The motor industry has urged the federal government to be ambitious in imposing CO2 limits on car makers, saying its own figures show there is room for the government to go harder than it previously thought.
Australia is one of just a handful of countries without a fuel efficiency standard, which requires car makers to meet certain emissions limits for their entire fleet or else face penalties, encouraging them to sell EVs or more fuel efficient vehicles.
The industry says the lack of a standard in Australia has put it at the end of the waitlist for in-demand EVs or efficient hybrids and petrol cars, which are shipped to countries that penalise car makers for exceeding emissions limits.
The industry is in the unusual position of asking to be regulated so that it can solve its supply issue, and is in lock-step with environment groups that Australia should set mandatory CO2 targets on car makers as soon as possible.
While the government is yet to commit to a fuel efficiency standard, Climate Change Minister Chris Bowen is due to announce the government's electric vehicle strategy this month, which is expected to include a discussion paper on the next steps towards a standard.
A spokesperson for Mr Bowen noted that in consultations on its EV strategy "the absence of these standards in Australia [was] cited as a key barrier to supplying more EV and fuel efficient models to the Australian market".
Motor industry raises its ambitions
Environment and motor groups agree that a standard is needed, though they differ on how tough that standard should be, with environment groups advocating for ambitious targets in line with the European Union, while car makers say the target should be closer to that of the United States.
In the absence of a federal target, the Federal Chamber of Automotive Industries (FCAI) created a voluntary standard for the industry, which was less stringent than the US standard because the industry argued Australia was several decades behind and playing catch up.
But the FCAI said its latest figures showed there was room for the government to be more ambitious with a CO2 standard on car makers.
"I think we could have more ambition than our target moving forward, because technology has changed and there's improvements there," chief executive Tony Weber said.
"There should be an ambitious but achievable target for the Australian context, and then we should review it on a regular basis to push the boundaries for technologies as they improve."
The FCAI reported car makers were tracking well on its voluntary target for passenger vehicles, but that cutting SUV and ute emissions had proved more difficult.
While heavy SUVs and commercial vehicles failed to get beneath the industry benchmark for emissions, light SUVs and passenger vehicles fared far better, emitting 15 grams of CO2 less per kilometre than the FCAI's target.
Mr Weber said it showed the government could pursue a tougher approach on passenger vehicles and light SUVs, allowing breathing room for commercial vehicles which were more difficult to make more efficient.
"I think we should have two separate targets, one for essentially sedans and smaller SUVs where there is more capacity to make greater gains quickly, and then we should have another target for the larger vehicles ... which make over one third of vehicles in Australian sales, because they are more difficult to transition to a low emissions environment," Mr Weber said.
The Australian Automobile Association's chief executive Michael Bradley said the government had the challenge of finding a "goldilocks" target to impose on car makers — too lenient, and a fuel efficiency standard would fail to encourage more supply of EVs, hybrids or fuel-efficient vehicles, but too tough and it would be too costly for car makers to meet.
EV Council chief executive Behyad Jafari said there was enough information before the government to commit to a standard.
"We're seeing all the signs of progress from the government of moving ahead on this and I think that is commendable, but this is an issue that is urgent to us because we are facing the problems of not having these standards right now," Mr Jafari said.
"It's really important the government moves through this quite quickly and that it's made very clear from the outset of the process that this is about Australia falling in line with international standards like those in the EU and the USA.
"It would be no good to Australia having a standard that is outside of those bounds."
Previous governments have proposed fuel efficiency standards but failed to introduce them, and a standard proposed by former Labor leader Bill Shorten at the 2019 election was derided by then-prime minister Scott Morrison as a policy that would "end the weekend" for recreational drivers.
Australia is an outlier on fuel efficiency standards, with more than 80 per cent of the global car market being subject to a standard.