Albanese government to impose mandatory pollution caps on cars to drive electric vehicle uptake

Mandatory pollution caps will be applied to new cars for the first time as part of the federal government’s National Electric Vehicle strategy to drive uptake of cleaner cars as a key measure to help Australia meet its climate targets.

Australia is the last developed economy except Russia that does not impose pollution caps on vehicles. Federal Climate Change and Energy Minister Chris Bowen and Transport Minister Catherine King announced on Wednesday the Albanese government would impose fuel efficiency standards on manufacturer’s fleets of passenger vehicles, although they didn’t detail the standards or the timing for their introduction.

The Albanese government has announced it will impose mandatory fuel efficiency standards on passenger cars.Credit: iStock

Fuel efficiency standards limit average emissions, measured in grams of CO2 per kilometre, produced by the overall fleet of vehicles sold into the market by a manufacturer to encourage them to sell more EVs.

“Fuel-efficient and electric vehicles are cleaner and cheaper to run – today’s announcement is a win-win for motorists,” Bowen said.

Passenger cars generate about 10 per cent of the nation’s greenhouse pollution and reducing their carbon footprint would be a major contribution to the Albanese government’s legally binding target to cut Australia’s emissions by 43 per cent by 2030. The government last year dropped the fringe benefits tax that applies to cheaper electric vehicle models, cutting the cost by up to $12,500.

Bowen said reform was long overdue and argued that tighter pollution limits would encourage carmakers to send more of their cheaper electric vehicle models to Australia, by creating a more attractive market when competing for the limited global supply of EVs.

“Look at other countries – the United Kingdom, for example – there’s a much bigger range of affordable vehicles, electric vehicles, available for people,” he said.

The UK, Japan, France and Germany have pledged to ban sales of combustion engines between 2025 and 2030. The US state of California is doing the same from 2035.

New cars in Australia use 40 per cent more fuel than those in the European Union, 20 per cent more than the United States, and 15 per cent more than New Zealand, the ministers said, claiming that a fuel efficiency standard could save motorists up to $519 per year on fuel.

King said the government would learn from international experiences and Australia’s pollution caps would be designed for the “unique” needs of the Australian market and as they would apply only to new vehicles, motorists would not be forced to ditch their current vehicles.

“What fuel efficiency standards don’t do is they don’t mandate that you have to get rid of your ute, they don’t mandate that you have to get rid of your diesel car. They don’t mandate the sort of car that you have.

“What they do is they provide an incentive for car manufacturers to send their latest and cleanest vehicles here into Australia,” she said.

Carmakers are warning that Australia will become a global dumping ground for old, dirty car models unless Australia matches the ambitions of the United States. US President Joe Biden last week announced reforms that are forecast to cut the country’s total emissions by 40 per cent by the end of the decade.

The US scheme is designed to boost the sales of electric vehicles by 1000 per cent so that they account for 67 per cent of new passenger cars sold in the US by 2032, although EVs only captured 6 per cent of America’s new car sales last year. It also imposes stricter emissions standards on new truck sales.

The Coalition indicated on Wednesday it was open to supporting Labor’s reform, saying it will review the strategy before finalising its position.

“We support Australians to embrace next-generation clean technologies including electric vehicles,” opposition climate change and energy spokesman Ted O’Brien said.

The former Morrison government ruled out fuel efficiency standards and focused instead on funding EV charging infrastructure and reforms to encourage industry to purchase plug-in hybrids and battery electric cars.

Without opposition support, the government would need the backing of the Greens and two crossbenchers to pass the standards through the Senate, where independent ACT senator David Pocock is set to push the government to match the US’ measures.

The Greens and the Smart Energy Council criticised the government for not setting a deadline for pollution caps.

“We now have a roadmap but with no clear destination. The government needs to set electric vehicle targets and get moving on implementing strong fuel efficiency standards,” Greens leader Adam Bandt said.

Electric Vehicle Council chief executive Behyad Jafari welcomed the government’s commitment to mandatory pollution caps but urged it to match the US plan.

“We’ll have fossil fuel car lobbyists arguing for weaker standards, this is their playbook,” Jafari said.

“For car companies, this is about global investment decisions and having weak standards in Australia sends a signal they should use us as a dumping ground.”

However, the Federal Chamber of Automotive Industries, which has backed mandatory fuel efficiency standards, questioned if Australia can afford to match the US.

“Any future emissions standard is not a simplistic copy of an overseas standard,” the Chamber’s chief executive Tony Weber said.

Opposition transport spokesperson Bridget McKenzie said she did not trust the government to abide by its commitment to not apply the standards to existing vehicles.

“They have only released a consultation document, and we must wait to see what they deliver in the final outcome,” she said.

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