The government is calling for feedback on proposed national fuel efficiency standards (FES).
An FES is an obligation on light vehicle suppliers to make sure the new vehicles they bring into the market, on average, meet a particular CO2 per kilometre standard.
On February 4, the Department of Infrastructure published the government’s impact analysis for proposed FES designs.
It suggests the introduction of standards will lower carbon emissions, and save consumers about $17,000 over the lifespan of a new vehicle.
Analysis by the International Council on Clean Transportation (ICCT) shows that by adopting similar to New Zealand, Australia could have an “almost fully decarbonised” passenger vehicle fleet by 2050.
Their modelling also shows comparatively little difference between a “business as usual” scenario, and the voluntary regime backed by the Federal Chamber of Automotive Industries (FCAI).
“To fully decarbonize its [passenger] fleet, we expect Australia would need additional measures, such as accelerated fleet turnover to phase out [internal combustion energy vehicles] as early as possible and a faster transition to a decarbonised grid,” they said.
“Aligning standards with the current FCAI voluntary standards would only yield an EV market share of 22% of new LDV sales by 2030. Not only is this pathway inadequate or accelerating electrification of the [passenger vehicle] stock … FCAI-aligned targets would allow backsliding.
“Since FCAI is a voluntary process, there is no mechanism to assess compliance and there are no penalties for noncompliance. No government agency collects, tracks, or discloses the performance of auto companies or their use of any of the compliance flexibilities.”
Worldwide, 85% of cars sold are subject to FES. Australia is the only major car market other than Russia with no legislated limits on vehicle pollution.
Transport currently makes up about 21% of CO2 emissions in Australia. Diminishing them is seen as vital to achieving Australia’s emission reduction targets.
To do this, an FES would set an “average annual emissions ceiling” for car manufacturers. This means on average, their vehicles would have to meet the specified standard, and large inefficient cars can be compensated for by small efficient ones.
This limit would fall each year, forcing manufacturers to make ongoing improvements to their fleet’s efficiency.
The plan also proposes imposing different limits on vehicles based on characteristics like weight, or sale category. This means utes and SUVs will not be expected to meet the same standards as hatchbacks.
One advantage of being a late mover in this space is an abundance of data to guide the policy from international examples. The impact analysis uses comparable countries to make judgements about the effects under different policy scenarios.
New Zealand was one of the latest countries to introduce fuel efficiency standards, in 2022. Using the US’ 50-year-old framework as a model, they have set separate standards for commercial and passenger vehicles, with the expectation both reduce average fuel consumption by 65% by 2027.
All include some kind of credit to manufacturers for producing cars that exceed efficiency standards.
Despite controversy around its introduction, FES has become extremely popular in New Zealand across the political spectrum.
This is a faster rate of reduction than either the US or EU, but like Australia, they start from a higher baseline due to the long absence of FES.
Electric Vehicle Council chief executive Behyad Jafari said polling in New Zealand showed people come around quickly to the idea once they see what it does for them.
“It’s easy for fossil fuel car lobbyists to claim Australians would dislike a policy when it’s all hypothetical. What the New Zealand experience proves is that once the standards are introduced, people embrace them,” he said.
“There was a scare campaign against fuel efficiency standards in New Zealand when they were introduced and it quickly disappeared once reality set in.
“The Australian Government should have introduced fuel efficiency standards many years ago. If this had happened we would have tens of thousands more EVs on the road and Australian drivers would not be waiting months, or years, to take delivery of their new electric vehicles.
Legislation is expected to be introduced in the first half of this year, with efficiency standards to come into force in 2025.
You can send feedback on the proposal here. Submissions close on March 4.
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