New Vehicle Efficiency Standard Bill 2024 [and] New Vehicle Efficiency Standard (Consequential Amendments) Bill 2024

Infrastructure, Transport, Regional Development, Communications and the Arts Updated 15 May 2024

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This is a revised version of the Digest published on 9 May 2024.

Key points

Australia is one of the only developed nations to not have a vehicle efficiency standard (also referred to as a fuel efficiency or vehicle carbon emissions standard). This is considered a major barrier to reducing carbon emissions from the transport sector and to the introduction of lower emissions internal combustion engine (ICE) vehicles and electric vehicles.
The New Vehicle Efficiency Standard Bill 2024 establishes a new vehicle efficiency standard (NVES) to regulate the carbon dioxide emissions of new passenger and light commercial vehicles. The standard is intended to commence on 1 January 2025, with compliance requirements to commence on 1 July 2025.
The NVES is not a tax. It is a policy mechanism designed to incentivise the provision of passenger and light commercial vehicles with lower carbon emissions.
The New Vehicle Efficiency Standard (Consequential Amendments) Bill 2024 amends the Clean Energy Regulator Act 2011 and Road Vehicle Standards Act 2018 to ensure the effective implementation of the NVES.
There has been strong community and industry support for the introduction of a vehicle efficiency standard, as evidenced through submissions to the development of the National Electric Vehicle Strategy and a specific consultation on the development of the standard.
However, some industry groups have been critical of key parameters of the proposed scheme, as outlined in the Consultation Impact Analysis, including the rate of decline, application to certain vehicles, availability of flexibility mechanisms, and potential penalties.
This prompted the government to revise key design parameters, including concessions for large four-wheel-drive ICE vehicles.

Introductory Info

Date introduced: 27 March 2024
House: House of Representatives
Portfolio: Infrastructure, Transport, Regional Development, Communications and the Arts
Commencement: The New Vehicle Efficiency Standard Bill 2024 (NVES Bill) commences on 1 January 2025.
The New Vehicle Efficiency Standard (Consequential Amendments) Bill 2024 commences on the later of the day after Royal Assent or immediately after the commencement of the NVES Bill. However, it doesn’t commence at all if the NVES Bill doesn’t commence.

Purpose and structure of the Bills

The New Vehicle Efficiency Standard Bill 2024 (NVES Bill) establishes a New Vehicle Efficiency Standard (NVES) to regulate carbon dioxide (CO₂) emissions from new passenger and light commercial vehicles.

The Bill contains 6 parts:

Part 1—Preliminary sets out the objects of the Act, application provisions, the constitutional basis of the Act, and definitions
Part 2—New vehicle efficiency standard establishes the NVES, including key parameters of the standard (such as covered vehicles and the determination of the interim and final emissions value), sets the headline limit for the first five years, provides for key parameters (including the headline limit, mass adjustment factor, mass in running order (MIRO) and breakpoints) to be determined by the Minister in a legislative instrument, and sets out the process for the Minister to make a determination (including consultation requirements)
Part 3—Units issued in respect of covered vehicles provides for the Secretary to issue units to a person whose interim emissions value is less than zero, for adjustments to the number of units issued, the extinguishment and transfer of units; units are personal property and are extinguished 3 years after the date of issue if not extinguished earlier
Part 4—The Registry establishes the New Vehicle Efficiency Standard Registry (the Registry) and provides for the opening and closing of accounts and the transmission of units, the correction of errors and rectification of entries, establishes offences and civil penalty provisions relating to the Registry, and provides for matters relating to the Registry to be provided in the rules
Part 5—Compliance and enforcement applies the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act) with some modifications, to provide for monitoring powers, investigation powers, civil penalties, infringement notices, and enforceable undertakings; it also provides for the appointment of inspectors, the provision of information to the Secretary, and for a court to make adverse publicity orders and non-punitive orders
Part 6—Miscellaneous deals with a range of matters, including publication and sharing of information, delegation of the Secretary’s functions and powers, reviewable matters, indexation of the penalty amount, the making of rules, and a statutory review of the Act.

The New Vehicle Efficiency Standard (Consequential Amendments) Bill 2024 (Consequential Amendments Bill) amends the Clean Energy Regulator Act 2011 (CER Act) and the Road Vehicle Standards Act 2018 (RVS Act) to enable the efficient implementation of the NVES.

The Consequential Amendments Bill has 1 Schedule:

Items 1 and 2 amend the CER Act to specify that the New Vehicle Efficiency Standard Act 2024 is a climate change law and enable the Clean Energy Regulator (CER) to perform functions conferred on it in accordance with that Act
Items 3 and 4 amend the RVS Act to provide that the provisions of Division 4 of Part 4 of the NVES Bill (which deal with offences and civil penalties related to the operation of the Registry) are ‘related provisions’ for the purposes of the exercise of monitoring powers and investigation powers under the RVS Act
Items 5 and 6 amend the RVS Act to insert proposed Division 5A to Part 4 of that Act, allowing a court to issue non-punitive orders upon a person who has contravened Part 2 of the RVS Act (relating to the registration of vehicles and road vehicle components).

Background

Contribution of the transport sector to Australia’s emissions and the need for a vehicle efficiency standard

In the year to September 2023, road transport contributed 97.3 million tonnes (Mt) of carbon dioxide equivalent (CO₂-e) or 21.17% of national emissions.[1] Emissions from the sector have increased by 18.6% since 2005.[2] Around 60% of transport emissions come from passenger cars, light commercial vehicles, and motorcycles.[3]

The most recent government projections indicate that emissions from the transport sector (in total) are estimated to reach 102.0 Mt by 2030, before declining to 95 Mt in 2035, under a baseline scenario.[4] The government has projected that under a ‘with additional measures’ scenario, incorporating the measures outlined in the National Electric Vehicle Strategy and including a new vehicle efficiency standard (NVES), emissions will decrease to 94 Mt in 2030 and 80 Mt in 2035 (18% lower than in 2023).[5]

Australia is one of the few major global economies that doesn’t have a vehicle efficiency standard (VES).[6] Concerns have been raised by a broad range of stakeholders over a long period of time that the absence of a VES in Australia is a major barrier to the introduction of low and zero emissions vehicles to the Australian market. According to analysis commissioned by the Electric Vehicle Council (EVC) and Climate Council,

In 2022, new vehicles sold in Australia were producing up to 1.5 times more carbon dioxide relative to our global peers. This gap was the largest for passenger vehicles, where new vehicles in Australia produced 1.5 times more carbon dioxide relative to the EU. For light commercial vehicles, Australia is still far behind, with new vehicles producing 1.4 times more carbon dioxide relative to the EU.[7]

Of the 21.2 million registered vehicles in Australia at the end of January 2023, 20.2 million were passenger vehicles, light commercial vehicles and motorcycles.[8] Battery and fuel-cell electric vehicles (BEVs and FCEVs) and hybrid electric vehicles (HEVs) make up a small proportion of these vehicles.[9] However, there was a 114% increase in the number of registered passenger BEVs during 2022–2023.[10]

What is a vehicle efficiency standard?

A vehicle efficiency standard imposes an obligation on vehicle manufacturers or their domestic suppliers (referred to as suppliers) to bring to market vehicles that, on average, meet a particular CO₂ gram emissions per kilometre standard.[11] The target is generally set on a whole-of-fleet basis (that is, across particular categories of vehicles).

Where a supplier beats the standard by selling a greater proportion of low and zero emissions vehicles (LZEVs), the supplier may receive credits. Where a supplier does not beat the standard, due to selling proportionally more higher emissions vehicles, they are penalised (through the need to buy credits from another supplier or paying a fine).

