Policy Overview
The National Electric Vehicle strategy aims to increase Australia’s electric vehicle uptake, which made up only 2% of Australian automotive sales in 2021, to reduce transport sector emissions in line with Australia’s climate goals. A key policy in the strategy is the introduction of an Australian fuel efficiency standard for vehicles, a CO2 standard. Australia is currently the only country in the OECD without mandatory fuel efficiency standards for road transport.
The consultation on the National Electric Vehicle Strategy (NEVS) was released in September 2022. It proposed making electric vehicles more affordable, expanding their uptake and sought views on how fuel efficiency standards could be implemented in Australia, alongside other policies such as electric vehicle purchase incentives. The government asked for feedback on such policies, with consultation responses finalized by October 2022, with further consultations likely to take place in 2023.
Following this, a consultation on the Fuel Efficiency Standard was released in April 2023, with the full responses published in August 2023. The consultation proposed introducing the first-ever fuel efficiency standard in Australia and sought feedback on the design of a standard. This includes the overall CO2 targets suggested, the emissions reduction trajectory, and the use of flexibility mechanisms such as off-cycle, air conditioning, and multiplier credits that may weaken the stringency of a standard.
In February 2024, the Australian government announced its proposed its New Vehicle Efficiency Scheme (NVES) that would bring Australia’s CO2 standards in line with U.S. by 2028, with a new consultation on the policy that ran until March 2024.
On March 26th, 2024, the Australian government announced legislation for a New Vehicle Efficiency Standard. The proposal made amendments to its February 2024 proposals, including recategorizing some SUVs from passenger car to light-commercial vehicles, less stringent early CO2 targets for light commercial vehicles and delaying credits and penalties until July 2025.
The legislation was approved by Parliament and Senate in May 2024, becoming law.