Australian Government releases discussion paper on mandatory CO2 standards for new light-duty vehicles beginning in 2015
The Australian Government has released a discussion paper outlining the issues involved in the setting of mandatory standards to reduce carbon dioxide emissions from passenger vehicles from 2015. The planned CO2 standards will complement the Government’s carbon price scheme and help to reduce carbon emissions from light vehicles.
The paper does not set targets, but asks industry and the community to help shape the new standards by presenting possible approaches for consideration and debate. The issues discussed in the paper fall into two broad categories: the emissions target(s) to be established under the standards; and the most appropriate regulatory framework for implementing the standards.
The views received in response to the discussion paper will help the Department of Infrastructure and Transport to develop an implementation Regulatory Impact Statement (RIS), which will set out options to implement the new standards. The RIS will also include a benefit-cost analysis and will be formally released for public comment.
Background. The Australian Government has stated that a fair and effective global agreement to stabilize greenhouse gas concentrations, at or below 450 parts per million CO2 equivalent, is in Australia’s national interest. The Government has committed to near-term targets of reducing economy wide emissions by at least 5% on 2000 emissions levels by 2020 (a bipartisan agreement in the absence of any action by other nations), and between 15% and 25% depending on the actions of other nations.
In July 2011, the Government announced its Clean Energy Future plan to reduce CO2 emissions across all sectors of the Australian economy. (Earlier post.) The Government intends to achieve this through introducing a carbon price into the Australian economy and through implementing a range of complementary measures.
Transport produces around 15% of Australia’s CO2 emissions; light-duty vehicles contribute 64% of Australia’s transport emissions, and 9–10% of total emissions.
The Australian light vehicle fleet comprises both locally manufactured vehicles (from three manufacturers—Ford, GM Holden and Toyota) and a large range of importers, with imports currently accounting for about 85% of sales. The average level of CO2 emissions of the new light vehicle fleet in 2010 was just under 213 g/km. The average for the passenger car segment (which includes SUVs) was 205 g/km, with light commercials averaging 250 g/km.
A 2011 analysis of 2010 vehicle sales data by the National Transport Commission (NTC) indicates that across the 15 largest manufacturers which supply around 94% of vehicles to the Australian market, the corporate average CO2 emissions ranged from 175 g/km to 237 g/km.
In Australia, around 15% of passenger cars and 70% of light commercial vehicles are diesel engined (leading to a 25% diesel share overall in the total light vehicle fleet).
According to an analysis by the Federal Chamber of Automotive Industries (FCAI—representing both local manufacturers and importers), under market influences alone (i.e. the combined effect of technology uptake and consumer led changes in market segmentation, but with no mandatory emissions standards in place) the emissions reductions to 2020 in Australia would average around 1.8% per year over the 2008–2020 period.
Regardless of...national and regional differences, the clear trend...is that all major vehicle producing countries are seeking significant reductions in CO 2 emissions from the introduction of their mandatory standards over the short-medium term—and the level of these reductions is significantly greater than that expected under a non-regulatory environment.
The Australian Government’s decision to implement mandatory carbon emissions standards for light vehicles from 2015 is consistent with these international trends. Although Australia imports some 85% of its light vehicles, in the absence of mandatory standards in Australia it is likely that sourcing decisions by global vehicle manufacturers will see the most fuel efficient vehicles and components being allocated to markets with mandatory standards in place.—Discussion Paper
Key issues. The two main issues considered by the paper are the target(s) and the design and implementation of the regulatory framework. The paper provides a more detailed set of questions and issues to frame the discussion on the two main issues, including:
- Single or staged targets?
- What is the appropriate reference (base) year?
- What is a reasonable target for Australia?
- Scenarios for discussion.
- What are the costs and benefits?
- Should the targets be split? I.e., separate targets for passenger vehicles (cars and SUVs) and for LCVs (utes and vans).
- How should the target be calculated?
- What are the options for methodologies for setting targets?
- What are the specific data requirements?
- Is the current data set adequate and appropriate?
- What legislation is required?
- Who is responsible?
- Is banking and trading appropriate?
- What are the appropriate sanctions for non-compliance?