A vehicle efficiency standard provides suppliers incentives to sell more vehicles that have low or zero emissions and to use new technology to reduce the emissions of other vehicles. Suppliers have flexibility to choose the type of vehicle technologies to meet their fleet average target and customer needs, and suppliers would have a clear pathway to plan their vehicle import mix in future years.

History of a vehicle efficiency standard in Australia

As noted above, Australia does not currently have a vehicle efficiency standard. Since 2008, vehicle manufactures have been required to provide information about a vehicle’s fuel or energy consumption and carbon dioxide emissions to consumers at the first point-of-sale.[12]

A detailed chronology of the past efforts to establish a VES is provided in the Parliamentary Library publication Developments in Australian fuel quality and vehicle emissions standards: a chronology.

Key events include:

a March 2009 report by the Australian Transport Council and the Environment Protection and Heritage Council finding a prima facie case for introducing mandatory CO₂ emissions standards
a July 2009 agreement of the Council of Australian Governments (COAG) in the National Strategy on Energy Efficiency to undertake a regulatory impact analysis for introducing CO₂ emissions standards for light vehicles
a July 2010 commitment of the Gillard Government to introduce mandatory CO₂ emissions standards for all new light vehicles from 2015
in 2011, the release of a discussion paper on light vehicle CO₂ emission standards
in June 2014, a recommendation of the Climate Change Authority to introduce a target to reduce the emissions intensity of the Australian light vehicle fleet from its 2013 level of 192 gCO₂/km to 105 gCO₂/km by 2025
in October 2015, the establishment of the Ministerial Forum on Vehicle Emissions to ‘coordinate a whole-of-government approach to addressing emissions from road vehicles’
in February 2016, the release of a Vehicle emissions discussion paper, noting the need for a standards regime for fuel efficiency
in December 2016, the release of a draft Regulation Impact Statement on Improving the efficiency of new light vehicles
in January 2019, a recommendation of the Senate Select Committee on Electric Vehicles’ inquiry into the use and manufacture of electric vehicles to establish a new CO₂ standard
in July 2020, the introduction of an industry-led voluntary vehicle CO₂ emissions reduction standard.

Albanese Government’s efforts to establish a vehicle efficiency standard

National Electric Vehicle Strategy

On 19 August 2022, the Minister for Climate Change and Energy, Chris Bowen, and the Minister for Transport, Catherine King, jointly announced the release of a discussion paper on a National Electric Vehicle Strategy. The Ministers said:

We believe that now is the time to have an orderly and sensible discussion about whether vehicle fuel efficiency standards could help improve the supply of electric vehicles into the Australian market to address the cost-of-living impacts of inefficient cars, and to reduce emissions from the transport sector.[13]

A Consultation Paper was released on 28 September 2022. The Consultation Paper states that ‘combining fuel quality, light vehicle noxious emissions standards and vehicle fuel efficiency standards … would help Australia have a cleaner fleet by the 2030s’.[14] The Consultation Paper notes:

Vehicle fuel efficiency standards need to be:

Effective in reducing transport emissions

Equitable so all Australians can access the vehicles they need for work and leisure

Transparent and well explained to avoid unintended consequences

Credible and robust by drawing on expert analysis and experience

Enable vehicles with the best emissions and safety technology to be available to Australians.[15]

The Consultation Paper sought views on:

whether fuel efficiency standards (FES) were an effective mechanism to reduce passenger and light commercial fleet emissions
whether FES would incentivise global manufacturers to send electric vehicles (EVs) and lower emissions vehicles to Australia
whether FES would be an appropriate mechanism to increase the supply of heavy vehicle classes to Australia
what design features should be considered in more detail, including the level of ambition, who should they apply to, commencement date, penalties and enforcement.[16]

The Consultation Paper received ‘over 500 submissions from more than 200 organisations and over 1,500 individuals’.[17] Only 447 of these are publicly available.

On 19 April 2023, the Ministers jointly released the National Electric Vehicle Strategy. The Strategy includes a commitment to developing a FES for Australia.

Consultation on vehicle efficiency standards

Also on 19 April 2023, the Ministers jointly announced the release of The Fuel Efficiency Standard: Cleaner, Cheaper to Run Cars for Australia: Consultation Paper (FES Consultation Paper) and accompanying fact sheet for FES. The Minister for Transport said that the further consultation was required in relation to the technical details of the standards.[18]

The Department’s design assumptions state that the FES would apply only to new vehicles entering the market for the first time, apply on average to vehicles sold, apply only to light vehicles (thus excluding motorcycles, heavy vehicles, law enforcement and emergency service vehicles), apply to vehicle suppliers (not motor vehicle dealers), and will ‘consider vehicle affordability, lifetime cost and model availability’.[19]

The FES Consultation Paper sought views on a range of technical issues including:

the average annual emissions ceiling (in gCO₂/km), including how far into the future ceilings are set, the rate of decline, and how the ceiling might be adjusted
the emission limit curve, and whether this should be mass-based or footprint-based
whether separate targets should be set for different vehicle classes (that is, light passenger vehicles and heavy SUVs and light commercial vehicles)
whether additional flexibility mechanisms should be included, such as allowing suppliers to form pools, provision of credits which can be sold or banked for future use, provision of ‘bonus credits’ for the adoption of new or innovative technologies that reduce emissions and/or ‘super credits’ as a multiplier for LZEVs, and provision for ‘off-cycle credits’
commencement of the scheme
the application and level of penalties for non-compliance and enforcement mechanisms, including exemptions for small volume and niche manufacturers
information disclosure requirements
governance arrangements, including an appropriate regulator (proposed to be the DITRDCA), identification of the appropriate ‘regulated entity’, the application of regulatory powers and, cost recovery.

On 25 August 2023, the Ministers jointly announced that submissions to the FES Consultation Paper ‘overwhelmingly support the introduction of a FES, which is expected to boost local access to cheaper-to-run cars that are also cleaner for the environment’.[20] The Minsters’ media release states ‘the submissions are now informing an impact analysis and our preferred model which will be released before the end of the year’.[21] Around 1,200 submissions were publicly released. A majority of these are short comments or form letters.

On 21 December 2023, the Ministers jointly announced changes to fuel quality standards and noxious emissions standards. The package includes ‘a new laboratory test for fuel consumption and CO₂ emissions’ and new requirements for fuel consumption labelling. The legislative instruments implementing these reforms were registered in April 2024.[22]

Further consultation on the Australian New Vehicle Efficiency Standard

On 4 February 2024, the Ministers jointly announced the release of the Cleaner, Cheaper to Run Cars: The Australian New Vehicle Efficiency Standard: Consultation Impact Analysis. The Consultation Impact Analysis outlines 3 options for the introduction of a new vehicle efficiency standard. The Consultation Impact Analysis identifies ‘Option B’ as the government’s preferred option. Key elements of this option include:

‘a strong, ambitious, and achievable NVES that seeks to catch up with the US around 2028 and then match the stringency of these standards … Two CO₂ targets, one for passenger vehicles and SUVs, and a higher target for utes and vans (including large pick-ups) in the light commercial vehicle category’
a limit curve and reference mass derived based on the fleet of vehicles sold in 2022 and updated on a rolling basis, and break points for passenger vehicles (PV) and light commercial vehicles (LCV)
vehicle manufacturers would be able to bank credits (earned by achieving a lower emissions target than that calculated for the vehicle manufacturer) and trade credits with other vehicle manufacturers, but would not be able to form pools with other vehicle manufacturers
super-credits, off-cycle credits and air conditioning credits would not be available to ‘maximise simplicity and transparency’
vehicle manufacturers would face a penalty of $100 for each gram per kilometre (g/km) of CO₂ that exceeded that vehicle manufacturer’s target.[23]

