Australia’s road to greater fuel efficiency
Jess Couttie
Director at Effective Freight Solutions || Transforming Logistics, Delivering Excellence.
In a step towards lowering carbon emissions, the Australian government recently released its proposed new vehicle efficiency standards.?
As well as cutting down Australia’s carbon footprint, this initiative is intended to give Aussies better access to vehicles that are more cost-effective to run.?
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Why is the government introducing new vehicle emission standards??
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Australia is currently one of the few countries in the The Organization for Economic Cooperation and Development (OECD) that does not have vehicle manufacturing standards around emissions.?
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The new proposal states that over 85% of cars sold worldwide are covered by a new vehicle efficiency standard, but the one million new cars sold in Australia each year are not currently required to meet any level of fuel efficiency. Meanwhile, more than 80 per cent of fuel consumed is petrol, and Australians buy more fuel for passenger vehicles than we do for freight vehicles (based on stats from 2020).??
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From a financial perspective, it comes down to this: Passenger cars in Australia on average, use 20% more fuel than passenger cars in the US. The inefficiency of our vehicles means that for every litre of fuel we buy, we drive fewer kilometres.?
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Finally, the cars we drive are responsible for around 13% of Australia’s greenhouse gas emissions (particularly carbon dioxide), with cars being the largest contributor to CO2 emissions in the transport sector.?
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What will change??
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The purpose of New Vehicle Efficiency Standard is to give car companies the incentive to produce and supply more fuel-efficient vehicles.?
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The proposal introduces a new set average CO2 target for car companies to meet or best. Over time, the standard will be lowered, encouraging companies to provide low-emission or zero-emission vehicles.?
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Car companies will still be free to sell the vehicles of their choice, but they must provide more fuel-efficient models to offset vehicles that might be less efficient so that they can meet the required averages.?
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The system will work by issuing car companies credits for meeting the new requirements. If a company fails to meet the target, they can:?
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In this way, it will be in the car companies’ interest to earn enough credits to avoid penalties.?
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If everything goes ahead, the plan is expected to come into effect as of January 1st 2025.??
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Will it save Aussies money??
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The government claims that from 2028, an average new vehicle will cost Aussies $5,710 less to own over a five year period. They also expect a saving of around $17,000 over the life of a new vehicle. What’s more, an average new car buyer in 2028 will cut their fuel costs by around 40% compared to the amount they pay today.?
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The big winners will be regional Australians who regularly drive long distances.??
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What is the end goal??
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The government hopes that the country will catch up to the standards of much of the rest of the world, including the US, by 2028. The long-term goal is to reduce CO2 emissions by 369 million tonnes by 2050.??
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Looking past the environmental benefits, the legislation is predicted to bring $143 billion in financial advantages, including $108 billion in fuel savings and $5 billion in health benefits from reduced pollution.?
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What people are saying?
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Responses so far have been generally positive. The NMRA has welcomed the plan, saying they are “pleased that a responsible and achievable option over time is being presented to the Australian people.”?
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The Climate Council also backed the proposal, saying, “By giving Australians a better choice of cleaner, cheaper-to-run cars, a strong fuel efficiency standard will cut household costs and clean up our air.”?
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How will the legislation impact freight around the country??
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Currently, the new legislation will only impact cars the government defines as light vehicles, which (with some exceptions) are generally cars that are less than 3.5 tonnes in gross vehicle mass (GVM).??
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This means that, for the time being, the following vehicles will be exempt:?
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The impact on the freight industry will be minimal at this stage, with only new vehicles that fall under the umbrella of ‘car’ affected. Still, time will tell as to whether the government will add further legislation in the future.??
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