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Climate authority calls for mandatory CO2 laws

Fuel for thought: The Climate Change Authority says motorists could save thousands of dollars over the life of a vehicle if mandatory CO2 standards are introduced.

New report sees dramatic benefits with compulsory CO2 standards, but FCAI disagrees

27 Jun 2014

AUSTRALIA’S independent climate change authority and federal government policy advisor has recommended mandatory emissions standards be introduced for all new light vehicles, claiming fuel efficiency across the industry could be almost doubled by 2025.

In a research report ‘Light vehicle emissions standards for Australia’ released this week, the Climate Change Authority has proposed that Australia follow other markets such as the European Union, United States, Canada, Japan, South Korea, China and India in developing mandatory standards.

It recommends that the standards be introduced from 2018 – after the three remaining Australian car-makers, Ford, Holden and Toyota, have closed their manufacturing operations – and that the standards progressively reduce carbon dioxide emissions from new light vehicles to 105 grams per kilometre, almost half the current level of 192g/km.

According to the agency’s chairman Bernie Fraser, this would broadly bring Australia into line with the US, but still trail the tighter EU targets by several years.

“Australia could almost double the fuel efficiency of its new vehicle fleet by 2025, save motorists thousands of dollars over the life of their vehicles and significantly reduce greenhouse gas emissions – all by introducing mandatory emissions standards for light vehicles,” Mr Fraser said.

In response, the Federal Chamber of Automotive Industries (FCAI) has hit out at the report, arguing that CO2 from new light vehicles accounted for only a fraction of the total emissions from the road transport sector.

FCAI chief executive Tony Weber also said the targets were unrealistic because of the less stringent fuel quality standards in Australia, such as the current unavailability of 95 RON unleaded petrol with 10ppm or less of sulphur.

“The road transport sector accounts for eight per cent of all CO2 emissions in Australia, and of that eight per cent new motor vehicles account for just one sixteenth of the emissions, or around half of one per cent of total CO2 emissions,” he said.

“The Climate Change Authority notes that their report demonstrates that mandatory standards are a cost-effective way to reduce Australia’s greenhouse gas emissions and light vehicle fuel use. But without having world-quality fuel available in the marketplace, mandatory CO2 targets would impose cost on the community without delivering the expected benefits.”

The Climate Change Authority proposes that the targets would be set as an average across the entire fleet, rather than be applied to individual vehicles.

It has calculated that the implementation of the mandatory standard would increase the average cost of a new car in 2025 by about $1500.

“This, however, would be offset several times by fuel savings of about $8500 over the life of the vehicle, leaving motorists better off,” Mr Fraser said.

“The proposed standard is projected to avoid 59 million tonnes of greenhouse gas emissions over the period to 2030, equivalent to the current annual emissions of all light vehicles.”

Established in 2012, the Climate Change Authority is facing an uncertain future after the federal government introduced a bill to parliament which would abolish the agency. The bill is still before the parliament.

Earlier this week, Greens leader Christine Milne, who had just withdrawn the party’s support for an increase in the fuel excise levy – a significant element in the Abbott government’s first budget – also called for mandatory fuel efficiency standards in Australia as the industry restructures with the exit of the three car-makers.

“The reason that the previous government wouldn’t accept it, or the opposition, is because the cars we made in Australia are not fuel-efficient,” Senator Milne said.

“Now that the whole structure of the motor vehicle industry in Australia is changing, I think there’s a good opportunity for us to now get mandatory vehicle fuel efficiency standards.”

As GoAuto has reported, the National Transport Commission recently released figures that put Australia’s CO2 average for passenger cars last year at 182g/km – a 4.2 per cent improvement on 2012 – while light commercials came in at 236g/km, down just 0.8 per cent on the previous year.

The industry average of 192g/km across both passenger cars and LCVs for 2013 represents a continuing decline in CO2 tailpipe emissions for light vehicles and the third-highest drop since annual figures were first published in 2002.

The reduction was driven largely by consumer preferences for smaller and more fuel-efficient vehicles.

In Europe, where emissions calculations are directly comparable with Australia, the CO2 average for passenger cars fell four per cent last year to just 127g/km while light commercials were down by a similar margin to 173g/km.

Europe has mandated a target of 95g/km for all new cars by 2021 (phased in from 2020) – equivalent to approximately 4.1 litres per 100km of petrol or 3.6L/100km of diesel – while the US has a target of 139g/km by the end of the decade.

In Australia, the former Labor federal government had mooted mandatory CO2 targets under Julia Gillard in 2010 – including a figure of 155g/km by 2024 – but subsequently refused to commit to them.

There are no such moves on the horizon from the Abbott government, despite allocating around $1.15 billion over the next four years to its 'emissions reduction fund’ designed to help the Coalition cut CO2 to five per cent below 2000 levels by 2020.

“On average, new motor vehicles in Australia have recorded 2.4 per cent year-on-year CO2 reductions over the last decade,” Mr Weber said this week.

“This is significantly greater than the reductions seen in most other sectors of the economy.”

Mr Weber also said the Climate Change Authority did not appear to give “appropriate recognition” to the fact that consumer preference contributes heavily to CO2 levels from motor cars.

“The reality is that Australians have the capacity to buy the vehicles the report alludes to however, they elect not to,” he said.

“New-car sales data shows that Australian consumers have a greater preference for heavier vehicles with larger and more powerful engines than consumers in the United Kingdom.

“They also have a preference for a lower proportion of diesel-powered engines and a higher proportion of automatic transmissions – all of which contribute to higher emissions.

“Other governments around the world also provide significant incentives for the purchase of low-emission vehicles.”

He added: “Any consideration to reduce transport CO2 emissions needs to be comprehensive. It needs to consider how to reduce traffic congestion, the choice of transport mode, and a taxation system that is also geared to achieve these outcomes.

“The FCAI would be cautious about relying on any one policy mechanism to deliver further reductions.”

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