Fuel Efficiency Standards Explainer - Solar Citizens

Fuel Efficiency Standards Explainer


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 mandatory fuel efficiency standards. 


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 electric vehicles being brought into Australia, and those that are are not affordable enough for most. Fuel Efficiency Standards are the key policy to unlocking a reliable supply of affordable EVs.


Fuel Efficiency Standards increase the supply of EVs (and other more efficient vehicles) including affordable models already available in other countries. Because lots of large companies and governments buy cars in bulk and have emissions targets, a bigger supply will lead to an expanded second-hand market, meaning more Australians will be able to get behind the wheel of an EV.


  • Fuel Efficiency Standards are 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, and incentives for them if they provide low-emissions vehicles like EVs.
  • 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.
  • In 2019, the average emissions a car emitted in Aus was 169.3 g/km. 
  • The EU’s Fuel Efficiency Standard started in 2009, and is now at 95 g/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.


One of four OECD nations, we’re behind compared to our trading partners, and one of four wealthy countries that doesn’t have Fuel Efficiency Standards – 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 Fuel Efficiency Standards, and very few EVs. Then, they send their EVs and efficient cars to other countries where they have to meet Fuel Efficiency Standards.


New Zealand’s car market is quite similar to Australia – a small, right-hand drive market with no local production, similarly isolated from the rest of the world. However, since the introduction of Fuel Efficiency Standards in 2021, EV sales have almost tripled. 


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.


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.

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