The Ministers said the proposed standard ‘will deliver more vehicles to Australia with the latest engine and design technologies to ensure lower fuel bills, meaning bigger savings at the petrol pump’.[24] The Consultation Impact Analysis estimated that Australians would collectively save $107.6 billion in fuel costs out to 2050.[25]

Announcement of the New Vehicle Efficiency Standard

On 26 March 2024, the Ministers jointly announced the finalised design parameters of the NVES, alongside representatives from key automotive and electric vehicle bodies. Minister King described the NVES as ‘an Australian standard for Australian consumers and Australian conditions’.[26] The revised arrangements include:

re-categorising some large 4WDs from passenger cars to light commercial vehicles[27]
smoothing the emissions trajectory for light commercial vehicles
adjusting the weight-based relative emissions limits (referred to as ‘break points’)
staging implementation to enable preparation and testing of essential data reporting capabilities, so that the scheme will commence on 1 January 2025, but compliance requirements will not commence until 1 July 2025.[28]

The Minister for Transport introduced the Bills to the House of Representatives the next day.[29] A revised Impact Analysis was also released by the Office of Impact Analysis. The Impact Analysis states:

[The best] option is estimated to deliver abatement of 20Mt to 2030, 80 Mt to 2035, and 321 million tonnes of CO₂ by 2050 … Australians will accrue around $86.04 billion in net benefits out to 2050, including over $95 billion in fuel savings to 2050 for everyday Australians.[30]

Committee consideration

House of Representatives

A Coalition proposal to refer the Bills to the Standing Committee on Regional Development, Infrastructure and Transport was unsuccessful.[31]

Senate Standing Committee for the Scrutiny of Bills

At the time of writing, the Senate Standing Committee for the Scrutiny of Bills is yet to consider the Bills.

Policy position of non-government parties/independents

Australian Greens

The Leader of the Australian Greens, Adam Bandt MP, said in response to the release of the government’s National Electric Vehicle Strategy, ‘the government needs to set electric vehicle targets and get moving on implementing strong fuel efficiency standards’.[32] On the release of the Consultation Impact Analysis, Mr Bandt said:

We’re glad Labor is finally taking its foot off the brake, but now we need action to ensure that we get electric vehicles on our roads, and that they’re affordable for everyone in this country.[33]

House Independents and Crossbench Senators

Independents Kate Chaney, Zoe Daniel, Monique Ryan, Sophie Scamps, Allegra Spender, Zali Steggall and Kylea Tink have all indicated support for a mandatory vehicle emissions standard.[34] Ms Spender, Ms Chaney and Senator David Pocock made individual submissions to the government’s FES Consultation Paper.[35]

On 27 February 2024, Independents Ms Tink, Dr Ryan, Ms Daniel, Ms Steggall, Ms Spender, Ms Chaney and Dr Scamps jointly ‘welcomed the Government’s proposed fuel efficiency standards and call[ed] on the Government not to back-slide on their commitment in the face of fierce lobbying from the fossil fuel car industry and Peter Dutton’s Liberal Party scare campaign’.[36] They called on the Government ‘not to compromise on the integrity of the scheme by introducing carve-outs and super credits that allow foreign car makers to continue dumping expensive and inefficient vehicles in Australia’.

Senator David Pocock has also welcomed the proposed introduction of the NVES but called on the government to bring forward their ‘commencement date of 1 July 2025 to at least the end of this year [2024]’.[37]

Liberal-National Coalition

Nationals Senator Bridget McKenzie has indicated that the Coalition ‘are absolutely committed to a low-emissions transport sector’.[38] Senator McKenzie said a fuel efficiency standard:

... needs to be something that's affordable for Australians. It needs to make sure that certain Australians aren't discriminated against over others - people in rural and regional Australia for instance, people on low incomes - and it needs to make sure that Australians still have the choice of vehicles what we enjoy today.[39]

Shadow spokesperson for Climate Change and Energy, Ted O’Brien MP, said the Coalition supported ‘next-generation clean technologies including EVs’, but added ‘genuine consumer choice for new vehicle and fuel technologies is key. We want to ensure Australian motorists can choose the vehicle that’s right for them – whether that’s electric, hybrid, petrol, diesel or hydrogen’.[40]

On the release of the Consultation Impact Analysis, Senator McKenzie and Mr O’Brien raised concerns about the cost of the vehicle efficiency standard, saying:

Fears from industry representatives … that the Government’s heavy-handed approach will drive utes off Australian roads is of deep concern to the Coalition which has always been on the side of more choice for consumers, not less.[41]

Position of major interest groups

This section provides a summary of views expressed in submissions to the Department’s FES Consultation Paper, statements made following the release of the Consultation Impact Analysis and views expressed in media reporting.

Consumer and health groups, and motoring organisations

Consumer and health groups strongly support the proposed NVES.[42] An expert position statement coordinated by Melbourne Climate Futures, and endorsed by the Australian Chronic Disease Prevention Alliance, stated that the impacts of traffic pollution include ‘premature deaths, a range of cardio-respiratory diseases including lung cancer, childhood asthma, adverse birth outcomes and diabetes’.[43] The statement noted that there were ‘no robust estimates for the health impacts in Australia’ but estimated that there were 11,105 premature adult deaths each year, based on modelling from New Zealand.

The Australian Council of Social Services supports the ‘rapid implementation of an ambitious FES’, arguing:

The design of fuel efficiency standards should aim to drive more affordable electric vehicles into the Australia car market, and should be accompanied by complementary measures to ensure people on low incomes or experiencing disadvantage are not left behind and can access electric vehicles and charging infrastructure sooner.[44]

In addition, motoring groups are broadly, although cautiously, supportive of the NVES.[45] Some special interest groups expressed a view that exemptions should be explored for particular vehicle categories.[46] The National Roads and Motorists Association (NRMA) has observed:

The economic and social opportunities associated with the transition to EVs extend far beyond light vehicle and the transport sector. Benefits associated with transitioning to EVs include reducing CO2 and noxious emissions, improving public health standards, lowering motoring costs, enhancing fuel and national security settings, and bolstering manufacturing and trade opportunities.[47]

Vehicle importers and manufacturers

Many importers and manufacturers were broadly supportive of the NVES as a technology-agnostic way of achieving emissions reductions.[48] However, they have also raised concerns about the scale of change required to meet the ambitious standard. For example, the Australian Automotive Dealer Association (AADA) said ‘on the surface this is an incredibly ambitious target which will be difficult to achieve especially for utes and large SUVs’.[49] Following the release of the finalised policy, the Motor Trades Association of Australia said:

In totality, the changes should benefit the Australian consumer – reducing the very real risk of price rises and reduced access to the vehicles they want and need – while placing the country on a CO₂ trajectory similar to other comparable nations.[50]

The Federal Chamber of Automotive Industries (FCAI) established a voluntary fuel efficiency standard in 2020 and has previously called on the government to introduce a mandatory standard.[51] However, the FCAI claimed that the effective cost of the policy would be ‘as high as $38 billion over the first five years’, albeit without factoring in any behaviour change or the availability of credits for LZEVs.[52] The FCAI has also warned of a potential spike in demand for high emissions vehicles ahead of the introduction of the proposed NVES.[53] The FCAI’s claims resulted in Tesla and Polestar withdrawing from the industry body.[54]

The positions of vehicle manufacturers are mixed, with varying views particularly in respect of the availability of flexibility mechanism such as multiplier, off-cycle and air-conditioning credits, the operation of credit banking and transfer mechanisms, and the availability of pooling.[55] More recently, Volkswagen and Hyundai are reported to support the standard,[56] while Toyota is reported to have said ‘the current NVES proposal is too ambitious, risks leaving thousands of Australians behind and must be better calibrated to the local market’.[57]

