No, cutting your car's carbon emissions won't cost you more

The Australian government has started looking into carbon dioxide emissions standards for light vehicles, as part of new measures to meet the nation’s 2030 climate targets.

However, some are already questioning the use of standards, with media reports pointing to higher costs for new car buyers and the possibility of the government bungling the introduction of standards.

Ministers Josh Frydenberg (energy and environment) and Paul Fletcher (urban infrastructure) have acknowledged these concerns, stating that “the reform agenda raises issues which need to be carefully considered including for their impact on motorists, the automotive sector and others”.

In 2015, new Australian vehicles produced an average of 184 grams of CO₂ for each kilometre. Introducing a standard is the cheapest way to cut carbon emissions in Australia’s economy.

At ClimateWorks Australia, we’ve long been calling for best-practice standards for new light vehicles. This has been supported by Global Fuel Economy Initiative, Future Climate Australia, and other environmental groups. Indeed, the latest report from the Climate Change Authority also recommended a mandatory CO₂ emission standard.

Our research shows that the introduction of emission standards for light vehicles has considerable benefits for motorists and Australia more broadly.

So let’s look at five key concerns and why light vehicle CO₂ emission standards should be introduced in Australia.

Emission standards will cuts costs for drivers

Based on a conservative estimate, we estimate that more efficient vehicles would add A$2,500 to the upfront costs for motorists (the Climate Change Authority estimates A$1,500). However, our research shows that the average driver could recoup these within three years through fuel savings, or even sooner for fleet drivers travelling greater distances. These payback periods are well within the average ownership periods for new cars.

With best-practice vehicle emission standards in place, by 2025 the average vehicle owner driving 14,000km a year would achieve annual fuel savings of up to A$850, while a fleet driver averaging 20,000km each year would save up to A$1,200.

Emission standards are the cheapest way to cut carbon

ClimateWorks’ Low Carbon Growth Plan for Australia and a range of other studies shows that reducing emissions from cars and light commercial vehicles through better fuel use is the cheapest way to reduce emissions across our economy.

Our analysis shows best-practice standards for new light vehicles, equivalent to 130g of CO₂ per km in 2020 and 95g CO₂ per km in 2025, would reduce CO₂ emissions by about 100 million tonnes from 2020 to 2030. This is bigger than the 76 million tonnes of CO₂ previously identified by the federal government.

Currently Australia is one of the few remaining developed countries without light vehicle CO₂ emission standards in place, with standards covering over 80% of the global automotive market. Any delay in implementing CO₂ emission standards will lock-in less efficient vehicles, resulting in higher costs to consumers, and higher emissions.

We don’t have to wait for better testing

The Volkswagen emissions scandal has increased scepticism about introducing standards here. The scandal highlighted the issue that laboratory testing of emissions does not reflect on-road driving conditions resulting in an overestimate of actual emissions reductions.

In fact, a recent report found completely legal inconsistencies between testing and on-road use in car models across Europe.

Some argue that Australia should do nothing until a better testing system has been developed to address these issues. However, even taking into account the fact that on-road emissions may possibly be higher than what current standards testing show, Australia would still improve the efficiency of its vehicle fleet by 50% with standards in place.

Fuel quality standards won’t get in the way

Some groups argue that Australia’s lack of low-sulfur fuel could be a roadblock in meeting future new vehicle CO₂ standards and that we need to have more stringent fuel quality standards in place before we look to introduce CO₂ standards.

Vehicles do run more efficiently with low-sulfur fuel, meaning they produce less CO₂. However, the sulfur content of our current fuel quality standards does not present an obstacle for vehicle efficiency technologies for compliance with CO₂ standards. The International Council on Clean Transportation has stated that Australia’s fuel quality now doesn’t present any impediment to reduce vehicle emissions at rates comparable to the other regions of the world.

As improving fuel efficiency now is shown to be cost-effective and technically feasible, we shouldn’t delay the implementation of CO₂ emission standards. Our research shows that any delay in improving vehicle emissions standards will lead to a level of emissions lock-in – where a larger proportion of vehicles on our roads will be less efficient than they would be with standards in place – reducing the potential by which vehicle emission standards can contribute to Australia’s emission reduction targets.

Australians will have more choice

The introduction of best-practice emission standards does not mean that drivers will have less choice. Under emissions standards, manufacturers are required to meet an average emissions standard across the entire fleet. This allows manufacturers to provide a range of models so long as the average emissions of the fleet as a whole does not exceed the agreed standard.

Rather than limit consumer choice, standards should increase the availability of more efficient vehicles into the Australian market and continue current trends of increasing the number of green vehicles.

The federal government has the opportunity to introduce best practice emission standards for light vehicles. If designed well, in collaboration with industry and consumers, it presents a significant opportunity to reduce emissions from the transport sector while providing benefits for vehicle owners and the broader economy.