Chris Bowen bows to pressure to lower fuel efficiency standards

Chris Bowen is preparing to lower proposed high fuel efficiency standards for petrol vehicles, following the change in US standards.

Energy Minister Chris Bowen. Picture: NCA NewsWire / Damian Shaw

Chris Bowen is preparing to lower Australia’s proposed high fuel efficiency standards for petrol vehicles following US President Joe Biden’s big backdown on American standards and pressure from Thailand, Japan and the domestic automotive industry.

Australia’s backdown is likely this week as parliament prepares to break before the May budget sittings and after a secret meeting last Thursday between the Albanese government and local automotive industry representatives.

Climate Change Minister Mr Bowen and Transport Minister Catherine King have previously promised to give the automotive industry a chance to respond to the policy plans, designed to set a New Vehicle Efficiency Standard that “seeks to catch up with the US around 2028”.

The Australian efficiency standards, designed to cut fuel emissions and promote the sale of electric vehicles, are a crucial part of Mr Bowen’s carbon emissions reduction targets.

The new laws will set fuel efficiency standards on new cars being sold in Australia that will require car companies to supply more fuel-efficient vehicles by targets set on the average emissions per kilometre for new cars sold.

Mr Bowen has repeatedly linked his plan to the US fuel efficiency proposals although they were much higher than the American standards in the short term, and he denied the Australian standards would increase the cost of cars in Australia or reduce the range of imported vehicles.

But Thai and Japanese car exporters claim the changes would mean large numbers of cars would not be able to be sent to Australia, the relatively small market did not warrant lifting standards well beyond other nations and the electric vehicles market was too small and slowing.

US President Joe Biden handed down a significantly softened set of rules designed to encourage more EVs Picture: Getty Images/AFP.

The reasons Mr Biden – facing pressure from US automotive unions in an election year – gave last week for walking away from the US standards was the impact on consumers and workers, and the declining electric vehicles market.

Apart from Thai and Japanese car manufacturers and the Australian automotive industry, the Coalition has demanded the Albanese government reduce the standards because they were a “ute tax” on working Australians and would push up the cost of cars.

Senior Labor ministers were concerned during the Dunkley by-election campaign that the proposed standards were “killing” the ALP, which was saved by the tax cuts announced in January.

Mr Bowen’s backdown is also a result of losing Greens support for the proposals unless there were no concessions given to the gas industry – President Biden’s concessions to US unions included freeing up more gas supplies.

On Monday Resources Minister Madeleine King is introducing amendments to environmental control on gas projects to ensure “the integrity of our offshore gas capability”.

Greens leader Adam Bandt has threatened to oppose the fuel efficiency standards legislation if Labor didn’t “abandon its push to work with the Liberals to fast-track massive offshore gas projects”.

“The Greens have offered to back Labor’s EV standards as proposed, even though we think they should be stronger, if Labor abandons its push to work with the Liberals to fast-track massive offshore gas projects,” Mr Bandt said.

“Just one massive gas project approved under Labor’s dirty deal with the Liberals will wipe out all of the climate gains of their EV policy, the equivalent of ripping solar panels off four million roofs.”

The Coalition has warned the fuel efficiency standard could increase the cost of utes. Picture: Toyota

The government’s climate change carbon reduction strategy is now becoming enmeshed in a series of changes on coal-fired power stations, gas production and petrol emission standards, which are causing concern among workers and unions.

Like Mr Biden, Anthony Albanese is facing an election within about a year, with conflict between Greens-backed environmentalists, declared zero carbon emissions targets, fears about jobs in resources projects and public priority concern about cost of living.

In the last week former US president Donald Trump has made difficulties for the Albanese government over Kevin Rudd’s appointment as US ambassador and Mr Biden has backed away from petrol emission standards as well as extending his ban on funding for the UNRWA in Gaza.

Amid mounting speculation Labor will introduce the legislation this week, Mr Bowen said he was open to hearing “sensible” feedback on the proposed fuel efficiency standards.

“Catherine King and I have been happy to consider sensible suggestions that ensure the policy does what it’s intended to, and that is to give Australians more choice of vehicles that cost less to drive,” he said.   

Opposition energy spokesman Ted O’Brien criticised Mr Bowen for acting in “bad faith” by failing to consult with the Coalition on how the fuel efficiency standards could strike the right balance between “price, choice and emissions”.

“Industry forecasts that Labor’s family car and ute tax will jack up the price of Australians’ favourite vehicles by up to $25,000,” he said. “People will just hold on to their existing vehicles for longer, so not only will prices go up and choice be restricted, but higher-emitting vehicles will be on the road for longer.

“Labor has refused to engage the Coalition at all, instead choosing once again to fall into the ideological arms of the Greens, who have no regard for the economy or the cost impost for families.

“No one disagrees with helping Australians drive more fuel-efficient vehicles, but we completely disagree with walloping Australian families and tradies with a new tax and telling them what cars they should drive.”