In October 2015, the Australian Government established the Ministerial Forum on Vehicle Emissions.
Jointly led by the Federal Minister for Urban Infrastructure (the Hon. Paul Fletcher MP) and the Federal Minister for Energy and Environment, the Forum was established to coordinate whole-of-government actions targeting reductions in air pollution and greenhouse emissions from Australia’s motor vehicle fleet (i.e. trucks, cars and buses).
The Forum is currently considering three draft proposals for achieving this aim. The first proposal involves the introduction of new fuel efficiency standards to progressively reduce the average fuel consumption of new vehicles sold in Australia.
Reducing fuel consumption delivers direct reductions in vehicle-related greenhouse emissions and this proposal is being considered as part of Australia’s response to its international obligations to reduce greenhouse emissions, in line with the 2016 Paris Agreement on Climate Change.
Similar legislation has been introduced in North America, Europe and China in recent years.
In North America, for example, the US Congress passed legislation in 2009 that introduced a two phased approach for the reduction of the average fuel consumption of America’s light vehicle fleet. The first phase, which operates between 2012 and 2017, set a mandated fleet average target of 34.1mpg.
The second phase, to run between 2018 and 2025, requires new vehicle manufacturers to achieve an average fuel consumption of 54.4mpg by 2025 – a whopping 60% reduction in average fuel consumption when compared with new vehicles manufactured in 2016.
“The important thing to note here is that this is not an arbitrary target – it is federal law”, said ACAPMA CEO Mark McKenzie.
Given the imminent closure of Australia’s remaining car manufacturing plants, our new car market is likely to see the progressive introduction of these vehicles in the near term, with possible implications on the future demand for transport fuels sold in Australia.
Estimating the exact nature of this impact, however, is complex. Continued growth in Australia’s passenger vehicle fleet, coupled with the fact that Australians tend to hold on to their vehicles much longer than other economies, will likely offset falls in near term fuel demand (i.e. Australia’s rate of fleet replacement – replacement of old vehicles with new – has historically averaged less than 3% per annum which is substantially lower than other developed economies).
“Nonetheless, this is an issue that our industry needs to monitor closely together with the growth of hybrid electric and fully-electric vehicles”, said Mark.
The second proposal targets the reduction of vehicle-related air pollution, commonly referred to as “noxious emissions” – as distinct from greenhouse emissions.
Noxious emissions are not directly impacted by fuel consumption. Rather, they are a result of the interaction between the emission technology fitted to the vehicle and the nature of the fuel burned in the vehicle engine (the relative impact of each factor on actual emissions is the subject of significant debate).
The Australian industry has long been the subject of national laws limiting the amount of noxious emission produced by new vehicles, with a progressive tightening of new vehicle emission standards since the early 1990’s.
“The principal difference in the options being considered under this second proposal relate to the timing of introduction of the new requirements, with the government trying to strike a balance between the delivery of air quality and human health improvements and reducing the risk of possible spikes in the cost of new vehicles for Australian consumers”, said Mark.
The third and final proposal involves possible changes to the Australian Fuel Quality Standards Act (2001). Most of these options target further reductions in the sulphur content of petrol and diesel, with one option proposing the gradual phase out of regular unleaded petrol in Australia – in the same way that leaded petrol was phased out.
Similar to the second proposal, the Australian Government appears to be seeking to strike a balance between the community benefits realised by fuel quality improvements and the costs involved in achieving these improvements.
“This debate is largely one for Australia’s fuel refiners and fuel importers”, said Mark.
“Our assessment is that the impact on fuel wholesalers and fuel retailers is unlikely to be significant but ACAPMA is nonetheless participating in the consultative process”, Mark continued.
Any changes to Australia’s fuel quality standards are unlikely to take effect before the expiry of the existing legislation in late 2018.
“While there was some difference in specific stakeholder views during this weeks forum, industry and consumer groups appeared to be giving the Australian Government the same message in respect of the timing of any future changes”, said Mark.
“These stakeholders urged the Australian Government to adopt a realistic timeframe for implementation – one that that minimises the risk of future sharp rises in the cost of either new vehicles or conventional transport fuels”, Mark continued.
The Discussion Paper canvassing the possible changes to Australia’s fuel quality standards (see https://www.environment.gov.au/system/files/consultations/f3f4acc3-f9e6-4cc3-8a1e-a59a6490cffd/files/better-fuel-cleaner-air.pdf) was released in December 2016 and public submissions close on 10 March 2017.
Further information about the consultation process can be found at: http://www.environment.gov.au/protection/fuel-quality/better-fuel-cleaner-air-discussion-paper-2016.