However, Toyota, Hyundai and Tesla were among those present as the Ministers announced the finalised policy. Toyota’s President and CEO, Matthew Callachor, indicated that the company supported the government’s amendments but noted ‘there still remains a very big challenge in achieving these ambitious numbers’.[58] Asked whether the policy was a tax, Mr Callachor said ‘no, the actual policy is directed at reducing overall emissions in the economy’.[59]

Environment and climate change advocacy groups

Environment and climate change advocacy groups strongly support the introduction of a robust vehicle efficiency standard.[60] The Australian Conservation Foundation and Australian Parents for Climate Action both argued that a standard should also apply to heavy vehicles such as buses and trucks, while the International Council on Clean Transportation argued that the standard should also be applied to used vehicles entering the Australian market and a separate standard for heavy-duty vehicles and motorcycles developed.[61]

The Climate Council argues that ‘an effective New Vehicle Efficiency Standard (NVES) will tackle … cost of living and pollution challenges together in a great two-for-one deal for Australians’.[62] It has however called on the government ‘to come up with other transport policies to keep Australia on track to hit our national emission reduction target’.[63]

Electric vehicle advocacy groups

Electric vehicle advocacy groups were strongly in support of the proposed standard;[64] for example, the Electric Vehicle Council said:

Australia finally has an opportunity to introduce a globally competitive NVES that can not only deliver significant reductions in transport costs and emissions for Australian households and businesses, but also foster the growth of local industry across the EV value chain, supporting jobs across mining, manufacturing, energy and recycling.[65]

The Australian Electric Vehicle Association cited ‘an unwillingness by some manufacturers to produce more low- and zero emissions vehicles across all segments’ as a reason that concessions and carveouts should not be provided.[66]

Financial implications

The Explanatory Memorandum states:

The Government committed $7.4 million in funding in the 2023–24 budget for the design, implementation and management of a new vehicle efficiency standard over 4 years. The resourcing needs for the administration of the new vehicle efficiency standard and the Registry are being considered in the 2024–25 Budget context.[67]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bills’ compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bills are compatible.[68]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights has considered the Bills and had no comment.[69]

Key issues and provisions

Key parameters of the New Vehicle Efficiency Standard

Part 2 of the NVES Bill establishes the key parameters for the NVES, as well as providing for these parameters to be amended by the Minister.

How does the standard work?

The RVS Act requires a person bringing new vehicles into the Australian market to first obtain a type approval or concessional RAV (Register of Approved Vehicles) entry approval for the vehicle before the vehicle can be registered in the Register of Approved Vehicles. This process requires the person to provide key data about a vehicle and evidence that the vehicle is compliant with applicable national road vehicle standards, including standards relating to noxious emissions, fuel consumption and fuel economy. The NVES draws on data recorded in the RAV, including the vehicle category, MIRO and gross vehicle mass (GVM).

The NVES applies only to covered vehicles, being new vehicles included in the RAV for the first time on or after 1 July 2025. These are divided into 2 categories (type 1 vehicle, type 2 vehicle), unless falling within the definition of an exempt vehicle.[70]

The type of vehicle is a critical component of the NVES because the 5 parameters set out in clauses 22 to 27, and used in the calculation of an emissions target for each vehicle in accordance with the formula in clause 21, vary depending on whether the vehicle is a type 1 vehicle or type 2 vehicle. Type 2 vehicles (larger, heavier vehicles) have less stringent emissions targets. The 5 parameters, and their interactions, are explained at pages 22 to 24 of the Explanatory Memorandum.

When finalising the design parameters of the NVES, the government decided to provide a mechanism for certain large sports utility vehicles (SUVs) or four-wheel drives (4WDs) to be classified as type 2 vehicles rather than type 1 vehicles. This is reflected in subclauses 13(1) and 14(1) and clause 15, which prescribe different treatment for light and heavy off-road passenger vehicles. Specifically, a heavy off-road passenger vehicle is defined as an MC (off-road passenger vehicle) vehicle, with a rated towing capacity of 3 tonnes or more, and a body on frame chassis (or as determined). Heavy off-road passenger vehicles are prescribed to be type 2 vehicles and therefore have less stringent emissions reduction targets.

Subclauses 13(2), 14(2) and paragraph 15(1)(c) would also allow a Minister to make determinations specifying that certain classes of vehicle (or vehicles with a particular chassis) are either type 1 or type 2 vehicles.

These adjustments to the final design of the NVES were perceived by some stakeholders as watering down or weakening the NVES.[71] For example, the provisions relating to heavy off-road passenger vehicles will see nearly 20% of these vehicles (based on 2022 sales data) moved from the type 1 vehicle to the type 2 vehicle category.[72] Economist John Quiggin has argued that Australia needs to wean itself off oversized vehicles that have shifted from ‘substance to symbol’ in order to reduce ‘emissions from Australia’s polluting road transport sector’.[73]

How is compliance with the standard determined?

Clause 17 imposes a duty on a person to ensure that their final emissions value (FEV) is zero or less by the start of the final reconciliation day for the relevant year (being the third 1 February after the end of the relevant year). A person’s final emissions value is calculated as a person’s interim emissions value minus the number of units extinguished by the person for that year.[74] The interim emissions value is calculated in accordance with the formula set out in clause 19; it is calculated as a sum total for all vehicles (and variants thereof) across a person’s fleet.

Subclause 17(1) provides for a court to impose a maximum civil penalty of $100 for each CO₂ g/km of a person’s final emissions value (that is, 100 times the person’s FEV).

Under comparable schemes, and noting that the design parameters of these schemes vary, the applicable penalties are:

in the European Union, €95 (A$157) for each excess CO₂ g/km (excess emission premium)[75]
in the United States, US$17 (A$26.32) for each excess 0.1 mile per gallon (for each vehicle)[76]
in New Zealand, from 2025, NZ$54–$67.50 (A$49–$61.90) for each used or new vehicle imported with a CO₂ value higher than the target.[77]

The Explanatory Memorandum explains:

Large civil penalties could arise under clause 17, but this would be proportionate to the number of covered vehicles provided by the person and the cost of improving light vehicle efficiency. It also reflects the potential adverse economic impacts of climate change, now and in the future, of CO₂ emissions on humans and ecosystems.[78]

However, as explained in more detail in the following sections,

a person can reduce their final emissions value by surrendering units to the Secretary
if a person’s FEV is greater than zero, an infringement officer (such as the Secretary) could elect to issue the person with an infringement notice rather than seeking a civil penalty in a court; in this case, the applicable penalty would be $50 for each CO₂ g/km.

Ministerial determinations: changes to key parameters of the NVES

The Bill allows the Minister to make determinations changing the key parameters of the NVES. The relevant provisions set out the circumstances in which a determination may be made, including a requirement for public consultation on a proposed determination, publication of a notice of reasons, and advance notice of the commencement of a determination.

Table 1 sets out the requirements relating to specific parameters.

