- Opposition leader Peter Dutton says Labor’s proposed fuel efficiency standard for new cars would push up the price of a Mazda CX30 “by about $19,000”.
- So what should we really expect if Australia finally introduces fuel efficiency standards here – decades after the US and Europe?
Car efficiency standards are common overseas
- Labor is proposing a so-called new vehicle efficiency standard of the kind proposed by the Coalition in 2016, championed by the Coalition in 2022, and common in the rest of the world.
- Every car manufacturer has to meet an average efficiency standard for the new vehicles it sells each year, whether expressed in miles per gallon (the US) or carbon dioxide emitted per kilometre (Europe).
In the US, fuel efficiency has doubled
- In that time, the average efficiency of its new cars has doubled, and it is about to tighten standards further.
- After decades of being the odd one out, Australian passenger cars on average use 20% more fuel than passenger cars in the US.
Standards change the mix of what’s sold
Efficiency standards don’t prevent carmakers from selling inefficient vehicles. What they do is ensure they make those vehicles more efficient, or balance their sales with sales of more efficient ones. At the moment, it means the vehicles sold in the US and elsewhere get advanced emissions technologies not generally offered in Australia.
- In the words of Volkswagen Group Australia chief Michael Bartsch, it makes Australia a “dumping ground” for older and less efficient vehicles.
- Labor has put forward three options for targets: a slow start, a fast start, and its preferred option: “fast but flexible”.
- Its preferred option would require carmakers selling in Australia to catch up with the standards of countries including the United States by 2028.
‘No systemic, statistically significant increase’
- Maybe Labor’s plan will push up car prices more than the Coalition’s 2016 plan, because it is more ambitious, as Dutton suggests.
- In the US, a statistical analysis of prices from 2003 to 2021 found “no systemic, statistically significant increase in inflation-adjusted vehicle prices” during two decades in which standards were tightened and fuel economy improved 30%.
- Without vehicles pulling their weight, along with heavy industry and electricity, we won’t get there.
Peter Martin is Economics Editor of The Conversation.