Car owners could save $10,000 if Australia had strong fuel efficiency standards

Modelling commissioned by the Climate Council and the Electric Vehicle Council shows that Australians could save up to $1,200 per year on car running costs if the federal government delivers strong fuel efficiency standards.

Fuel emission standards, also called vehicle emission standards, are regulations set by governments to limit the amount of pollutants and greenhouse gas emissions produced by vehicles.

Effective and competitive standards could save Australian consumers up to $10,000 over a vehicle’s lifetime.

The report titled, Raising standards, cutting costs found that well designed fuel efficiency standards could deliver up to $13.6 billion in net benefits by 2035 from reduced vehicle running costs, cleaner air and less environmental damage.

31 million tonnes of harmful pollution could be reduced over the next decade, and there would be a rapid increase in low and zero emissions vehicles to buy.

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Australia lagging behind

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Australia is one of the only wealthy countries lacking fuel efficiency standards. The Climate Council says Australia is lagging behind given fuel standards already cover 80 percent of the global car market.

“This modelling underlines that a strong fuel efficiency standard will deliver huge benefits for Australians in cheaper running costs for vehicles, while also reducing pollution and climate harm from transport emissions,” said Climate Council head of advocacy, Dr Jennifer Rayner.

“Australia cannot remain a dumping ground for expensive, polluting vehicles that cost our hip-pockets, health, and environment."

"Every day we wait to put in place strong fuel efficiency standards means Australians are paying more than they should for fuel, and pumping out more harmful pollution.”

The Climate Council says that strong vehicle efficiency standards should:

• Set Australia on a strong pathway to a zero emissions fleet – with the objective of all new vehicles sold being zero emissions by 2035, at the latest
• Align with other car markets like New Zealand, the United States and Europe as a minimum – so Australia moves up the queue for cleaner, cheaper vehicles
• Deliver genuine reductions in emissions from new cars sold in Australia – avoiding credits and loopholes that undermine their effectiveness
• Are mandatory and legislated – auto manufacturers shouldn’t be able to opt out
• Start as soon as possible – every new vehicle sold today will likely be on the road for at least the next 10 years, so we cannot delay.

New vehicles sold in Australia on average have 50% higher emissions than vehicles sold in the EU, and 23% higher than vehicles the US.

New light commercial vehicles sold in Australia have 40% higher emissions than the EU and 25% higher than the US.

“New Zealand mandated their first efficiency standard more recently in 2022. These standards have been set to catch-up with the US and EU by 2027,” states the Raising standards, cutting costs report.

“In stark contrast, Australia has a voluntary standard in place. This standard falls significantly short of the progress achieved by other nations. By 2030, Australia could find itself between 92% to 154% behind global peers.”

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Norway is the gold standard

While Australia lags behind the EU, US and New Zealand, the picture looks even worse when Australia’s average new vehicle emissions are compared to Norway’s.

Thanks to Norway’s strong EV policy, average new car emissions dropped to just 16 g/km in May. The Norwegian figure is ten times lower than average new vehicle emissions in Australia which were 164 g/km in 2022.

New vehicle emissions over the past 20 years show just how far behind Australia is from the gold standard Norway, where plugin vehicles made up 91% of all new cars sold in May.

The study also shows how the additional cost of new EVs is far outweighed by the massive fuel and maintenance savings which will provide a $13.6 billion net economic benefit to Australians by 2035.

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