Table 1 Permitted changes to key parameters

Parameter	Details, including limitations	Commencement
Covered vehicles (clause 28)	Allows the Minister to determine that a class of vehicle with a concessional RAV entry approval is subject to the NVES.	At the start of a year.
Class of vehicle status (clause 29)	Allows the Minister to determine that a class of vehicle has type 1 vehicle, type 2 vehicle or exempt vehicle status (including effectively allowing certain types of passenger vehicle to be considered type 2 vehicles or any type of vehicle to be an exempt vehicle).	At the start of a year and be registered at least 3 months before commencement (unless commencing on 1 January 2025).
Chassis falling within definition of heavy off-road passenger vehicle (clause 30)	Allows the Minister to determine that a chassis is covered by the definition of heavy off-road passenger vehicle, and therefore a type 2 vehicle.	At the start of a year and be registered at least 3 months before commencement (unless commencing on 1 January 2025).
Headline limit and breakpoints (clause 31)	Allows the Minister to determine the headline limit, lower breakpoint, and upper breakpoint for type 1 vehicles and type 2 vehicles. The headline limit must be lower than the headline limit in the previous year (using the same test procedure), or may be higher than the headline limit in the previous year if the Minister is satisfied that the new headline limit has been worked out using a more stringent standard (such as the WLTP) under which the headline limit for the previous year would have been lower if also worked out using the more stringent standard.	At the start of a year and be registered at least 2 years before commencement.
Mass adjustment factor and reference MIRO (clause 32)	Allows the Minister to determine the mass adjustment factor or reference MIRO for any vehicle. The Explanatory Memorandum states that the mass adjustment factor would need to be set each year because ‘the mix of vehicles supplied to Australia will vary over time’.[79]	At the start of a year and be registered at least 6 months before it commences (unless commencing on 1 January 2025).

Notably, in relation to the setting of headline limits, the Explanatory Memorandum states:

The headline limits for 2025 to 2029 inclusive were determined using the New European Driving Cycle (NEDC) test cycle, as this is the test currently mandated in Australia to measure CO₂ emissions from light vehicles. However, a new Euro 6d noxious emission standard will be phased in for new light vehicles supplied from 2025 to 2028. This will mandate a more stringent test procedure (known as the WLTP [Worldwide harmonised Light vehicle Test Procedure]) to measure emissions from new vehicles and will require an increase in the headline limit to maintain an equivalent NVES.[80]

The WLTP provides a more accurate estimate of the noxious emissions and fuel economy than the NEDC. The government’s Impact Analysis suggests that the review of the NVES legislation may consider the use of the WLTP in determining the headline limits from 1 July 2028, as the use of the WLTP will be mandatory for all vehicles supplied to the Australian market from that time.[81]

In accordance with clause 33, before making a determination, the Minister:

must consider the objects of the Act (as provided in clause 3)
may consider any submissions received during a public consultation process in relation to a proposed determination (per clause 36) and any other matters the Minister considers relevant.

Prior to making a determination, the Minister must publish a notice of a proposed determination on the Department’s website and invite written submissions.[82] The minimum period of consultation varies depending on the subject matter of the determination. Submissions must then be published on the Department’s website.

If the Minister makes a determination, the Minister must publish a notice of reasons, including which submissions (if any) the Minister considered.[83]

While determinations, as disallowable legislative instruments, will be subject to scrutiny by the Parliament, these provisions provide the Minister with considerable discretion to significantly alter the scope and potential effectiveness of the proposed NVES. The Explanatory Memorandum suggests this ‘provides flexibility to account for the rapidly changing vehicle market’.[84] However, consideration could be given to whether it would be desirable for the Minister to be required to seek the advice of an independent body such as the Climate Change Authority before making certain determinations, such as the headline limits (and underlying parameters) beyond the introductory period.

Tradeable units and a New Vehicle Efficiency Standard Registry

Part 3 of the NVES Bill provides for units (equivalent to 1 CO₂ g/km) to be issued by the Secretary and for the transfer and extinguishment of these units. Units only exist in the electronic New Vehicle Efficiency Standard Unit Registry (Registry) which is established by Part 4 of the NVES Bill.

The Secretary must issue a person who has a registry account the relevant number of units if the person’s interim emissions value (IEV) for a year is less than zero.[85] The number of units that may be issued is equal to the absolute value of the person’s IEV.

Units are a form of personal property and may be dealt with by the person as they see fit.[86] For example, a person could sell units to another person with a registry account in accordance with any terms agreed between those parties.

Units may be used to reduce a person’s final emissions value (FEV) and in so doing are ‘extinguished’.[87] Units may also be extinguished upon the person’s request and are in any event extinguished 3 years after their issue, if not already extinguished.[88]

The Secretary is required to establish and maintain the Registry.[89] The Secretary may be assisted in doing so by the Clean Energy Regulator, who administers similar registers under the Australian Carbon Credit Scheme and Renewable Energy Target.[90]

The NVES Bill provides for the opening and closing of registry accounts, the correction of errors in registry accounts, and the rectification of registry accounts by court order.[91] It also establishes a range of criminal offences and civil penalty provisions relating to dealings with registry accounts, such as providing false and misleading information.[92] Clause 69 provides for rules to be made relating to the operation and management of the Registry, including the transfer of units.

Clause 86 requires the Secretary to publish on the Department’s website information from the Registry (and to keep that information up to date), including:

for each person with a covered vehicle, the person’s interim emissions value
the name of each person who has a registry account
the number of units held in each registry account
other information, as prescribed by the rules.

The Explanatory Memorandum states:

The publication of information provides transparency in the operation of the Bill. The publication of information about the holding of units also contributes to market transparency and allows people interested in trading units to have access to relevant information to allow for efficient trading. The rules may also provide for the publication of other information. After further development of rules to support the legislation, it might be considered desirable to publish information like: the Final Emissions Value for each person, the total amount of emissions offset through the extinguishment of units, and/or the total amount paid under infringement notices, for example.[93]

Consideration may be had to whether it may be desirable, in the interests of transparency, for the Secretary to be required to regularly publish other information in addition to the examples provided in the Explanatory Memorandum (as quoted above). Another example could include information on the imposition of civil penalties under clause 17.

Compliance and enforcement mechanisms

Part 5 of the NVES Bill establishes the compliance and enforcement mechanisms applicable to the NVES. It does this by applying the Regulatory Powers Act in relation to:

monitoring powers (proposed clause 74)
investigation powers (proposed clause 75)
civil penalties (proposed clause 76), applicable to clauses 17, 60, 62–65 and 72
infringement notices (proposed clause 77)
enforceable undertakings (proposed clause 78)

Part 5 also includes provisions providing for:

the appointment of inspections by the Secretary (clause 71)
the Secretary to require a person to produce information relevant to administration of the Registry (clauses 72 and 73)
a court, upon the application of the Secretary, to make adverse publicity orders or non-punitive orders (clauses 83 and 84).

However, the Bill also modifies the application of the Regulatory Powers Act in relation to clause 17 – the duty to ensure that the final emissions value is zero or less. The most significant of these are set out below.

Firstly, as explained in the Explanatory Memorandum,

… clause 17 is not subject to [the monitoring powers and investigation powers] because whether a person has complied with their duty under clause 17 is based on a point-in-time final emissions value – i.e. whether at the start of the final reconciliation day for the year, the person’s final emissions value for the year is zero or less. A person’s final emissions value is determined by reference to information that is already available to the Department.[94] [emphasis in original]

Secondly, clause 79 modifies the application of subsection 82(5) of the Regulatory Powers Act in relation to contraventions of clause 17. Subsection 82(5) provides for the application of the corporate multiplier (being 5 times the maximum pecuniary penalty) if the contravening person is a body corporate. Clause 79 provides that the maximum penalty a court could impose is ‘the pecuniary penalty specified for that civil penalty provision’ (that is, $100 for each CO₂ g/km of a person’s final emissions value, subject to indexation).

Thirdly, clause 82 modifies the application of subsection 104(2) of the Regulatory Powers Act in relation to contraventions of clause 17. Subsection 104(2) sets out the maximum penalty amount that could be specified in an infringement notice. It provides that the maximum penalty that could be imposed is the lesser of:

(a) one‑fifth of the maximum penalty that a court could impose on the person for that contravention; and

(b) 12 penalty units where the person is an individual, or 60 penalty units where the person is a body corporate.

