The Federal Government has announced a compromise on New Vehicle Emissions Standard (NVES) acceding to some of the demands of the auto industry, particularly Toyota, to water it down regarding some 4 wheel drive vehicles, and slightly delay the penalty system.

Legislation for the New Vehicle Emission Standard is due to be introduced to the House of Representatives on Wednesday 27 March 2024. The Coalition parties have decided to oppose the changes, before even seeing the bill.

Major concessions include easing of rules for certain large SUVs and a six-month delay to the credit and penalty system. Modifications to the preferred model include:

• Recategorising a limited number of 4WDs from passenger car to light commercial vehicle. This acknowledges that some off-road wagons use similar ladder-frame chassis, and need comparable towing capacity above 3 tonnes, to dual cab utes. This includes models such as the Toyota Landcruiser and Nissan Patrol;
• Smoothing the emissions trajectory for light commercial vehicles. This reflects adjustments announced by the US EPA to its vehicle Standard and smooths the transition for utes, vans and 4x4s;
• Adjusting the weight-based relative emissions limits (known as the break point), recognising that heavier vehicles emit more;
• Staging implementation to enable preparation and testing of essential data reporting capabilities. To ensure we get the implementation right in partnership with industry, the scheme will commence on 1 January 2025 but manufacturers will not begin earning credits or penalties until 1 July 2025. 

The Government also announced provision of $60 million subsidy to boost EV charging at Australian dealerships, under the Driving the Nation fund.

Carbon dioxide emissions will be cut by 321m tonnes by 2050, instead of 369m tonnes predicted under the government’s initial preferred model.

At Tuesday’s press conference announcing the updated standard, Transport minister Catherine King and energy minister Chris Bowen were joined by bosses from Toyota, Hyundai, Tesla and the Electric Vehicle Council, among other climate and industry leaders. The Guardian reported that the Federal Chamber of Automotive Industries (FCAI) absence was notable.

Minister Catherine King said:

We have responded to practical suggestions and a limited number, as I said, have responded to practical suggestions and they are, a limited number of four-wheel drives, such as the Toyota Landcruiser, great vehicle, Ford Everest will move from the passenger car to light commercial.

The new vehicle efficiency standard targets for passenger vehicles catch up to comparable economies by the end of the decade. We’re adjust what is known as the break point, recognising that heavier vehicles emit more, that means that EVs can also earn more credits.

The standard itself will begin on 1 January 2025, but the credits and penalties system won’t start until 1 July next year, and that’s to help my department with the implementation.

The Coalition, despite not seeing the bill for the New Vehicle Efficiency Standard, has decided to vote against it. They are pushing that this is a car tax, despite the fact more fuel efficient vehicles will actually save consumers substantially on fuel costs.

The Guardian reported that at the exact time Shadow Climate Minister O’Brien and Nationals Deputy Leader Bridget McKenzie were giving a press conference, the Motor Trades Association of Australia – the peak automotive retail body representing over 15,000 Australian automotive retailers – released a statement saying it “welcomes the draft New Vehicle Efficiency Standard (NVES) legislation”.

In totality, the changes should benefit the Australian consumer – reducing the very real risk of price rises and reduced access to the vehicles they want and need – while placing the country on a CO2 trajectory similar to other comparable nations.

MTAA statement

Toyota Australia CEO endorses new standard

Tesla, Polestar were already on board with the governments preferred model for the New Vehicle Efficiency Standard. VW, Skoda, Audi also supported the new-car emissions targets with slight concessions.

The Guardian reports that the boss of Toyota Australia, Matthew Callachor, who attended the fuel efficiency press conference, and is asked whether Toyota will still be offering the same vehicles Australians are used to (Hilux etc) or change it up because of this standard and says:

I think key to this, we’re looking for something that was ambitious but also we bring Australians along in the journey. As I said, that does leave a challenge. A significant challenge.

But I think basically from our perspective is we want to continue to be able to provide vehicles that people actually see fit for purpose and in conjunction with that, involve the technology developments over this journey, over the next years coming.

And it is a journey as we get there. You know, in summary, we basically as Toyota want to be able to offer practical capable and affordable vehicles.

Asked if it is a tax, Callachor says no.

Former Nationals Leader Barnaby Joyce asks a question.

During question time in the House of Representatives Nationals MP Barnaby Joyce raises a ‘ute tax’ fear campaign question.

“Can the minister confirm that even after the prime minister’s personal intervention to fix the mess of Labor’s new family car and ute tax, families who buy one of Australia’s most popular vehicles the Toyota Land Cruiser still be facing a tax making it more $10,000 more expensive than it is today?”

Climate Minister Chris Bowen responds:

“I’m not sure who he think makes the Hilux. Lamborghini maybe?

