Australia cannot hit net zero emissions by 2050 without a policy for the transport sector, experts say, and it must be focused on driving people to buy electric vehicles.

In the first of a series of industry reports, the Grattan Institute argues strict regulations are needed to phase out petrol cars with emissions standards that tighten to zero by 2035.

It says a carbon price is the most economically efficient way to address emissions, but as that has been rejected by both of Australia’s major political parties sector-specific policies are needed to reduce greenhouse gases industry by industry.

Grattan’s report says “there are no federal government policies to reduce transport emissions at any significant scale” and it called for tax breaks on electric vehicles and swift rollout of emissions standards because the national fleet “takes more than 20 years to replace” and vehicles sold after that date could be in operation after 2050.

“Government should encourage a thriving market for zero emissions vehicles by exempting them from inefficient taxes such as import duties, luxury car tax and motor vehicles stamp duty,” the report says.

But the think tank warns that “relying on technology and market forces alone won’t be enough to get on track for net zero 2050” because the crossover point when the purchase price of an electric vehicle became cheaper than petrol or diesel vehicles was expected to come after 2025.

This means there would likely be many petrol and diesel cars on the road after 2050, given the average life of an Australian vehicle is more than 20 years.

In that scenario, government would have to rush out expensive and inefficient emissions reduction measures to bring down transport emissions in the decades before 2050, such as funding a “cash-for-clunkers-style program”, the report says.

Prime Minister Scott Morrison’s “preferable” climate change objective for Australia is to reach net zero by 2050.

But Deputy Prime Minister Barnaby Joyce, a long-time sceptic of climate action, said on Sunday that he would consider a net zero deadline but only once the financial impacts had been mapped out.

“We want to see exactly what’s involved and we want to see exactly what the cost is,” Mr Joyce told ABC’s Insiders.

The Morrison government’s climate policy centres on a technology road map to drive uptake of cleaner energy sources, lowering the cost of hydrogen fuel, using green steel and aluminium as well as carbon sequestration in agriculture.

But it has not indicated any plan to satisfy Mr Joyce’s demand to model the cost of meeting a national emissions reduction target or the cost to industry from setting an emissions reduction deadline.

Grattan’s energy program director Tony Wood said the best-option carbon price was “on the nose” in Australia but Grattan had developed policy alternatives because the institute “operates on a principle that we’d rather have a second or third best policy that actually works rather than the best approach no one adopts”.

“We’ve go to start soon and get these vehicles into the market,” Mr Wood said.

The motor industry pleaded with the government in March to adopt its own policy that requires new cars sold to reduce their emissions by 4 per cent each year over the next decade and 3 per cent for new heavy SUVs and light commercial vehicles.

Grattan Institute energy director Tony Wood says the federal government must act now to help the transport sector switch to clean electric vehicles.


The federal government’s Future Fuels strategy ruled out subsidies for electric vehicles and instead focused on encouraging businesses to use plug-in hybrid and electric cars for their fleets by funding charging stations.

Mr Taylor said subsidising cars for private sales would cost taxpayers $195 to $747 per tonne of carbon dioxide equivalent while “we can abate now at around $16 from the Emissions Reduction Fund, so it’s just not value for money”.

“We are optimistic about how quickly the technology cost will reduce for other electric vehicles compared to traditional cars,” said Energy and Emissions Reduction Minister Angus Taylor.

Grattan said Australia had “suffered more than a decade of policy uncertainty on climate change” and “political difference between and within both major parties have held back progress”.

Because an economy-wide price on carbon emissions was off the political agenda, the report said, “the most pragmatic approach is a combination of sector-based, technology-driven policies that will create momentum towards greater ambition at a later date”.

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