The Federal Government released on 4 February 2024 a ‘Consultation Impact Analysis’ on the proposed New Vehicle Efficiency Standards (NVES). The impact analysis sets out the Federal Government’s proposed policy position to the NVES and seeks feedback from the community. Following this consultation, Government will decide on the design of the NVES and final Impact Analysis will be developed.
Following consultation on the Government’s preferred option, the Government will make an announcement on its final position, with a view to introduce legislation in 2024 and the NVES commencing from 1 January 2025.
The Government has stated that the primary problem that it is trying to solve is how to save Australians money on fuel, stimulate the provision of more efficient vehicles into the Australian market and reduce CO2 emissions from new cars.
The Government’s impact analysis for fuel efficiency standards come off the back of record vehicle sales in January 2024 being driven by SUVs and Utes. The Ford Ranger was Australia’s top-selling vehicle with sales of 4,747 units, followed by the Toyota Hilux (4,092), Toyota Landcruiser (2,541), Isuzu Ute D-Max (2,541) and Toyota RAV4 (2,211).
Proposed Standards
The NVES would impose a headline target for vehicle importers (suppliers) in grams of CO2 emissions per kilometre travelled by passenger and light commercial vehicles. The headline CO2 emissions target would be based on a supplier’s fleet of new passenger and light commercial vehicles sold from 1 January 2025 – as opposed to each individual vehicle. Heavy vehicles and vehicles subject to heavy vehicle emissions tests would be exempt from the NVES.
The headline target proposal would mean that suppliers are able to supply vehicles that exceed target, but the average emissions across the fleet must be at or below the headline target. The Government has also proposed that the headline target will reduce every year until at least 2029, in the following manner:
| Year | Passenger Vehicle CO2 (g/km) | Light Commercial Vehicle CO2 (g/km) |
|---|---|---|
| 2025 | 141 | 199 |
| 2026 | 117 | 164 |
| 2027 | 92 | 129 |
| 2028 | 68 | 94 |
| 2029 | 58 | 81 |
The Government’s preferred NVES proposal would require an approximate 60% reduction in carbon intensity over the period from 2025 to 2029. This proposal would therefore require that each supplier, each year, would supply increasingly more efficient vehicles. In 2019, the average light vehicle had an emissions intensity of 181 g/km,1 and the Government’s proposal would require an approximately 68% reduction in emissions intensity by 2029 from this base.
The Government proposes to enforce the NVES by imposing a penalty on suppliers of $100 per g/km exceeding over the target.
Consultation
The Government is seeking feedback from community members, including the general public, car manufacturers and the broader automotive sector. Submissions can be made until 4 March 2024, click here to access the link.
The Government’s Consultation Impact Analysis is available, click here to view.
This article was written by Evan Stents, Lead Partner – Automotive Industry Group and Matthew Carlei, Law Graduate.
1 https://www.greenvehicleguide.gov.au/pages/UnderstandingEmissions/VehicleEmissions
