Stoush over caps on car emissions heats up

NSW and Victorian motorists in outer suburban and regional areas would save as much as $1800 a year in fuel costs under the government’s plan to cap motor vehicle emissions for new cars, under new analysis championed by Climate Change and Energy Minister Chris Bowen.

Bowen has also promised Australians more electric vehicle choices, along with cheaper fuel bills for those driving petrol cars, in a policy pitch designed to fend off a campaign by the Coalition and car industry over his plan to impose fuel efficiency standards on new cars from next year.

Climate Change and Energy Minister Chris Bowen is using new analysis to argue drivers in outer suburban and regional areas will save more on fuel costs under the government’s plan to cap pollution limits on new cars. Credit: Alex Ellinghausen

As part of its sales pitch for the new scheme, the government has claimed the standards will save the driver of an average new and more efficient car in 2028 about $1000 on annual fuel costs.

In a bid to strengthen his case with motorists who are more likely to face longer commutes in petrol cars, Bowen is using new analysis prepared by his department to argue they could save hundreds of dollars more.

Bowen has said the data shows “less choice is costing households” as he attempts to stare down an escalating stoush with the auto industry lobby, the Federal Chamber of Automotive Industries (FCAI), which argues that the proposal to cap motor vehicle pollution is “too aggressive” and will drive up the price of new vehicles.

Under the government’s proposed “new vehicle efficiency standards”, there would be a cap on the average emissions of a carmaker’s overall fleet of vehicles sold each year from January 1. The limits, which will apply to new cars only, are designed to reduce emissions by 60 per cent by 2030 by encouraging manufacturers to import either more efficient combustion-engine cars or more electric vehicles, with penalties for those that breach their cap.

Australia is the only developed country apart from Russia that does not impose mandatory pollution caps. Bowen has asserted Australia has become a dumping ground for dirtier, inefficient cars due to the lack of pollution caps, and that new passenger cars in Australia use 15 per cent more fuel than in New Zealand, 20 per cent more than in the US, and 40 per cent more fuel than in the EU.

The department estimates, on average, a driver from Wollondilly, on Sydney’s south-west fringe, would save $1813 on fuel annually in a new car from 2028, while those living in the NSW Central Coast areas of Gosford and Wyong would save more than $1600 a year. In Victoria, a driver from the Macedon Ranges would save $1976 a year, a driver from Castlemaine in the state’s central west would save $1804, and a driver from Sunbury in Melbourne’s north-west fringe would save $1641.

“Transport and fuel costs are a big proportion of the average household budget – we can and should give households more choice to be able to bring those costs down – that’s exactly what efficiency standards do,” Bowen said.

The departmental analysis also lays bare the limited choice Australian motorists face compared with overseas counterparts when purchasing electric or hybrid vehicles.

It shows Australians have access to fewer than 100 of the more than 500 globally available electrical vehicles and plug-in hybrid models. Of the 10 most fuel-efficient cars available in Europe, seven are not available in Australia, while 40 of the 50 most fuel-efficient cars available in Germany cannot be purchased here.

“Putting a standard across an average fleet, it really requires the manufacturers to send us more of their more efficient cars, that inevitably leads to more choice, including at the more affordable end of the spectrum,” Bowen said.

“There are lots of very efficient cars overseas, whether they be EVs or hybrids or new model petrol, which are at the more affordable end of the range. We’re missing out on those choices.”

The federal opposition has seized on claims by the FCAI and some carmakers to mount a campaign that the government’s plan amounts to a “new ute tax and new family car tax” and would add thousands of dollars to the price of a new car.

“If somebody wants to go and buy a D-Max, or they want to go and buy a LandCruiser, or BT-50, or a HiLux, or a Ranger, whatever it might be, the government shouldn’t be applying a new tax to those vehicles to make it look more attractive to buy an electric vehicle,” Opposition Leader Peter Dutton said after visiting a Toyota dealership in Perth last week.

Toyota, which was the top-selling car marker in Australia in 2023 with more than 215,000 vehicles sold, has urged the Albanese government to slow the pace of new car emissions standards. In a statement last month, it said the prospect of financial penalties from as soon as January 2025 could lead “to price rises or companies rationalising their product offerings”.

Independent experts at the Grattan Institute think tank have rejected claims the changes will drastically increase consumer prices, citing their analysis showing the average new car price would rise by as little as 1 per cent – or $500.

The heated political debate has triggered a split among car manufacturers, with electric vehicle maker Polestar last week joining Tesla in resigning from the FCAI in protest against what it says is a deliberate campaign to slow the shift to electric cars and weaken new pollution limits.

Tesla accused the FCAI of making “demonstrably false” claims that the scheme would significantly drive up the price of cars for Australian consumers, while Polestar said the lobby group’s commentary may have “irrevocably damaged consumer perception and trust in the proposed policy”. The EV companies stand to benefit under the scheme by selling credits for their cleaner fleet onto manufacturers of fuel-driven cars trying to meet the emissions caps.

Other manufacturers including Hyundai, Kia and Volkswagen have thrown their support behind the scheme.

The FCAI has said that while it supports the introduction of a fuel efficiency standard, it opposes the government’s preferred approach “to impose a FES with extremely aggressive targets and severe penalties, to be effective on very short notice”.

Bowen said the FCAI’s claims “did not stack up”, arguing that the FCAI “has a voluntary fuel efficiency standard which is stricter in the first year than ours is”.

“Consultation has closed. We’ll consider sensible good faith suggestions ... but we’re not going to entertain suggestions in which really people are saying ‘we support a fuel efficiency standard as long as it doesn’t work’,” Bowen said.

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