Clause 17 specifies that the maximum pecuniary penalty is $100 for each CO₂ g/km of a person’s final emissions value. Applying subsection 104(2), the maximum penalty that could be specified in an infringement notice would be $20 for each CO₂ g/km above a person’s final emissions value. However, clause 82 provides that the maximum penalty that could be specified in an infringement notice is ‘half the maximum penalty that a court could impose on the person for that contravention’; that is, $50 for each CO₂ g/km of a person’s final emissions value.

The Explanatory Memorandum, with reference to the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, observes:

… if the penalty [that could be specified in an infringement notice] was lower the anticipated cost of compliance (by supplying more efficient vehicles), suppliers may make an economic decision to pay the penalty instead of supplying more efficient vehicles. This would undermine the objectives of the NVES Bill to reduce CO₂ emissions from new road vehicles and stimulate the provision of low and zero emissions vehicles into the Australian market.[95]

The government has indicated ‘it expects few, if any penalties, will be paid under the Government’s proposed approach to the New Vehicle Efficiency Standard’ because ‘vehicle manufacturers are expected to be able to meet an Australian New Vehicle Efficiency Standard, as they generally do in the vast majority of advanced economies with efficiency standards in place’.[96]

Infringement notices are ‘generally issued for minor matters where a high volume of contraventions are expected’ but may also be issued ‘where an assessment of a contravention can easily be made based on straightforward factual questions’ – as may be the case in respect of a person’s final emissions value.[97] It would be within the remit of the department to determine what if any compliance action may be appropriate in the circumstances. However, consideration may be had to whether the issuing of infringement notices in the government’s signature policy directed at reducing emissions from the passenger and light commercial vehicle component of Australia’s transport sector is desirable.

A limited review mechanism

Clause 93 requires the Minister to cause a review of the operation of the Act to be commenced before 31 December 2026. The Minister must cause a copy of the report to be tabled in each House of Parliament within 15 sitting days of receiving it.

The compliance requirements of the NVES are staggered, such that a person’s IEV for the preceding year is not determined until 1 February of the following year. The person then has a further 2 years to ensure compliance with that IEV (by earning or purchasing units), such that any potential liability for the first period of the NVES’ operation (1 July 2025 to 31 December 2025) will not arise until 1 February 2028.

To maximise the utility of a review of the operation of the Act, it may be useful for it to be timed to take into account a second accounting period (which would fall due on 1 February 2027) and associated public reporting of compliance with IEVs. Further, consideration could be given to requiring regular formal reviews of the operation of the Act aligned with the determination of the headline limits for each successive five-year period of the NVES’ operation.[98] This would be consistent with other climate-related laws such as the National Greenhouse and Energy Reporting Act 2007 under which the safeguard mechanism is established.[99]

Acknowledgement: the author thanks Chris Welch, Lizzie Smith and Louise Woodward (Science, Technology, Environment and Resources Section) for their assistance with background research on the views of major interest groups.

References

[1]. Department of Climate Change, Energy, the Environment and Water (DCCEEW), Quarterly Update of Australia’s National Greenhouse Gas Inventory: September 2023, (Canberra: DCCEEW, March 2024), 16. Parliamentary Library calculation using supporting Data Source, Figures 1 and 10.

[2]. ‘National Greenhouse Gas Inventory Quarterly Update: September 2023’, DCCEEW; determined using ‘Emissions cumulative change on 2005’ Microsoft Power BI dashboard, Panel 4, selecting ‘Transport’ from the ‘Sector dropdown’. The total change relative to 2005 is provided in the bottom left chart.

[3]. ‘Australia’s National Greenhouse Accounts’, DCCEEW, selecting the ‘Emissions inventories’ tile followed by the ‘Paris Agreement Inventory’ tile. Parliamentary Library calculation based on emissions from cars, light commercial vehicles and motorcycles by opening ‘Select sectors’, expanding ‘1 Energy’, ‘1.A Fuel Combustion’, ‘1.A.3 Transport’, ‘1.A.3.b Road Transportation’ and selecting ‘1.A.3.b.i Cars’, ‘1.A.3.b.ii Light Commercial Vehicles’ and ‘1.A.3.b.iv Motorcycles’ and the ‘1.A.3 Transport’ checkboxes, and calculating the percentages from the downloaded data.

[4]. DCCEEW, Australia’s emissions projections 2023, (Canberra: DCCEEW, November 2023), 52.

[5]. DCCEEW, Australia’s emissions projections 2023, 57. Note: key design parameters of the NVES have been changed since that time.

[6]. Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA), The Fuel Efficiency Standard: Cleaner, Cheaper-to-run Cars for Australia: Consultation Paper, (Canberra: DITRDCA, 19 April 2023), 7.

A fuel efficiency standard (FES) is also referred to in the literature as a ‘new vehicle efficiency standard’, a ‘vehicle emissions intensity standard’, or a ‘vehicle CO₂ standard’.

[7]. Mandala, Raising standards, cutting costs: How an effective new vehicle efficiency standard can reduce vehicle emissions and save consumers money, Final report, commissioned by the Electric Vehicle Council and Climate Council, (June 2023), 7.

[8]. Bureau of Infrastructure and Transport Research Economics (BITRE), Road Vehicles Australia, 31 January 2023, dataset, revised 21 July 2023, (Canberra: DITRDCA, 28 June 2023). Parliamentary Library calculation from ‘Table 1 Motor vehicles on register, by type of vehicle and state/territory of registration, 2021, 2022 & 2023’.

[9]. BITRE, Road Vehicles Australia, 31 January 2023. There were 441,679 BEV, FCEVs and HEV passenger, light commercial vehicles and motorcycles, making up 2.1% of all registered passenger, light commercial vehicles and motorcycles. Parliamentary Library calculation for 2023 from ‘Table 4 Motor vehicles on register, by motive power type and type of vehicle, 2021, 2022 & 2023’.

[10]. BITRE, Road Vehicles, Australia, January 2023, (Canberra: DITRDCA, June 2023), 1.

[11]. DITRDCA, FES Consultation Paper, 7.

[12]. Vehicle Standard (Australian Design Rule 81/02 – Fuel Consumption Labelling for Light Vehicles) 2008.

[13]. Chris Bowen (Minister for Climate Change and Energy) and Catherine King (Minister for Transport), ‘Accelerating Australia’s electric vehicle potential’, media release, 19 August 2022.

[14]. DCCEEW, National Electric Vehicle Strategy Consultation Paper, (Canberra: DCCEEW, September 2022), 9.

[15]. DCCEEW, National Electric Vehicle Strategy Consultation Paper, 10.

[16]. DCCEEW, National Electric Vehicle Strategy Consultation Paper, 10–11.

[17]. DITRDCA, FES Consultation Paper, 7.

[18]. Chris Bowen and Catherine King, ‘Press Conference: National Electric Vehicle Strategy’, transcript, 19 April 2023, 4.

[19]. DITRDCA, FES Consultation Paper, 12–13.

[20]. Chris Bowen (Minister for Climate Change and Energy) and Catherine King (Minister for Infrastructure, Transport, Regional Development and Local Government), ‘Submissions to fuel efficiency standard consultation back greater access of modern, safer, cheaper-to-run cars’, media release, 25 August 2023.

[21]. Bowen and King, ‘Submissions to fuel efficiency standard consultation back greater access of modern, safer, cheaper-to-run cars’.

