A federal government proposal to introduce lower fuel emissions standards in Australia is being called a ‘carbon tax’…

THE DEPARTMENT OF INFRASTRUCTURE and Regional Development has proposed a tax on emissions by vehicle manufacturers to be implemented from 2022. However, the mechanics of the proposal have caused widespread condemnation.

The proposal requires all new vehicles sold in Australia by 2025 to adhere to an emissions average of 105 grams per kilogram as per current test cycle procedures. Vehicles currently sold in Australia produce, on average, almost 200 grams per kilogram and up to 65% of vehicles on the Australian market would fail to meet the new target.

Under the proposal, manufacturers would be taxed or credited depending on their average emissions output. Failing to meet the standard would see distributors liable to pay a penalty of $100 per g/km of emissions unless it were to be offset within three years by lower emissions. Cars that produce less than the target would accrue credits.

Unlike Europe – which employs a similar scheme – accrued credits would not be allowed to be traded to other distributors. With current popular vehicles such as SUVs and utilities that would fail, the cost of the tax would be passed onto the buyer, which could add up to thousands of dollars to the purchase price, according to opponents of the scheme.

Several federal government ministers have hit out at the proposal, calling it a “beat-up” and wiping the idea off the table.

“The suggestion that the department put out had all the hallmarks of a mini carbon tax which is something that is anathema to the Australian people,” Senator Eric Abetz told Sky News. He added the issue had been put “back in the cupboard where it belongs” by senior ministers.

Energy Minister, Josh Frydenberg was even more disparaging and told the ABC, “there is as much chance of a carbon tax on cars as Elvis making a comeback,” and that, “the only thing the government is interested in is how do we reduce the fuel costs for families on their vehicles.”

A report by the National Transport Commission (NTC) has shown sales of small cars between 2014-2016 dropped by 45,114, while sales of SUVs increased by 88,670.

If the emissions standards were to be introduced, the Australian Automobile Association (AAA) has urged the government to take a real-world approach to emissions targets that take into account what cars people are actually buying.

“The NTC report shows a growing number of Australians value the attributes the Government is failing to factor into its current cost-benefit analysis and suggests the Government’s numbers are getting less accurate by the month,” said the AAA.

“In the wake of the Volkswagen scandal, jurisdictions across the globe are taking steps to use real world emissions testing to provide more accurate information to consumers about emissions and fuel consumption and such reform should be at the top of the Government’s list of priorities in this area.”

ClimateWorks Australia has slammed the description of the emissions standard as a ‘carbon tax’, suggesting that it if implemented correctly, it could lead to lower costs for consumers. 

ClimateWorks Australia Head of Implementation, Scott Ferraro said the proposed introduction of light vehicle emission standards would provide net savings to consumers, ensure that Australians have access to the latest vehicle technologies, and substantially reduce emissions from the transport sector.

“The government’s own modelling shows that an average motorist purchasing an average performing passenger vehicle in 2025, could save $519 per year in fuel costs based on the proposed target,” he said.

“Based on 2012 household energy costs data, this would cut household energy costs by up to 10 per cent, with even greater savings for low-income households. That same modelling shows that these standards will provide net economic benefits of $13.9 billion to 2040.”

“The claim that these standards, which are in place in over 80 per cent of global automotive markets, are akin to carbon tax is incredibly misleading. The government has called out this scaremongering, which runs counter to positive actions we can take to improve fuel efficiency and provide cost savings to motorists.

“The proposed standard would apply as an average across all vehicles sold by a manufacturer. These standards allow manufacturers to sell vehicles with emissions higher than the standard as long as they are balanced out by lower emission vehicles, and Australians would still have access to the variety of vehicles they currently enjoy.

“This means there may not be any cost increase from potential penalties under these standards. It will come down to how proactive a manufacturer can be in bringing new, fuel efficient models to market,” Ferraro said.

Writing in June, Scott Ferraro said the fuel efficiency of Australian cars was not improving fast enough and already lagged improvement rates of new cars in Europe and the United States.

“The improvement in fuel efficiency of new cars in Australia has dropped to its lowest rate over the last 10 years, with improvement of only 1.1 per cent achieved in 2016 compared to an improvement rate of 4.2 per cent in 2006 and 3.7 per cent in 2012,” he said.

“The national average carbon emissions intensity from new passenger and light commercial vehicles is down to 182g/km in 2016, which is only a slight improvement from 184g/km in 2015.

“Australia is currently well behind the European Union in terms of performance, with their 2016 average emissions intensity for passenger vehicles of 118gCO2/km, and they have a target to get to 95gCO2/km by 2021.  Even the US market is targeting approximately 105gCO2/km by 2025, which is over a 4 per cent annual improvement.”

Question: Would you support the introduction of a lower emissions standard on new vehicles sold in Australia? Leave a comment below.


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About Author

Alex Rae

Alex Rae brings almost two decades’ experience, previously working at publications including Wheels, WhichCar, Drive/Fairfax, Carsales.com.au, AMC, Just Cars, and more.


  1. I don’t think this measure would be very effective, our market is so small, car companies aren’t going to change their emissions output based on what we do here. Europe and the US are bigger drivers of forcing car companies to reduce emissions, and that is happening, so why do we need to do anything here? Better to focus on power generation emissions.

  2. Curbing light vehicle emissions is good, but its just one part of our transition to a cleaner energy future…..

    Are there realistic proposals in place to reduce the emissions of buses, trucks, trains, planes, boats and power stations bg a similar percentage??

  3. There is much talk about market forces bringing change about. Yet governments are forced to introduce rules because the market cares only about profits. Trading emissions credits is just a pea and thimble trick that solves nothing. Set a standard. Enforce it. If a vehicle won’t meet it don’t sell it. It will all be academic soon as EV’s begin to take over. Then we’ll have the problem of generating enough electricity. It would be wonderful if any government could see further ahead than the next election. The car business is messy enough as it is.

  4. Perfectly Ok for me and that’s despite owning a large SUV today. We all fell victim to the super-size everything syndrome during recent years and that’s just not sustainable. Globally we are among the worst (per capita).
    Personally I would prefer a different approach – simply by banning cars that produce emissions beyond a certain threshold – this wouldn’t result in fees/taxes. Allowing more emissions when paying some extra feels very wrong to me at least.
    Anyway, I wouldn’t suffer by being forced to buy something smaller and more environmentally friendly.

  5. We all know that the priority for the Conservatives is reelection and, thanks to Tony Abbott, certainly NOT progressive policy development on which industry can base forward planning.
    We have a short term malaise based on cynicism.

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