Caution needed in setting targets for CO2 standards for light cars

27 April 2016

As the Labor Party today released its climate change policy, the Australian Automobile Association (AAA) again cautioned against setting vehicle emissions reduction targets without fully considering the characteristics of the Australian vehicle fleet and the way Australians use their vehicles.

The AAA also called for a robust benefit-cost analysis of all options that could be used to reduce CO2 emissions from light vehicles.

AAA Chief Executive Michael Bradley said: “Any future Australian Government must be very careful when considering regulations to reduce vehicle emissions. For example, a set of regulations that suit American vehicles and usage may not be cost effective in Australia, given the number of Australians who live beyond our major cities and our reliance on road transport.

“The AAA accepts the need for motorists to play their part in reducing emissions to help Australia meet its climate change obligations. However, as we pointed out in our recent response to the Government’s Vehicle Emissions Discussion Paper, the issues around vehicle emissions are very complex, and there is potential for unintended consequences that could cost Australian households dearly.

“The AAA supports the consideration of a CO2 standard as part of a package of measures to address CO2 emissions from light vehicles.  However, it is critical that any standard is developed using a robust analysis that considers all of the costs to consumers.

“Policy makers must be aware that if a standard is applied, other aspects of the vehicle which are important to consumers, such as space, carrying capacity, and engine power, may need to be sacrificed in order to meet the required efficiency standard. Research conducted by the Centre for International Economics (CIE) on behalf of the AAA cautions against this approach and suggests incentives may need to be offered to offset these opportunity costs.

“Additionally, given the average age of Australia’s vehicles, any new standards would need to be supported by measures which encourage fleet renewal and changed driving behaviour across the entire fleet.

“Standards also only cover new cars. With about 1 million new cars sold in Australia each year, regulated vehicle emissions standards would take more than 10 years to apply to the majority of the Australian fleet of more than 13 million passenger vehicles.

“The AAA believes that a range of complementary measures that will help reduce emissions and running costs for all motorists need to also be considered, such as increased investments in public transport and a greater focus on smart infrastructure. It is pleasing to see these elements in Labor’s policy.”

Other complementary non-regulatory policy measures that could assist in reducing pollution from the Australian vehicle fleet include:

  • The abolition of industry protection measures such as import tariffs and the Luxury Car Tax; factors that drive up new car costs, slow fleet renewal, and discourage the uptake of technologies that enhance safety and environmental performance;
  • The enhancement of the Government’s Green Vehicle Guide to provide simpler and more usable information to consumers wanting to buy environmentally friendly cars; and,
  • The abolition of regulations prohibiting the personal importation of vehicles. Increasing competition will help drive down vehicle costs and increase the uptake of vehicles with modern safety and environmental technology.

The AAA’s Vehicle Emissions Discussion Paper Submission can be found at the following link:


Written by RACV
April 27, 2016