best transport choice for the planet and your cheapest option.

Walking and cycling as cheapest transport options.

The limitations here are clear – you can only walk, ride or roll so far and fast – but initiatives like improving cycleways and footpaths, as well as making cities and towns more liveable and accessible can enhance adoption of these active transport methods.

If you want to put your money where your environmentally friendly mouth is, check out some of these ethical banking options.

^The Mozo Experts Choice Awards are designed to highlight Australia's most competitive financial products. Explore the range of product winners here.