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Fuel emissions standards are not a carbon tax, they are a win for motorists and the environment!


The impact of traffic on the environment
The impact of traffic on the environment (Image courtesy of HTN Corporation)

The Everlution Blog is devoted to discussing issues related to the ever-increasing ecological footprint of human beings. If we have the determination, we can reduce that footprint, even with more population and more affluence. We have the technology to overcome human-induced climate change - the biggest issue we have ever faced. But we have to get going as our species is irreversibly altering the climate that has been stable for the last 800,000 years.


 

I got a call from a good mate yesterday day lambasting the federal government over the new fuel emission standards. The mate is an intelligent person but has been misled by false information. Once again, the pro-fossil fuel people like Mr Potatohead, Brigitte Mackenzie, etc will do anything to stop the reduction in carbon emissions, including by falsely maligning the proposed new fuel emission standards as a car tax or ute tax. This is so not true and if they had succeeded, Australian motorists would have continued to pay billions of dollars extra in fuel.


Australia’s first fuel emissions program commences on 1 January 2025. It comes 15 years after the then Federal Labour Government announced a fuel emissions program to start in 2015, later cancelled in 2013 by the Tony Abbott-led government. That left us and Russia as the only developed countries in the world without a standard, proposed or otherwise. A new car sold in Australia currently uses, on average, 6.9 litres of fuel for each 100km travelled compared with new cars in Europe and the US that use 3.5 litres and 4.2 litres, respectively.


A report prepared by the Transport Emissions/Energy Research organisation on 29 May 2019 estimated that over one billion dollars would have been saved by motorists in the previous three years alone in fuel costs if a fuel emission program had been in place. That was at a time when the average per litre price of fuel in Australia was $1.37. Therefore, it can be assumed that over the last eight years the savings would have been in the billions. The saving in carbon emissions would have been in the millions of tonnes.


Under the new vehicle efficiency standard, the 2025 emissions target for passenger vehicles for 2025 is 141 grams of CO2 per kilometre and 210 grams for light commercial vehicles. The emissions drop by 2029 to 58 grams for passenger vehicles and 110 grams for light commercial vehicles.


So, what does all this mean? Eco Profit has prepared a table that converts grams of CO2 per kilometre to litres of fuel consumed per 100 kilometres travelled for ULP and diesel vehicles in both the passenger and light commercial categories:




The bottom row of the table shows the maximum litre consumption per 100 kilometres for each vehicle type. It is estimated that the program will deliver about a 60% reduction in new passenger vehicle emissions and 50% reduction in new light commercial vehicle emissions by 2029, as well as $95bn in fuel savings by 2050. Note for instance ULP for passenger vehicles will have a maximum of 2.52 litres per 100 km from 2029. That means big savings over current vehicles using 7 litres per 100km.


The government also announced changes to the credits system. These mean companies whose emissions averages across their fleet come in below the cap will gain credits that can be traded with other manufacturers who will be penalised for exceeding the cap. Further, the government’s initial proposal is for a rate of penalty of $100 per g/km of CO2 emitted over a manufacturer’s cap remains. While the standard will still begin on 1 January, the government has also pushed out the effective start date of the credit and penalties system to 1 July. This is to “give industry more time to adjust” and allow more time to put in place the regulator and IT systems, the government said.


The car industry seems to have come to a somewhat amicable agreement with the government, with the Toyota boss, Matthew Callachor, saying the changes are not a “car tax” as claimed by the opposition.

It is noted that worldwide research shows no increase in new car prices or fuel prices with the adoption of fuel emission standards. For those who tow caravans, it is business as usual and the other real benefit is the lowering of other exhaust emissions like NOX and SOX.


So, if you are planning on upgrading your own car or fleet vehicles, bear in mind the significant impact the new fuel emission standards will have on transportation costs. It may be time to wait until 2025, or if you are planning on upgrading to hybrid or EV alternatives, ensure your return-on-investment calculations incorporate the reduced fuel costs of 2025 ICE vehicles. Also, check the potential impact on trade-in values.




References


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