[22]. Vehicle Standard (Australian Design Rule 79/04 – Emission Control for Light Vehicles) 2011 Amendment 3; Vehicle Standard (Australian Design Rule 79/05 – Emission Control for Light Vehicles) 2024; Vehicle Standard (Australian Design Rule 111/00 – Advanced Emission Control for Light Vehicles) 2024; Vehicle Standard (Australian Design Rule 112/00 – Control of Real Driving Emissions for Light Vehicles) 2024.

[23]. DITRDCA, Cleaner, Cheaper to Run Cars: The Australian New Vehicle Efficiency Standard Consultation Impact Analysis (Impact Analysis), (Canberra: DITRDCA, February 2024), 32–35.

[24]. Chris Bowen (Minister for Climate Change and Energy) and Catherine King (Minister for Infrastructure, Transport, Regional Development and Local Government), ‘Delivering Australians more choice of cars to save on fuel’, media release, 4 February 2024.

[25]. DITRDCA, Impact Analysis, 45.

[26]. Chris Bowen (Minister for Climate Change and Energy) and Catherine King (Minister for Infrastructure, Transport, Regional Development and Local Government), ‘Press Conference: New Vehicle Efficiency Standards’, transcript, 26 March 2024, 1.

[27]. A factsheet released by the DITRDCA indicates that the following vehicles are among those that will move to the light vehicle category: Isuzu-Mu-X, Mitsubishi Pajero Sport, Toyota Prado, Lexus LX, Mercedes-AMG G 63, Toyota Fortuner, Ford Everest, Nissan Patrol, and Toyota Landcruiser.

[28]. Chris Bowen (Minister for Climate Change and Energy) and Catherine King (Minister for Infrastructure, Transport, Regional Development and Local Government), ‘A New Vehicle Efficiency Standard tailored for Australia’, media release, 26 March 2024, 2.

[29]. Catherine King, Second reading speech: New Vehicle Efficiency Standard Bill 2024, House of Representatives, Debates, (proof), 27 March 2024; Catherine King, Second reaching speech: New Vehicle Efficiency Standard (Consequential Provisions) Bill 2024, House of Representatives, Debates, (proof), 27 March 2024.

[30]. DITRDCA, Impact Analysis, 12.

[31]. Division: Reference to Committee: New Vehicle Efficiency Standard Bill 2024, New Vehicle Efficiency Standard (Consequential Amendments) Bill 2024, House of Representatives, Debates, (proof), 27 March 2024, 34; Ted O’Brien, ‘The Coalition’s motion to refer the “New Vehicle Efficiency Standard Bill 2024” for an inquiry … was rejected’, media release, 27 March 2024.

[32]. Mike Foley, ‘Albanese government to impose mandatory pollution caps on cars that drive electric vehicle uptake’, Sydney Morning Herald, 19 April 2023.

[33]. Adam Bandt, ‘Time for action on fuel efficiency standards: Greens’, media release, 4 February 2024.

[34]. Monique Ryan, ‘How the Labor government can unlock the electric car market’, Australian Financial Review, 29 June 2022; Dan Jervis-Bardy, ‘Standards push to fuel EV switch’, Canberra Times, 19 August 2022; Tom McIlroy, ‘Woolworths, Linfox driving big push for a million EVs in five years’, Australian Financial Review, 31 October 2022; Kate Chaney and Allegra Spender, ‘Teal wave has been rebutting oppositional politics for a year’, AFR Weekend, 20 May 2023; Zoe Daniel, Submission to the National Electric Vehicle Strategy Consultation paper, [Submission no. 320], 2022; Allegra Spender, Submission to the National Electric Vehicle Strategy Consultation paper, [Submission no. 257], 27 October 2022; Kylea Tink, Submission to the National Electric Vehicle Strategy Consultation paper, [Submission no. 479], 31 October 2022.

[35]. Allegra Spender, Submission to the Department of Infrastructure, Transport, Regional Development, Communications and the Arts on the FES Consultation Paper, 31 May 2023; Kate Chaney, Submission to the FES Consultation Paper, 31 May 2023; David Pocock, Submission to the FES Consultation Paper, 31 May 2023.

[36]. Kylea Tink, Dr Monique Ryan, Zoe Daniel, Zali Steggall, Allegra Spender, Kate Chaney and Dr Sophie Scamps, ‘Crossbench urges Government to stand firm on fuel efficiency standards’, media release, 27 February 2024.

[37]. David Pocock, ‘Strong fuel efficiency standards to save Australians money and reduce emissions’, media release, 4 February 2024; see also: David Pocock ‘Cutting bills and creating jobs with an accelerated smart energy transition’, media release, 4 May 2022; David Pocock, Submission to the FES Consultation Paper, 31 May 2023.

[38]. Bridget McKenzie, ‘Interview’, interview by David Speers, ABC Insiders, 18 June 2023.

[39]. Bridget McKenzie, ‘Interview’.

[40]. Paul Karp, ‘Electric vehicle sales in Australia overtake petrol-driven cars in medium category for first time’, Guardian, 20 April 2023.

[41]. Bridget McKenzie and Ted O’Brien, ‘Principled approach to FES’, media release, 4 February 2024. See for example, Matt Canavan, Questions Without Notice: New Vehicle Efficiency Standard, Senate, Hansard, 28 February 2024, 60.

[42]. See for example: Clean Air Communities, Submission to the FES Consultation Paper, 31 May 2023; Lung Foundation Australia, Submission to the FES Consultation Paper, 26 May 2023.

[43]. Clare Walter and Dr Delvin Say, Health impacts associated with traffic emissions in Australia: Expert Position Statement, (Melbourne: University of Melbourne, 2023), 1.

[44]. Australian Council of Social Services, Submission to the FES Consultation Paper, 31 May 2023, 5.

[45]. Australian Automobile Association, Submission to the FES Consultation Paper, 31 May 2023; Royal Automobile Club of Western Australia, Submission to the FES Consultation Paper, 30 May 2023.

[46]. Association of Motoring Clubs, Submission to the FES Consultation Paper, May 2023; Australian Historic Motoring Federation, Submission to the FES Consultation Paper, n.d.

[47]. National Roads and Motorists Association, Submission to the FES Consultation Paper, 31 May 2023, 1.

[48]. See for example, Australian Automotive Dealer Association (AADA), Submission to the FES Consultation Paper, May 2023, 8; Federal Chamber of Automotive Industries (FCAI), Submission to the FES Consultation Paper, May 2023, 7; Ford Motor Company of Australia Pty Ltd, Submission to the FES Consultation Paper, 31 May 2023, 1.

[49]. AADA, ‘Government’s preferred fuel efficiency standard too far too fast’, media release, 4 February 2024. See also: Simon Evans, ‘Sales about to spike for gas-guzzling utes’, Australian Financial Review, 26 February 2024.

[50]. Motor Trades Association of Australia, ‘Government listens to the MTAA advice to develop a workable Fuel Efficiency Standard’, media release, 26 March 2024.

[51]. FCAI, ‘Federal Chamber of Automotive Industries announces voluntary CO₂ Emissions Standard’, media release, 24 July 2020; FCAI, ‘FCAI seeks government mandated vehicle emissions target’, media release, May 2022.

[52]. Jacob Greber, ‘Drivers 'face $38b hit' from emissions plan’, Australian Financial Review, 9 February 2024; Daniel Bleakley, ‘Can the fossil fuel car lobby run a 2010 anti-mining tax style fear campaign in 2024? Unlikely’, The Driven, 12 February 2024.

[53]. Simon Evans, ‘Sales about to spike for gas-guzzling utes’.

[54]. Elias Visontay, ‘Polestar joins Tesla in quitting auto lobby over its campaign against proposed vehicle efficiency standard’, Guardian, 8 March 2024.

