Climateworks Australia, in partnership with CHOICE, has called on the Federal Government to introduce best practice light vehicle CO₂ emission standards within the next two years to bring Australia on a trajectory that follows Europe and the United States.

Recent analysis by Climateworks, and transport analysts Rare Consulting, has drawn upon a substantial body of evidence from Australia and overseas and found the introduction of best practice standards would provide significant benefits for consumers while also reducing greenhouse gas emissions.

Climateworks Executive Director Anna Skarbek said most major economies already have standards in place but Australia has no standard. As a result, Australians are spending more on fuel than they should be. 

“Our analysis looked at introducing best practice standards for light vehicles, targeting an average performance of 95 gCO₂/km by 2024. This would achieve more than a 50 per cent reduction in the average vehicle’s fuel use over 10 years compared to our current average of 199 gCO₂/km” she said. “This is akin to adopting the EU’s standards for passenger vehicles with a four year lag, and matching the US ambition of improving fuel efficiency by 50%”.

“Even taking account of rising fuel prices, this would see the average driver pay less per year for fuel in 2020 than they do today, even after considering potential fuel price rises.”

CHOICE CEO Alan Kirkland said best practice emission standards would save money for consumers, targeting one of the key cost-of-living concerns for Australian households.

“Through decades of testing of home appliances, CHOICE has seen first-hand that well-designed standards can have a powerful impact in reducing running costs,” he said.

Climateworks Acting Head of Engagement, Scott Ferraro, outlined that these efficiency gains will come at a net financial benefit to consumers, even after considering any additional upfront costs of more efficient vehicles. 

“Our analysis shows that based on a conservative estimate of $2,500 for additional upfront cost for more efficient vehicles, the average driver could recoup these within three years through fuel savings, and this would be recouped even sooner for fleet drivers. These payback periods are well within the average ownership periods for new cars.”

“With these standards in place, the average vehicle owner driving 14,000 kilometres a year would achieve fuel savings of up to $850 a year, while a fleet driver averaging about 20,000 kilometres a year would save up to $1,200 a year on fuel costs. Even considering a conservative estimate of additional upfront costs, this results in annual savings of $350 for the average driver over an average five year ownership period, and $380 for a fleet driver over a three year ownership period”.

“This means Australia would save about 3.7 billion litres of fuel each year, alone worth $7.9 billion by 2024 (assuming a 50 per cent increase in fuel prices over this period). 

This is equivalent to reducing up to 50 per cent of all automotive fuel used in Australia in 2012.

Mr Ferraro said the introduction of best practice emission standards could also save 4 million tonnes of carbon dioxide equivalent by 2020, and 8.7 million tonnes by 2024. 

“The introduction of emission standards is consistent with Direct Action and would be one way for the Federal Government to reduce emissions and save its budget allocation for other measures” he said.

“Indeed the Government’s own Regulatory Energy White Paper and Emissions Reduction Fund issues papers called for suggestions of regulatory reform measures. Best practice vehicle emission standards is an example of a simple measure that is already in place in the US and EU.” 

Mr Ferraro said Australia lagged behind most major economies in tackling emissions from light vehicles.

“Without standards in place, Australia runs the risk that we become a dumping ground for the world’s most inefficient vehicles, as manufacturers prioritise supplying their most efficient models to markets with standards in place.”

Mr Ferraro said best practice vehicle emission standards have been implemented overseas alongside other complementary measures to help achieve these efficiency gains. These may include information measures and incentives to build consumer awareness and increase demand for fuel efficient vehicles and other measures to minimise the ‘rebound effect’. 

“The introduction of best practice emission standards does not mean that consumer choice will be limited.  People can still choose to drive larger cars but they will simply be more efficient.

“However, the Government needs to take action to ensure Australia has best practice emission standards in place within two years so they can start to have an impact by 2020.  Every year of delay means locking in higher emissions making it harder and more expensive to catch up with the rest of the world.” 

“Best practice standards need to be designed in consultation with industry and consumer groups to ensure that benefits to consumers and the environment can be maximised”.