Vehicle emissions standards: Why Australia needs them, and why they’re NOT a carbon tax

The federal government was this week forced to squash claims it was putting a ‘carbon tax’ on cars as some industry groups stepped up their opposition to the introduction of vehicle emissions standards in Australia.

The Environment and Energy Minister, Josh Frydenberg highlighted the absurdity of the claims by suggesting an Elvis Presley comeback was more likely than a ‘carbon tax’ on cars. He was right to do so. The proposed standard on vehicle emissions is not a tax and claims to the contrary are misleading and act against the best interests of motorists.

The proposed introduction of light vehicle emissions standards would provide net savings to consumers, ensure that Australians have access to the latest vehicle technologies, and substantially reduce emissions from the transport sector.

Vehicle emissions standards will deliver net benefits, not costs

Since 2015, the government, through the Ministerial Forum on Vehicle Emissions, has been consulting with the car industry, consumer bodies, environment groups and others about introducing CO2 light vehicle emissions standards. Currently CO2 light vehicle emissions standards cover 80 per cent of the global automotive market.

The lack of standards here means Australia’s light vehicle fleet is less efficient than many other countries, and this gap is set to widen.

In 2016, the average efficiency of new light vehicles sold in Australia (in grams of carbon dioxide emitted per kilometre) was 182g/km. By way of comparison, the average efficiency of new light vehicles sold in the European Union was 120 g/km for passenger vehicles and 168g/km for light commercial vehicles, while in the United States – traditionally home of the gas-guzzlers – it is 183g/km and set to go to 105g/km in 2025 using the same type of regulation proposed here in Australia.

On Monday, the government released of a proposed model for an Australian fuel efficiency standards for further consultation. The issues paper supported the introduction of a CO2 lightvehicle emissions standard of 105g/km to apply to all new vehicles sold in 2025.

Based on this proposed standard, the government’s own modelling shows that an average motorist purchasing an average performing passenger vehicle in 2025, could save $519 per year in fuel costs.

Using 2012 household energy costs data, this would cut household energy costs by up to 10 per cent, with even greater savings for low-income households. That same modelling shows that these standard will provide net economic benefits of $13.9 billion to 2040.

How it works

Claims by the industry that the proposed standard would increase the cost of some cars by thousands of dollars is misleading. The proposed standard is not applied to individual cars but would apply as an average across all vehicles sold by a manufacturer.

These standards allow manufacturers to sell vehicles with emissions higher than the standard as long as they are balanced out by lower emissions vehicles. This means there may not be any cost increase from potential penalties under these standards.

It will come down to how proactive a manufacturer can be in bringing new, fuel efficient models to the Australian market. This regulation will drive manufacturers to improve the efficiency of the fleet of vehicles on sale in Australia, which is ultimately a good thing for Australian motorists.

A manufacturer will have a number of options to ensure they meet the standard. They can either improve the efficiency of models on offer through technologies such as light weighting, or they can bring in a greater range of low and zero emission vehicles to bring down their fleet average.

Currently the uptake of electric and other low emissions vehicles in Australia is slow and the industry are saying this is in large part due to a lack of standards and other incentives. In one sense they can’t have it both ways. And while standards can act as an incentive to drive the uptake of low emission and electric vehicles they alone are not the silver bullet. A range of complementary measures should also be implemented in support of light vehicle CO2 emissions standard to help drive efficiency gains and build consumer awareness of fuel-efficient vehicles.

Emissions reductions

While reducing emissions may not be a top priority for all motorists, the task of cutting emissions from our transport sector is crucial if Australia is to meet our national and international emissions targets.

Light vehicles account for around 10 per cent of Australia’s emissions and contribute to increasing poor air quality in our cities. The proposed standard of 105g/km will deliver 6.5 per cent of Australia’s 2030 emissions reduction target at least cost across the economy.

The introduction of light vehicle CO2 emissions standards is good public policy that will deliver savings for motorists and substantial reduce Australia’s greenhouse gas emissions.

Given that groups such as the AAA have themselves highlighted the increasing pressure motorists are facing from fuel costs in their Transport Affordability Index, it is indeed interesting to see that they aren’t supporting the implementation of these standards which will help address this issue.

Lets hope ridiculous claims of standards being akin to a ‘carbon tax’ on cars have been put to rest and we can confirm instead that Elvis has definitely left the building!

Scott Ferraro is ClimateWorks Australia’s Head of Implementation