[55]. See for example: Japan Automobile Manufacturers Association, Submission to the FES Consultation Paper, 31 May 2023; Nissan Motor Co Australia Ltd, Submission to the FES Consultation Paper, 31 May 2023; Tesla Motors Australia Pty Ltd, Submission to the FES Consultation Paper, 31 May 2023; Volkswagen Group Australia, Submission to the FES Consultation Paper, 29 May 2023.

[56]. Daniel Bleakley, ‘Volkswagen joins Hyundai in supporting efficiency standard, plans 10 new EVs’, The Driven, 21 February 2024.

[57]. Phillip Coorey and Simon Evans, ‘Toyota says Labor’s ambitious clean cars plan to push up prices, hit supply’, Australian Financial Review, 29 February 2024.

[58]. Catherine King, ‘New Vehicle Efficiency Standards’, 3.

[59]. Catherine King, ‘New Vehicle Efficiency Standards’, 5.

[60]. See for example, Australian Parents for Climate Action, Submission to the FES Consultation Paper, 31 May 2023; Climateworks Australia, Submission to the FES Consultation Paper, 31 May 2023; Smart Energy Council, Submission to the FES Consultation Paper, May 2023.

[61]. Australian Conservation Foundation, Submission to the FES Consultation Paper, 1; Australian Parents for Climate Action, Submission to the FES Consultation Paper, 31 May 2023, 6; International Council on Clean Transportation, Submission to the FES Consultation Paper, 31 May 2023, 1–2.

[62]. Climate Council of Australia, Aussies would pay less at the petrol pump with clean, efficient cars like those sold overseas, Briefing Paper, 16 February 2024.

[63]. Climate Council of Australia, ‘New vehicle efficiency standard a win for bills, climate and health’, media release, 26 March 2024.

[64]. Australian Electric Vehicle Association, Submission to the FES Consultation Paper, 5; Electric Vehicle Council, Submission to the FES Consultation Paper, 31 May 2023; Wallbox Chargers, Submission to the FES Consultation Paper, 31 May 2023.

[65]. Electric Vehicle Council, Submission to the FES Consultation Paper, 31 May 2023, i.

[66]. Australian Electric Vehicle Association, Submission to the FES Consultation Paper, 5.

[67]. Explanatory Memorandum, NVES Bill and Consequential Amendments Bill, 6.

[68]. The Statement of Compatibility with Human Rights can be found at pages 7 to 13 of the Explanatory Memorandum to the Bills.

[69]. Parliamentary Joint Committee on Human Rights, Human Rights Scrutiny Report, 3, 2024, 17 April 2014: 5.

[70]. NVES Bill, clause 12–16. The Impact Analysis states that ‘heavy vehicles and vehicles subject to heavy vehicle emissions tests (i.e. large freight, service or utility trucks), military vehicles, law enforcement vehicles, emergency service vehicles, agricultural, construction or mining equipment, motorhomes, horse trucks and motorcycles’ will be exempt (p. 43). Clause 16 provides that exempt vehicles are vehicles with a GVM exceeding 4.5 tonnes and those subject to a determination made under clause 29.

[71]. Jake Evans, ‘New Vehicle Efficiency Standard weakened, with rules softened for utes and vans’, ABC News, 26 March 2024; Elias Visontay and Josh Butler, ‘Labor unveils watered-down fuel efficiency standard that eases emission rules for large SUVs’, Guardian, 26 March 2024.

[72]. DITRDCA, New Vehicle Efficiency Standard Fact Sheet, (March 2024), 3.

[73]. John Quiggin, ‘Australia must wean itself from monster utes – and the federal government’s weakening of vehicle emissions rules won’t help one bit’, The Conversation, 28 March 2024.

[74]. NVES Bill, clause 18.

[75]. European Parliament and European Council, Regulation 2019/631 setting CO2 emission performance standards for new passenger cars and for new light commercial vehicles, article 8.

[76]. United States Code of Federal Regulations: 49 CFR V 531 ‘Passenger Automobile Average Fuel Economy Standards’ ; 49 CFR V 578 ‘Civil and Criminal Penalties’, section 578.6(h)(2).

[77]. ‘Data, values and formulas’, NZ Transport Agency, under ‘Reference data’. New Zealand’s Clean Car Standard is implemented under the Land Transport Act 1998 (NZ) and Land Transport (Clean Vehicle Standard) Regulations 2022 (NZ).

[78]. Explanatory Memorandum, NVES Bill and Consequential Amendments Bill, 20 [para 77].

[79]. Explanatory Memorandum, NVES Bill and Consequential Amendments Bill, 23 [para 100].

[80]. Explanatory Memorandum, NVES Bill and Consequential Amendments Bill, 26–27 [para 128].

[81]. DITRDCA, Impact Analysis, 43–44.

[82]. NVES Bill, clause 36.

[83]. NVES Bill, clause 34.

[84]. Explanatory Memorandum, NVES Bill and Consequential Amendments Bill, 5.

[85]. NVES Bill, clause 39.

[86]. NVES Bill, clauses 47–49. See also clauses 45 and 68 in relation to the transfer of units between Registry accounts.

[87]. NVES Bill, clause 42.

[88]. NVES Bill, clauses 43 and 44.

[89]. NVES Bill, clause 51.

[90]. NVES Bill, clause 52; Consequential Amendments Bill, Items 1 and 2, inserting paragraph (ca) into the simplified outline in section 3 of the Clean Energy Regulator Act 2011 (CER Act) and inserting paragraph (na) into the definition of climate change law in section 4 of the CER Act.

[91]. NVES Bill, clauses 53–59.

[92]. NVES Bill, clauses 60–65.

[93]. Explanatory Memorandum, NVES Bill and Consequential Amendments Bill, 53 [para 368].

[94]. Explanatory Memorandum, NVES Bill and Consequential Amendments Bill, 46 [para 318] and 47–48 [para 325].

[95]. Explanatory Memorandum, NVES Bill and Consequential Amendments Bill, 51 [para 354].

[96]. Senate Environment and Communications Committee, Answers to Questions on Notice, Climate Change, Energy, the Environment and Water Portfolio, Additional Estimates 2023–24, 23 February 2024, Question SQ24-000301.

[97]. ‘Introduction to infringement notices’, Attorney-General’s Department.

[98]. These determinations must be made at least 2 years in advance: subclause 31(3).

[99]. National Greenhouse and Energy Reporting Act 2007, sections 76A and 76B.

Glossary

Term or phrase	Description
CER	Clean Energy Regulator
CER Act	Clean Energy Regulator Act 2011
Consequential Amendments Bill	New Vehicle Efficiency Standard (Consequential Amendments) Bill 2024
DCCEEW	Department of Climate Change, Energy, the Environment and Water
DITRDCA	Department of Infrastructure, Transport, Regional Development, Communications, and the Arts
FEV	final emissions value
ICE	internal combustion engine
IEV	Interim emissions value
NVES	new vehicle efficiency standard
NVES Bill	New Vehicle Efficiency Standard Bill 2024
Registry	New Vehicle Efficiency Standard Registry
Regulatory Powers Act	Regulatory Powers (Standard Provisions) Act 2014
RVS Act	Road Vehicle Standards Act 2018
Secretary	Secretary of the Department of Climate Change, Energy, the Environment and Water
VES	vehicle efficiency standard (also referred to as a fuel efficiency standard (FES) and carbon dioxide emissions standard)

Terms defined in the Bill or other legislation are italicised in this Digest.

Links

The links to the Bills, their Explanatory Memoranda and second reading speeches can be found on the home page for the New Vehicle Efficiency Standard Bill 2024 and the New Vehicle Efficiency Standard (Consequential Amendments) Bill 2024, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at May 2024.

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