Ricciardo had finished second in front of his home crowd on his debut for the Austrian team before race stewards disqualified him for a fuel irregularity. The 24-year-old's car had been found to have consistently exceeded the maximum permitted fuel flow rate of 100kg/h.
In a statement on their website, Red Bull said they were disappointed by the outcome but that they accept the ruling by the ICA. "We always believed we adhered to the technical regulations throughout the 2014 Australian Grand Prix," it read.
"We are sorry for Daniel that he will not be awarded the 18 points from the event, which we think he deserved. We are of course disappointed by the outcome and would not have appealed if we didn't think we had a very strong case."
Christian Horner, the team principal, had been confident that the decision would be overturned, having said that his team had "a very strong case". Red Bull cited persistent issues with the sensors over the weekend which had forced them to take their own readings but the FIA, the sport's governing body, said that no instrument other than the permitted sensor was allowed to measure the fuel flow.
Red Bull had been warned both after qualifying and five laps into the race about the issue. However, they argued that the warning was not regulatory and therefore they should not be punished for disregarding it.
Mercedes, who have won all three races so far, have called for a further sanction, to be suspended until the end of the season, with the intention of dissuading Red Bull from doing the same thing again.
The decision means that Red Bull and Ricciardo will not recover the 18 points he lost in Melbourne leaving the driver 10th and the team fourth, 68 points behind leaders Mercedes, in the overall standings.