Australia's new vehicle emissions laws are just around the corner

12/29/2024 02:00 PM

Australia's New Vehicle Efficiency Standard comes into effect on Wednesday as the nation looks towards reaching net zero by 2050, but not after intense debate between car makers and the Federal Government.

The standard applies from 1 January 2025, and will penalise car brands for selling too many high-emissions vehicles unless they are offset by enough low- or zero-emissions cars.

Toyota is one of many car makers supportive of the new standard, although industry bodies expect it to increase used-vehicle demand, meaning used-car buyers may end up paying more in the short-term.

The New Vehicle Efficiency Standard (NVES) bill was announced in February 2024 with the primary goal of reducing carbon-dioxide (CO2) vehicle emissions.

MORE: Australia's new vehicle emissions standard passes next checkpoint

It was intended as a step towards Australia's broader goal of becoming 'net-zero' – meaning it does not produce more greenhouse gases, such as CO2, than it absorbs – by the year 2050.

"The Standard will bring us into line with the majority of the world's vehicle markets where 85 per cent of all vehicles are sold, and global manufacturers will need to comply with Australia's laws," a government report said.

The move will contribute to reducing the overall amount of CO2 produced by Australia's motorists every year, with the transport sector the country's third-largest emitter of CO2.

Passenger vehicles are by far the biggest single CO2 contributor across all forms of transport – at 45 per cent – followed by light commercial vehicles at 18 per cent.

The NVES will measure the quoted CO2 emissions of every new vehicle sold by each car maker annually against a government-set CO2 figure.

There were initially two ‘headline’ CO2 targets – one for passenger cars and all types of SUVs, and another less stringent figure for utes and vans.

Each CO2 limit is subsequently adjusted based on a vehicle’s weight, becoming more stringent for lighter cars and less restrictive for heavier ones.

The Federal Government’s classifications sparked significant debate with car makers, as it would have required a large 4WD SUV such as a Ford Everest to hit a much harder target than its Ford Ranger ute sibling, despite both vehicles being related, and designed with off-roading, towing and other heavy-duty uses in mind.

After consultation with car makers, the NVES was adjusted to move heavy-duty SUVs on a ladder-frame chassis – and capable of towing at least three tonnes – under the higher light-commercial vehicle CO2 target.

For 2025, the 'headline' figure for passenger cars is 141g/km of CO2, with light commercial vehicles needing set at 210g/km or less.

These are called 'headline' figures as they will be adjusted up or down for vehicle weight, given a three-tonne pick-up will have higher emissions than a city hatchback.

There are 'break points' separate to the 'headline' figures to stop targets becoming too easy to meet of any vehicle type.

The amount of CO2 will reduce on 1 January each year. Come 2029, the headline figure for passenger cars will be 58g/km, while the light commercial vehicle category will quote 110g/km.

These are substantially lower than the emissions of vehicles currently in Australian showrooms.

The cheapest new car in Australian showrooms, the Kia Picanto Sport manual city car has a combined CO2 figure of 125 grams per kilometre, derived from laboratory testing.

Australia's most popular SUV, the Toyota RAV4 Hybrid, is rated at 107g/km in GX trim, while the Ford Ranger XLT V6 is said to emit 222g/km.

While car makers pushed for the original targets to be watered down, some groups expressed disappointment the standards do not go further, and have a date for CO2 emissions to reach zero.

The United Kingdom's emission reduction targets, for comparison, see the amount of permitted CO2 lowered annually until 2032, when the figure becomes zero – and in 2024 alone, zero-emissions vehicles must account for 22 per cent of new-car sales if brands are to avoid hefty fines.

In Australia, a six-month transition period starts on 1 January 2025 which means car makers won't face any penalties during this time for failing to meet emissions targets.

From 1 July 2025, a fine of $100 per g/km, per vehicle sold above the thresholds will be enforced.

Alternatively, credits can be purchased from other manufacturers to offset emissions beyond the targets – if brands are unable to do it themselves by selling more cars which beat the standards.

In lowering CO2, the standard is designed "to stimulate the provision for more efficient vehicles into the Australian market" with the current vehicle fleet described as "highly polluting.”

The Federal Government claims car makers will be forced bring vehicles to Australia with their most advanced fuel-saving technology, something it says is currently not happening.

It says Australian motorists are spending more at the fuel pump because they are driving less-efficient vehicles.

Motorists in the United States, it says, drive vehicles using around 20 per cent less fuel than Australia's passenger cars and light commercials.

Yet the integrity of the system is questionable, according to the Motor Trades Association of Australia (MTAA), as it says in some cases car makers will be able to sell 'high polluting' vehicles for 12-18 months after July 2025.

For Australia's most popular new-car brand, Toyota, its approach – offering a mix of pure petrol and diesel, hybrid, battery-electric and hydrogen fuel-cell power – seems vindicated under the new regulations.

Maker of Australia's best-selling vehicle – the predominantly diesel-powered Ranger – Ford told Drive at the launch of the 2024 Mustang the car maker it thinks it has the right product mix to comply with the NVES.

This includes introducing the Ford Ranger plug-in hybrid (PHEV) in 2025, following the recent arrival of the BYD Shark 6 PHEV ute.

Perennial top-three sales finisher, Mazda Australia, told Drive meeting the targets will be "tough" after dropping its only electric vehicle – the MX-30 SUV – in 2024, but welcomed the NVES' introduction.

Kia Australia said under NVES the zero-emission Kia EV5 mid-size battery-electric SUV will help offset CO2 emissions from sales of the diesel-powered 2025 Tasman ute, enabling the brand to offer both.

Other brands such as Nissan and Volkswagen have moved to add more hybrid cars to their line-ups.

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