Australia softens fuel efficiency standard targets

The Australian federal government has agreed on draft legislation for its fuel efficiency standards for new passenger and light commercial vehicles, which will come into effect with reduced targets and later than originally proposed.

The scheme will start on 1 January 2025 as planned by the government but manufacturers will not begin earning credits or penalties until 1 July 2025. This will enable it to prepare and test data reporting capabilities in partnership with the industry, the federal government said.

Some sport utility vehicles, such as the Toyota Landcruiser and Nissan Patrol models, will also be recategorised as light commercial vehicles that will now have smoother targets compared with the government's preferred model released in early February. The government said this reflects recent adjustments announced by the US Environmental Protection Agency to its vehicle standards, which gave US auto manufactures more time to scale up the production of electric vehicles (EVs).

Under Australia's proposed emissions standards, whose bill was introduced for a vote in parliament on 27 March, manufacturers will be set an average carbon dioxide (CO2) target for the range of vehicles they sell. Those will be lowered over time to mandate the sale of more fuel efficient, low or zero emissions vehicles.

Companies that exceed their emissions targets will receive credits, which they might sell to less efficient manufacturers or use in future years. Those that fail to meet the requirement will need to make it up over the following two-year period, pay a penalty or acquire credits.

The government's preferred model was criticised by the Federal Chamber of Automotive Industries (FCAI) as unreasonable, given the short timeframe for manufacturers to adjust their fleets. The FCAI welcomed the changes made by the government, although it said it would still need to review the draft legislation in detail to understand the impact to the industry and consumers.

Associations such as the Electric Vehicle Council of Australia and the Climate Council supported the bill, with the former saying the "strong, ambitious standards" will drive a greater update of EVs.

Charging boost

Together with the bill, the federal government announced it will provide A$60mn ($39.2mn) to boost EV charging at Australian car dealerships. It said the standards will reduce greenhouse gas (GHG) emissions from new passenger vehicles by more than 60pc by 2030, while those from new light commercial vehicles will be nearly halved over the same period compared with a 60pc reduction originally.

Environmental group Greenpeace said the final proposal is a meaningful effort to reduce transport pollution but it will achieve only 80pc of the emissions reduction originally planned for light commercial vehicles.

"The decision to weaken the standards when it comes to light commercial vehicles will mean around 20pc more carbon pollution will be allowed by 2030 compared to the original proposal, so we expect the government will be looking at other options for reducing pollution from transport in order to meet their climate targets," Greenpeace said.

Transport makes up 98mn t/yr or 21pc of Australia's total GHG emissions. By 2030 it is expected to be the largest source of emissions as the electricity sector decarbonises. Government data show that on average passenger cars in Australia emit at a rate 20pc higher than the US vehicle fleet. Passenger cars contribute 41mn t/yr of CO2 equivalent (CO2e), or 42pc of all transport emissions, with light commercial vehicles emitting 18mn t/yr CO2e or 18pc of total transport emissions.

By Juan Weik