National

Ditching diesel could save Pacific nations almost $1b

By Jennifer Dudley-Nicholson

Aug 25, 2026

Boat in the Pacific — A study has analysed fuel imports for power plants, generators, boats and cars in Pacific countries. -AAP Image

Australia's Pacific neighbours could save almost $1 billion a year by swapping fossil fuel imports for renewable energy - and cover the cost of the transition in just over a decade.

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UNSW Sydney released the findings on Tuesday after analysing fossil fuel costs in 21 Pacific countries, from American Samoa to Vanuatu.

The study comes days before regional leaders gather for the Pacific Islands Forum in Palau, where they will discuss climate change and renewable energy ahead of November's COP31 event.

The report, Counting The Cost of Fossil Fuels in the Pacific, analysed fuel imports used to run power plants, generators, boats and vehicles in Pacific countries.

It found fossil fuels cost each nation between 10 and 25 per cent of their economic output - significantly more than the regional average spent on education (eight per cent) and health (six per cent).

Replacing diesel generators in the region would require 2.2 gigawatts of renewable energy generation and 8800 megawatt hours of storage, the report found, and would cost $US650 million per year.

However, the investment could deliver savings of $US700 million a year, which would cover the cost of renewable energy investment in little more than 10 years.

Attracting investment in Pacific nations could be challenging due to high transport costs and small project sizes, but UNSW Institute for Climate Risk and Response research associate and report author Wesley Morgan said the study showed it could deliver financial benefits.

"We're used to talking about renewable energy in the Pacific as a moral issue, but today's report shows that the economic case is overwhelming," Dr Morgan said.

"Fossil fuel dependency is a risk not just to the climate but to Pacific economies and renewables are the clearest pathway to energy security and stability."

Switching to renewable energy generation and storage would also address rising prices triggered by Middle East conflict, the report said, which could raise fuel costs by $US375 million in Fiji and $US68 million in Vanuatu if they persisted.

Leaders at the Pacific Regional Energy and Transport Ministers Meeting in May reiterated their target to become the first region powered entirely by renewable energy.

Additional investments would be needed to achieve the goal, Tuvalu climate change minister Dr Maina Talia said.

"Tuvalu has an ambitious renewable energy target but we need our international partners to help us get there," he said.

"Every dollar not spent on polluting and expensive diesel is money we can put towards our people's health and education."

Pacific nations contribute 0.03 per cent of global emissions but are among the most vulnerable to climate change impacts, the report found, including cyclones and rising sea levels.