The Department of Infrastructure, Transport, Regional Development, Communications and the Arts has sought responses to a consultation paper on the proposed design and implementation of the New Vehicle Efficiency Standard (NVES).

Climateworks Centre supports the Australian Government’s commitment to decarbonising the transport sector.

As stated in our previous submissions, introducing a vehicle efficiency standard is a crucial policy for reducing carbon dioxide emissions, accelerating electric vehicle (EV) uptake and meeting the strong demand for low-to-zero emission cars.

In addition to reducing emissions, the NVES will improve the efficiency of internal combustion engine (ICE) vehicles, making them cheaper to run.

In our previous submission, we recommended that an ambitious standard be set, which targets reaching 0 gmCO2 /km by 2035 for all new light vehicles.

This gives fifteen years for the remaining ICE vehicles to transition out of the fleet, providing adequate time to achieve a fully electrified vehicle fleet that will support reaching a cost-effective net zero by 2050.

We also recommended that the design of the standard be simple, transparent, trackable and oriented towards achieving Australia’s emissions reduction targets (Climateworks Centre, 2023a).

It is encouraging to see the Government agrees with our recommended principles for an effective NVES design.

In this submission, we have evaluated the three options (A, B and C) presented by the Government and compared them against Climateworks’ modelling of least-cost decarbonisation pathways for the transport sector.

In summary,

  • Climateworks’ preferred option is C, as this option has the greatest impact on reducing transport emissions.
  • According to our analysis, option C provides emissions reduction from new vehicles that is closest to the reduction required in our 1.5 degree-aligned scenario. Options A and B are not on this trajectory and risk Australia missing its emissions reduction targets.
  • The effectiveness of the NVES is tied to its design and enforcement. In this submission, we reiterate key principles that will lead to an effective standard, namely:
    • An effective NVES should be aligned with national EV uptake and emissions reduction targets.
    • The trajectory of NVES targets should be ambitious and aligned to achieving net zero across the economy before 2050, to limit warming to 1.5°C.
    • Sport utility vehicles (SUVs) and four-wheel drives should be categorised under ‘passenger vehicle’ classification rather than the ‘light commercial vehicle’ for the NVES to be effective.
    • The NVES should include legislated reviews and improve data collection through mandatory, reliable and consistent reporting from manufacturers and importers.
    • A system of incentives and penalties should be in place to ensure the NVES effectively reduces emissions. These should be enforced from the commencement of the standard, as any delays in enforcing penalties will make the NVES ineffective in achieving its goals.