What are fuel efficiency standards and why am I hearing so much about them lately?
Fuel efficiency standards are the key to unlocking electric vehicle (EV) supply in Australia.
Fuel efficiency standards cover 80% of the global car market, and Australia is one of the only wealthy countries without them – alongside Russia, Indonesia and Turkey.
With a new Federal Government in charge, there’s a renewed opportunity to put strong fuel efficiency standards in place that will help us cut Australia’s emissions this decade and beyond.
|The nitty gritty
Fuel efficiency standards aim to limit the greenhouse gas emissions Australia’s fleet of car releases. It does this by creating a maximum average level of carbon emissions across a manufacturer’s overall car sales. In short, they provide incentives for car makers to supply low and zero emissions vehicles to a country – and penalise them for failing to do so. Over time, as the fuel efficiency standard is tightened (meaning the maximum amount of CO₂ that can be emitted is reduced), car markers must offer more zero emissions vehicles in order to avoid penalties.
Why will fuel efficiency standards help tackle climate change?
Personal transport is one of Australia’s fastest growing sources of greenhouse gas emissions. Cars and light commercial vehicles alone make up over 60% of Australia’s transport pollution levels. This is largely due to our petrol-guzzling cars which produce up to 40% more carbon dioxide than their European counterparts due to our dirty and inefficient fleet.
If Australia had fuel efficiency standards in place since 2015 when the last Federal Government considered them, we would have prevented 9 million tonnes of carbon from being emitted. That’s the equivalent of a year’s worth of emissions in domestic flights.
Rapidly implementing robust fuel efficiency standards will enable Australia to attract low and zero emissions vehicles rather than being a dumping ground for highly polluting guzzlers.
Why are fuel efficiency standards good for household budgets?
Introducing strong fuel efficiency standards is the best way to cut costs for Australians while cutting our emissions for the future.
- Make EVs more affordable: The cheapest electric vehicle available in Australia costs almost $50,000, compared to just $18,000 overseas. Implementing fuel efficiency standards will incentivise manufacturers to bring their cheaper EVs to the Australian market.
- Reduce fuel costs and reliance: The average price of 91-octane unleaded across Australia in June 2022 was $2.13 per litre, an increase of 28 per cent compared to six months earlier. Compared to overseas, it’s relatively expensive to buy an electric vehicle in Australia due to our current lack of supply. However, implementing robust fuel efficiency standards will attract more to our market and reduce the price over time. Once we have brought down the upfront cost, we can power our EVs with the Australian wind and sun. This means cheaper, cleaner transport for all. Even if powered by our current energy mix from the grid, an electric vehicle is 50% cheaper to run compared to a car powered by fossil fuels (ie. petrol and diesel).
At the moment we have the perverse situation where only those on the highest incomes can afford to make savings by buying an EV. But imagine the difference it would make for the most vulnerable Australian households if they could free up a few hundred dollars a week by no longer paying for petrol.
What are the main obstacles to introducing strong fuel efficiency standards?
A number of car markers have vested interest in continuing to sell dirtier cars in Australia and delay the introduction of electric vehicles. They want to continue business as usual without being penalised for failing to meet efficiency standards. They can use Australia as a dumping ground for high emitting vehicles while selling zero emissions vehicles in countries where they face financial penalties for not doing so.
The Federal Chamber of Automotive Industry (FCAI), of which Toyota is the most influential member, is advocating for weak standards. While they appear to welcome fuel efficiency standards, the devil is in the detail. If implemented, their standards would leave Australia’s car sector with some of the weakest carbon emissions rules globally.
The FCAI’s standards would mean new passenger cars sold in 2030 would still pump out an average of at least 98 grams of carbon emissions per kilometre. To put this in perspective, current European standards set a maximum of 95 grams of CO2 per kilometre. Further, the EU is banning almost all new petrol and diesel vehicles including hybrids by 2035. The UK is set to ban the sale of the majority of new petrol and hybrid cars from 2030.
What’s more, the FCAI’s standards rely on things called ‘super credits.’ Super credits allow a manufacturer to use hybrid vehicles to offset multiple petrol and diesel vehicles. Super credits enable the industry to hide real emissions.
What else can fuel efficiency standards do?
We have so much to gain by driving electric vehicle uptake in Australia:
- Improve health:
Air pollution from cars, trucks and fossil-fuel powered buses is kills 1,700 Australians every year – larger than the national road toll. Stepping up public transport use and having all new car sales as EVs in 2035 would save thousands of Australian lives.
- Enable climate-safe transport options for everyone:
Getting harmful fossil fuels out of our transport system means embracing other modes of transport including renewable-powered electric buses, trains and trams, and moving around by bike, foot or wheelchair. But some people will always need to rely on a personal vehicle due to their accessibility needs (for example, people with a disability). Providing affordable electric vehicles means people who need a car are more readily able to access one.
- Reduce dependency on foreign oil: Fuel price volatility this year has exposed Australia’s energy vulnerability and dependence on international oil supply. Electric vehicles, charged by renewable energy, mean our cars can be powered by Australian sun and wind.
- Serve as ‘batteries on wheels’:
When paired with ‘vehicle to grid’ technology via a two-way charger, batteries in parked EVs can export power to the grid during periods of high demand (primarily in the evenings). This means electric vehicle owners are able to earn money by selling their excess power to the grid.
Read more about why we love electric vehicles.
What else do we need to do to reduce Australia’s transport emissions?
EVs are an important piece of the puzzle, but we won’t achieve the deep emissions reduction we need this decade with EVs alone. To play our role in ensuring a liveable future and achieving the science-backed goal of net-zero emissions by 2035, Australia needs to embrace other clean, affordable and efficient ways to move around.
Boosting walking, riding, rolling and zero-emissions public transport will benefit everyone through financial savings at the petrol pump, reduced car traffic, cleaner air, less harmful emissions and better options when it comes to getting around.
1. Allocate 50% of state and territory transport budgets for public transport and 20% of the transport budget for initiatives that boost walking and bike-riding in line with best practice and the community’s needs.
2. Encourage private electric bike uptake through financial assistance at point of sale and try-before-you-buy programs.
3. Convert Australia’s bus fleets to clean, quiet and zero-emission buses.
Read more about our Climate Council transport policy packages.
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