Government releases EV strategy as industry waits on emission standards

The Australian Government has released its electric vehicle strategy with a stated aim of emissions reduction, to be achieved through a centrepiece fuel efficiency standard.

This, it says, will encourage EV supply in Australia and reduce household bills, pointing to a six-fold greater cost of fuelling a petrol vehicle, on average, compared to an electric motor each year.

The ultimate goal is to contribute to reaching the government’s target of a 43% reduction in carbon emissions on 2005 levels by the end of the decade. About one-fifth of Australia’s current greenhouse gas output is connected to the transport sector.

Fuel efficiency standards are caps on the amount of carbon dioxide equivalent that can be emitted by vehicles per kilometre.

In 2014, under the then Abbott government, the Climate Change Authority proposed a cap of 105g/km by 2025.

That target wasn’t adopted, and successive Coalition governments have avoided imposing standards.

The new strategy doesn’t name a fuel efficiency figure either. Instead, the government says it will further consult with industry to design the scheme.

The drive to bring electric vehicles to regional Australia revs up

The strategy also avoids declaring a phase-out date for petrol vehicles. Until the introduction of a firm figure, Australia remains the only developed nation along with Russia yet to adopt a carbon cap on vehicle emissions.

Ambition good, but a cap needed to start carbon cuts

“There are, of course, some design considerations, but essentially because we’re so late to the party, there’s no need really for us to be the inventors of any of the detail – we can just take it off the shelf,” says Marion Terrill, who leads the Grattan Institute’s transport and cities program. Like some experts, she was hoping to see the strategy contain a cap from the get-go.

Terrill points to other economies with well-established policies, which she says could provide Australia with “off-the-shelf” models for its new emissions standards.

New Zealand introduced clean car laws in 2022, with emissions caps commencing for passenger and light commercial vehicles in 2023 and progressively tightening each year until 2027. Within five years, a passenger car imported to NZ will see its allowable per-kilometre carbon emissions more than halved.

It also provides rebates for new vehicles with emissions below the threshold, and a fee for those with excessive carbon output. Motor traders are also required to label fuel efficiency.

Europe currently imposes a 50g cap on its vehicles until the end of 2025.

Last week, the US Environmental Protection Agency proposed a progressive tightening of current carbon emission caps on light and medium-duty vehicles that would see passenger car output capped at 82g/imperial mile (roughly 51g/km) by 2032.

While Australia has no compulsory standard, the Federal Chamber of Automotive Industries introduced a voluntary measure in 2020 with a targeted for cars to fall below a 100g/km threshold carbon by the end of the decade. Last year, the average carbon output was 131g/km.

But the FCAI welcomed the government’s decision not to pull policies from other nations into its framework, saying in a statement the consultation paper “highlight[s] the complexity of the issue and demonstrates the Government has done its homework to ensure any future emissions standard is not a simplistic copy of an overseas standard but instead suited to Australia”.

Terrill suggests the primary question for the government in undertaking its final consultation is how competitive its targets should be, relative to other markets.

“The only decision really for the government, or the key decision, is: what level of ambition they want to take on?” Terrill says. “They haven’t really given any indication, one way or the other. It’s [now] a subject of further consultation.

“Hopefully, we’ll get those targets by the end of the year.”

Carbon reduction isn’t just about EV

Broadly, experts have welcomed the Albanese government’s policy but noted the absence of charging infrastructure as the most pressing issue to resolve to ensure successful implementation.

There’s also some concern around feet-dragging – the absence of an immediate cap – when other, similar economies are well underway with successful policies. A failure to impose standards quickly runs the risk of more inefficient vehicles behind sold in Australia, which was one of the largest markets globally for new vehicle sales emerging from the pandemic.

But beyond its stated aim of reducing road transport emissions and expanding EV uptake, the government’s plan also identifies the need to improve charging infrastructure, particularly in regional areas. It also seeks to implement a circular economy where batteries are recycled or repurposed.

Other observers have noted that the policy’s intent to drive more car sales neglects considerations of smarter transport use.

Helen Rowe, a policy expert who heads up the Monash Climateworks Centre’s transport program, would like to see the government’s next step to be a broader consideration of transport.

“EVs are a huge lynchpin of reducing transport emissions in Australia,” Rowe says. “Something we’re looking at for the next year is thinking about what’s going to happen in the rest of the transport sector: what are the complimentary things we can do to help?

“So the weight is not just on EVs, they could be on freight, but also thinking about in urban areas, [where] we have a lot of congestion, things like shared mobility, mode shift, public transport –they’re all going to play a role.”

Rowe says the next piece of work will be to draw all these considerations together to determine what transport decarbonisation looks like – “so that we reach our climate goals in time”.