Because the chief executive of Toyota was at a press conference with me … expressly disagreeing with the position just brought by the member for New England.

“Who should we believe? Who should we believe about Toyota?

“The member for New England or the chief executive of Toyota?

“Maybe the member for New England knows more about impact on Toyota than the chief executive of Toyota?

“The chief executive of Toyota said and I quote: ‘It is really been Toyota’s position for some time that we wanted a standard to basically help us with long-term product planning and where we are going and we wanted an emission standard that is basically ambitious but also brings people on a journey and does not leave people behind and that is where we are’.

“And he was asked explicitly whether he agreed with the Coalition’s description of our policy (as a tax) and the honourable member guess what he said? No, Mr Speaker. Why don’t you tell us more about the position of Toyota?”

Vital Improvement although flawed

The Smart Energy Council called this new standard a vital improvement, although flawed.

Chief Executive, John Grimes said:

“We have waited decades but finally Australia will join the rest of the world in implementing New Vehicle Efficiency Standards,” Mr Grimes said.

“Until today, Russia and Australia were the only developed nations without fuel efficiency standards. Today, Vladimir Putin stands appropriately isolated.

“New Vehicle Efficiency Standards are the primary means of reducing Australia’s soaring transport emissions. Federal Parliament must pass this legislation as soon as possible.

“The Smart Energy Council is disappointed the proposed New Vehicle Efficiency Standards have been weakened to include some SUVs in the light commercial vehicle category, with the emissions reduction trajectory also weakened.

“Calling a Toyota Land Cruiser a light commercial vehicle does not pass the school drop off test.  Toyota is Kodak on wheels – a company that has failed to modernise, wanting us all to pay the price for their poor business decisions and lack of action.”

Smart Energy Council Press release

Time to move on to active and shared transport in cities

The Climate Council also welcomed the new standard acknowledging the compromise due to industry feedback while still delivering emissions reduction benefits and savings to consumers. Climate Council Head of Policy and Advocacy, Dr Jennifer Rayner, highlighted the need to now move to addressing shared and active transport solutions for cities.

“Having landed their final settings on the New Vehicle Efficiency Standard, the Federal Government now needs to come up with other transport policies to keep Australia on track to hit our national emission reduction target. 

“Enabling people in our big cities to use shared and active transport more often is the best way to cut climate pollution quickly this decade. This shift to shared and active transport should be at the centre of the Federal Government’s upcoming Transport and Infrastructure Net Zero Roadmap.”

Climate Council Press Release

Climate Action Merribek previously blogged on new vehicle emission standards:

• FEBRUARY 21, 2024 – Submission: New Vehicle Efficiency Standard
• FEBRUARY 7, 2024 – New Vehicle emission standards proposed to start from 2025
• APRIL 21, 2023 – Timid steps in decarbonising transport with National Electric Vehicle Strategy

Update: More detail on the final settings:

• Final emissions reduction targets are at 80% of the climate abatement they proposed in their original preferred option B (by 2030).
• It will come into effect 1 January 2025 (still detail to be worked out as the debits and credit system will not start until July 2025). 
• No super credits or offcycle credits (big win!)
• Weaker targets for LCVs (light commercial vehicles) in early years, but passenger car targets remain the same and are strong.
• Penalties will stay at $100 rate (though this is effectively $50 when it gets passed on to the car companies).
• Some 4WDs have moved from the passenger to the LCV category. But it is positive that this was done with more precision than just a blanket category shift of all SUVs or 4WDs.
• Minister should have the power to update the targets and strengthen them over time. Weakening the targets will be much more complicated (will have to go back to Parliament). A significant design win. 

Following table compares the overall emissions abatement numbers in the final settings, compared to what they initially proposed in their preferred Option B:

References

DCCEEW, Joint media release: A New Vehicle Efficiency Standard tailored for Australia, 26 March 2024, The Hon Catherine King MP, Minister for Infrastructure, Transport, Regional Development and Local Government, The Hon Chris Bowen MP, Minister for Climate Change and Energy https://minister.dcceew.gov.au/bowen/media-releases/joint-media-release-new-vehicle-efficiency-standard-tailored-australia

The Guardian, Elias Visontay Transport and urban affairs reporter, Albanese government manages to unite automotive industry on fuel standards – almost, 26 March 2024, https://www.theguardian.com/environment/2024/mar/26/albanese-government-manages-to-unite-automotive-industry-on-fuel-standards-almost

Smart Energy Council, 26 March 2024, Imperfect but vital: Time to get moving with New Vehicle Efficiency Standards https://smartenergy.org.au/articles/imperfect-but-vital-time-to-get-moving-with-new-vehicle-efficiency-standards/