Australia aims to catch US standards by 2028

The automotive industry and advocacy groups have welcomed the Australian Government’s release of an impact paper on new fuel efficiency standards.

Such standards would bring Australia into line with other developed economies that regulate the quality of fuel consumption and emissions produced by new vehicles. Australia and Russia are currently the only advanced economies without such standards, allowing the world’s automakers to effectively dump inefficient vehicles into these markets.

In a statement, federal climate change and energy minister Chris Bowen said efficiency standards – which are set to be introduced from 1 January 2025 – would save households $1000 on annual fuel spend.

Gridlocked cars on a road
Credit: Beyond Images via Getty Images

The government’s new compulsory NVES (New Vehicle Efficiency Standard) would match the United States’ current vehicle emissions intensity limit by 2028.

In 2020, Australia’s fleet-average carbon dioxide emissions were 31% higher for cars and 24% higher for light commercial vehicles.

But Robin Smit, founder of Transport Energy Emissions Research, told Cosmos analysis he and international colleagues will shortly release shows Australia’s fleet emissions are much higher than those outlined in the NVES impact report.

“We recently compared the Australian emissions performance of new light-duty vehicles with the US, European Union, China and Japan’s emissions performance and that basically shows a larger difference than what’s been reported in this study,” Smit says.

“Australian light duty vehicles underperformed significantly when compared internationally. That includes the US, so in that respect, following the US standards should lead to a significant [CO2] reduction.

“In fact, we found the fleet average CO2 emissions of Australian passenger vehicles are about 50% higher than the average of all the major markets, including the US, in 2021.”

Government slates three fuel standards, with a preferred ‘middle way’

The government has put forward three options for community consultation, which will conclude in a month.

A “slow start, no catch up” policy would see car CO2 intensity decline by 34% by the end of the decade, compared to an “ambitious” option – preferred by Bowen – which would achieve a 61% decline.

A third “aggressive” NVES would reduce carbon by 77% for cars and 74% for light commercial vehicles. Modelling suggests this and an ambitious model aligned to current US starts could lead to 15-25 million tonnes of CO2 abatement by the end of the decade, and more than 350Mt by the middle of the century.

The less ambitious target would barely move the dial.

Total CO2 intensity reduction 2024-29Option AOption BOption C
Light Commercial14%62%74%
Source: Headline targets, Cleaner, Cheaper to Run Cars: The Australian New Vehicle Efficiency Standard Consultation Impact Analysis

“Australians are missing out on savings at the bowser regardless of what sort of car they choose, and of course Australian cars are emitting more into the environment and emitting particulates and pollution which is having an impact on the health of Australians as well,” Bowen says.

Industry advocates and motoring bodies have cautiously welcomed the step forward on fuel standards while calling for more detail.

While support of such groups is framed around consumer choice, environmental groups support the policies as a means of reducing greenhouse gas emissions.

It’s not just carbon either, says Smit. Other pollutants released by vehicles not bound by stringent standards can reduce overall air quality in cities.

But Smit also emphasises that while standards might set a cap on new cars, it doesn’t apply to existing vehicles – meaning effectiveness comes down to policy design.

“Effectiveness of the standards will very much and critically depend on the actual design of the standard, so it’s a bit of an open question how effective it actually will be in reducing greenhouse gas emissions from road transport,” Smit says.

“The other important thing which is, you know, the nature of these standards is that it focuses on the emissions performance of future new light duty vehicles, cars and SUV’s and use and light commercial vehicles. So it takes time for these new low-emission vehicles to penetrate the on-road fleets. It is a bit unclear yet how much this will actually contribute to achieving the net zero emission targets for road transport in 2050.”

New Zealand introduced clean car laws in 2022 with emissions caps arriving last year. Those caps will tighten each year until 2027. It also introduced incentives for low-emission vehicles, which the Federal Chamber of Automotive Industries noted is part of the US policy Bowen is hoping to emulate.

“The targets in that country are supported by significant financial incentives yet the discussion paper makes no reference to any additional incentives to support the uptake of low-emission vehicles,” said the industry body’s chief executive Tony Weber.

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