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Fuel Efficiency Standards Explainer

TRANSPORT EMISSIONS:

In Australia, our transport sector is our third largest source of emissions (18%) and our transport emissions are growing faster than any other sector. Road based transport, especially cars, makes up the bulk of these emissions (11%). Cars sold here produce up to 40% more CO2 than those sold in Europe due to not having a mandatory Fuel Efficiency Standard. 

THE PROBLEM:

Australians are currently facing a cost of living crisis, an energy crisis, and the climate crisis. Demand for electric vehicles (EVs) has never been higher, but there’s not enough EVs being brought into Australia, and those that are aren't affordable enough for most. A Fuel Efficiency Standard is the key policy to unlocking a reliable supply of affordable EVs.

WHAT IS A FUEL EFFICIENCY STANDARD?

A Fuel Efficiency Standard increases the supply of EVs (and other efficient petrol and diesel vehicles) including affordable models already available in other countries. Because lots of large companies and governments buy cars in bulk and only hang onto their cars for a limited time, a bigger initial supply of EVs will lead to an expanded second-hand market a few years down the track, meaning more Australians will be able to get behind the wheel of an EV.

HOW IT WORKS

  • A Fuel Efficiency Standard is a simple rule for car makers, who would have to sell cars and utes that meet a limit for CO2 emissions (calculated as an average for all the cars sold).
  • There are penalties for car makers if they don’t meet this standard.
  • The standard tightens over time, so the mix of vehicles a car maker provides Australia would have to include more EVs as time goes on.
  • Eventually all new cars would emit no CO2, or 0 grams per km – this means 100% of new car sales would be EVs.

THE CONTEXT:

We’re behind compared to our trading partners, and one of four wealthy countries that doesn’t have a Fuel Efficiency Standard – on par with Russia, Indonesia and Turkey. This means we are a dumping ground for inefficient vehicles, and we’re at the back of the queue for EVs. Car makers send us all of the inefficient cars they can’t sell in countries with a Fuel Efficiency Standard, and very few EVs. Then, they send their EVs and efficient cars to other countries where they have to meet a Fuel Efficiency Standard (because they will be penalised if fail to meet the rule).

  • In 2019, the average emissions a car emitted in Aus was 169.3 g CO2/km. 
  • The European Union’s Fuel Efficiency Standard started in 2009, and is now at 95 g CO2/km.
  • The International Energy Agency says this needs to happen by 2035 at very latest, if we are to remain below 1.5°C of warming and meet our Paris commitments.

STRENGTH OF A FUEL EFFICIENCY STANDARD:

The Federal Chamber of Automotive Industries (FCAI) is pushing for the Federal Government to implement some of the weakest Fuel Efficiency Standards in the world, that would see cars still pump out an average of at least 98 g/km in 2030. This standard would include a loophole for hybrid vehicles to “offset” petrol cars, despite the fact they require fuel and emit carbon. This weak standard would see Australia fall short of its Paris commitments and leave Aussies with cars that cost more over the long run, use more fuel, and pollute more carbon for longer.

To limit warming to 1.5°C, Australia’s Fuel Efficiency Standard should at least be in line with our international trading partners if not stronger, and take us to 0 g/km by 2030 at very latest. A strong standard cannot include rewards to manufacturers for hybrid vehicles they provide to the market.

EFFECT ON THE COST OF LIVING:

If Australia had implemented Fuel Efficiency Standards back in 2016, $5.9 billion in fuel costs would have been saved through more efficient engines being brought into the
country. If we implement them in the next 12 months, Australians could avoid at least $20 billion in vehicle running costs. 

EVs are far cheaper to run than petrol vehicles. Per 100 kilometres, a petrol car uses around $22 of fuel. Over the same distance, an EV charged on the grid uses $3.50 of power, while an EV charged during the middle of the day using rooftop solar uses a minimum of 60c of power – 93% cheaper to run. There are also less moving parts in an EV, so maintenance costs are significantly cheaper.

You can download a copy of this explainer here.

 

WHAT WE'RE CALLING FOR

Ambition

Solar Citizens recommends that the starting limit of our Standard be 95 grams of CO₂ per kilometre – competitive with the European Union. Alternatively, a Standard in line with New Zealand's trajectory could be considered. This ensures we don't remain at the back of the international queue for new EVs and low-emissions vehicles and can catch up to other major markets by 2030.

The Standard should tighten over time and reach 0 grams CO₂/km (the point at which 100% of new car sales are zero emissions) as soon as possible, but no later than 2035 to meet our commitments under the Paris Climate Accord and limit global warming to 1.5°C.

Integrity

Currently, the Federal Government doesn't know the emissions intensity of the national vehicle fleet, because the FCAI does not provide the data. For a Fuel Efficiency Standard to have any integrity, this data must be collected and published regularly by a government agency such as the National Transport Commission and not by the industry.

Manufacturer penalties should be significant enough to outweigh any commercial benefits of exceeding the limit. We believe it’s fair for Australians to expect car makers to do their bit for the climate and pay their fair share if they can’t meet the Standard needed to bring emissions under control.

Additionally, no loopholes like so-called “super credits” or “eco-innovation credits” should be considered that can result in disingenuous participation from car makers and a lower actual reduction in emissions. Strong emissions limits such as our proposed 95 g CO₂/km mean that we should not need super credits, which are designed to encourage car makers to supply more zero-emissions vehicles to the market.

Equity

When the Standard comes into effect, it should send a strong market signal to car makers that they must prioritise a variety of low and zero-emissions vehicles that suit all Australian motorists – including vehicles suitable to regional Australians and for trades, such as utes.

Finally, a Standard should be accompanied by measures to reduce the upfront cost of EVs such as the Federal Government’s Electric Car Discount bill and increase charging accessibility for all.

 

You can read more about what we're calling for in our 'Recharging Australia' report here.

Other resources: