Delays put Australian fuel efficiency standards on the rocks

The Albanese Government won’t deliver on its promise to take another next step towards introducing fuel efficiency standards locally in 2023.

Scott Nargar, senior manager of future mobility and government relations at Hyundai Australia, confirmed the news to CarExpert on the back of conversations with Minister for Climate Change and Energy Chris Bowen – and fears this delay could be the first of many.

“We’re not going to see [fuel efficiency standards] this year,” Mr Nargar told CarExpert.

“We’re not going to see the impact statement this year, which was due a couple of weeks ago. We’re certainly not going to see draft legislation this year. The concerns are that we end up having delays, we go into quarter one [2024]. There’s a budget mid-year, there’s an election around May 2025,” he said.

“It’s going to take two sittings of parliament to get it through, that’s if it doesn’t get stuck in the Senate with negotiations with The Greens and others. My greatest fear for the country is that we don’t have emissions regulations by the end of this term of government.”

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Along with growing concerns about legislation that may make new cars more expensive during a cost-of-living crisis, Mr Nargar blames warring factions within the car industry for the hold-up.

Regardless of why, it’s a significant backflip from the Federal Government given Mr Bowen earlier this year said there was “overwhelming support” for the Government’s position.

“Australia needs fuel efficiency standards that make us competitive with other parts of the world for cleaner, cheaper-to-run cars,” the minister said in August 2023, after public submissions about the standards closed.

Australia and Russia are the only two developed nations with no fuel efficiency standard (FES).

Carmakers have long pointed to our lack of a FES as a hurdle to bringing the latest, most environmentally friendly vehicles Down Under.

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What are fuel efficiency standards?

The idea behind a fuel efficiency standard is to push carmakers into delivering more electric vehicles and fuel-efficient, lower-emitting petrol or diesel cars to Australia by capping their fleet emissions.

Over time, as the fuel efficiency standard is tightened (meaning the maximum amount of CO2 that can be emitted is reduced), carmakers must sell greater numbers of lower and zero-emissions vehicles to avoid financial penalties.

The Federal Chamber of Automotive Industries (FCAI) is the peak body for carmakers in Australia. It has previously said it “fully supports the introduction of an ambitious but achievable, technology agnostic FES that it is designed and implemented with a focus on the Australian consumers’ needs”.

“The exact form of a fuel efficiency standard needs to consider the model cycle time frames to bring more fuel-efficient vehicles into Australia and the level of financial and non-financial support from the government,” FCAI chief Tony Weber said in August.

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“Across the world, this partnership of industry and government has been crucial to the development of low-emission vehicles.

“Most importantly, any policy that does not bring consumers along the path of reform will, by definition, fail. Key to the transition for consumers is the availability of product that they want or need at an affordable price.”

The Electric Vehicle Council (EVC), a breakaway lobby advocating a faster transition to electric vehicles, detailed a vision in May this year.

It wants fuel efficiency standards, which it rebrands as the New Vehicle Efficiency Standard (NVES), to kick off from 2024, with reviews built in for 2026 and 2029.

The headline figure is the goal to achieve at least 50 per cent electric car sales among new light vehicles (passenger cars, SUVs, and light commercials) by 2030, and up to 95 per cent EV sales on new vehicles by the mid 2030s.