Government introduces revised New Vehicle Efficiency Standard

In an announcement on Tuesday, the government confirmed it has made adjustments to its preferred option after consultation with industry, making concessions for carmakers that say proposed rules are too restrictive and will result in higher costs for consumers.

“This will reduce emissions from new passenger vehicles by more than 60 per cent by 2030, and roughly halve the emissions of new light commercial vehicles over the same period,” it said in a release.

The proposed Standard options released by the government in February were linked to similar rules put in force under the Biden government, with the intention of bringing Australia in line with US emissions standards for vehicles.

However, the US government is reportedly winding back its rules under pressure from domestic carmakers and the worker’s union, delaying stringent reductions in emissions until 2030.

While the changes in the US are in the context of reducing existing rules, the introduction of a New Vehicle Efficiency Standard in Australia comes after many years of stagnation. A draft Standard was drawn up by the Coalition government in 2016 but was blocked internally. If passed, it would have seen changes brought into effect four years ago.

As a consequence, the Albanese Labor government is now seeking to bring the new Standard in at a much quicker pace. It was always expected that the final Standard would include revisions.

Climate Change and Energy Minister Chris Bowen confirmed to media that the government was open to making changes to its preferred Option B, dubbed “Fast and Flexible,” which sat between a “Slow Start” option and a “Fast Start” option.

The revised standard now introduces concessions that puts certain large SUVs in the same segment as utes so that they are not subject to more stringent passenger vehicle (PV) standards.

It also includes a higher vehicle weight “break point,” a slower reduction of emissions targets for light commercial vehicles and a later date for the introduction of penalties, to allow carmakers more time to implement reporting.

The announcement follows a consultation period after the initial proposal was released, and which received some 9000 submissions. 

In more detail, changes to the government’s preferred Option B include:

• Higher headline targets (the average grams CO2/km limit across individual carmaker sales) for light commercial vehicles (LCVs);
• Reclassifying large 4WDs that use similar ladder-frame chassis and offer towing capabilities above 3 tonnes, like dual cab utes, from PVs to LCVs. This group includes models such as the Toyota Landcruiser, Ford Everest and Nissan Patrol;
• Adjusting the emissions trajectory for LCVs to align with revisions made by the US EPA to its vehicle standard and facilitate a slower, smoother transition for utes, vans, and 4x4s;
• Modifying the weight-based emissions limits (referred to as the break point) to account for the fact that heavier vehicles emit more pollutants. This adjustment also allows electric vehicles heavier than traditional ICE counterparts to earn additional credits up to the higher break point;
• Phasing in essential data reporting capabilities. To ensure a successful implementation in collaboration with the industry, the program will launch on 1 January 2025, but manufacturers will not start accruing credits or penalties until 1 July 2025. 

The new headline targets for LCVs include: 

Example of large SUVs that will move from the PV category to the LCV category include:

• Isuzu MU-X
• Mitsubishi Pajero Sport
• Toyota Prado
• Lexus LX
• Mercedes-AMG G 63
• Toyota Fortune
• Ford Everest
• Nissan Patrol
• Toyota Landcruiser

Medium-sized SUVs that will remain in the PV category include, for example:

• Toyota Kluger
• Toyota RAV4
• Hyundai Tucson
• Hyundai Santa Fe
• Nissan X-Trail
• Tesla Model Y
• Subaru Outback
• Mitsubishi ASX
• Honda CR-V

The NRMA’s support for the Standard was confirmed in a submission to the government in early March.

NRMA CEO Rohan Lund has also said via a statement that, “A business as usual approach meant that Australian families and businesses were not benefiting from the best technology designed to reduce fuel consumption. The NRMA’s opposition to Australians being forced to spend more money on fuel than they otherwise should have to, is well known across the country.

“The NRMA has worked hard to see standards that strike a sensible balance and are achievable in an appropriate time frame - we are pleased the Australian Government has responded in kind”.