Car industry sets own emissions standard

THE Federal Chamber of Automotive Industries (FCAI) has announced an industry-developed CO2 emissions standard for car manufacturers that aims to reduce carbon dioxide emissions from new passenger cars and lighter SUVs sold in Australia by 36 per cent by 2030.

The voluntary standard, which is long-term in nature and comes without penalties or government regulation as seen in other countries, aims to reduce the current average CO2 emissions across the industry – at 169 grams per kilometre for passenger cars and SUVs last year – to below 100g/km. 

This represents a four per cent reduction on average achieved each year over the next decade. 

Light-commercial vehicles and heavier-duty SUVs pose a more difficult challenge, with the FCAI expecting to achieve a reduction of about 30 per cent with these two categories combined. 

Last year, CO2 emissions from new LCVs sold in Australia averaged 223g/km. The target for 2030, with heavy SUVs included, is 145g/km, reflecting a three per cent reduction per annum. 

The new standard only applies to FCAI members, which includes 40 major brands but not the market-leading electric vehicle brand Tesla, which last year sold about 3000 cars.

The initiative places Australia at least a decade behind the progress made in other markets such as Europe, where stricter mandatory emissions that ramp up this year require all brands to cut their passenger and SUV model range to 95g/km – or to 147g/km for LCVs – which are similar figures to the targets the FCAI is aiming to achieve by 2030.

The EU is also introducing ever-stricter standards, switching to a 15 per cent reduction (from the 2021 starting point) for both passenger vehicles and vans by 2025. From 2030 onwards, a 37.5 and 31 per cent reduction is also mandated for cars and vans respectively.

In its defence, the FCAI says the Australian standard – which it describes as a “stretch target” – was developed specifically for this market and deliberately avoids discouraging buyers from purchasing large and typically higher-emitting vehicles such as SUVs and pick-ups. 

Instead, the industry is relying on the continuous improvement of engine technology and the ongoing rollout of low- or zero-emissions vehicles to achieve substantial reductions, which are not reliant on specific incentives to purchase green cars and do not require mandatory targets or related regulatory reform such as higher fuel quality and the adoption of the Euro 6 emissions standard. 

The FCAI said the new Australian system is based on standards used overseas, including in Europe, China and the United States, and that it was developed over four years in consultation with the car-makers and all levels of government. 

According to the chamber, the new standard was deliberately designed as a “long-term objective which recognises that different brands will follow different paths towards the target depending on their individual model cycles”. 

It also emphasised that “the pathway to the new target may not be without impediment and it is fully expected that individual manufacturers may not always record annual improvement; in this instance, the end goal of meeting the 2030 target remains the key focus”.

FCAI chief executive Tony Weber said the standard “aims to provide certainty to manufacturers to enable them to confidently plan future product for the Australian market”.

“The pathway to the 2030 target will not be smooth. We won’t see linear improvements on an annual basis from all brands across the membership – that’s just not going to happen,” he said. 

“There is only one target here; that is, 2030. This is a difficult target and a difficult process that we are going through but we believe this is something that is worth doing.

“There are no direct penalties, but there will be information in the public domain … that will be used by consumers to make an informed decision about their next vehicle purchase, which they already do on a whole range of issues.

“This is not a ‘toothless tiger’. We will be reporting on an annual basis on our progress to the 2030 target, and it will be in the public domain.”

Asked why Australia’s standard appeared to be 10 years behind Europe, Mr Weber said: “Europe started a long time ago. It’s about the rate of improvement … not the overall number. It’s about improving from the starting point. 

“What you need to think about here is the overall objective, and the overall objective is reducing the CO2 that you are putting into the atmosphere as an industry. And that is exactly what we’re doing.

“The differential in vehicle size is significant between what is sold in the European Union and what is sold in Australia, and that is why with this scheme we have picked up elements of the US scheme, because their vehicle market more reflects ours, and we’ve also picked up parts of the European scheme because our vehicle ADRs (Australian Design Rules) are aligned with European standards.”

FCAI technical director Ashley Sanders also said the EU regulations and market conditions were not directly comparable – “it’s trying to compare apples with pears” – and that the Australian CO2 standard was nonetheless achieving similar reductions on a year-on-year basis to that achieved in Europe and the US.

Responding to the suggestion that a number of car-makers were opposed to the standard, Mr Weber said: “There’s no doubt that this is a substantial reform that we are making, and it’s not easy. The target is particularly tough. 

“There has been a bit of discussion about the design of the scheme over the last four years, I don’t step away from that, but what they (car company CEOs) say to me is that they all agree with the principle about having a standard, and I think that’s the really important point.”

FCAI chairman and Toyota Australia president and CEO Matt Callachor, said: “You’ll probably be surprised to hear this from a car company executive, but if we don’t focus on measures to address global warming and energy-related issues, there will be no future for the motor vehicle.

“There are many challenging obstacles for us to overcome, and we have a long way to go. 

“Currently, 95 per cent of vehicles sold worldwide are powered solely by fossil fuels, despite CO2 targets being mandated overseas.

“Today, the industry is meeting the expectations of our customers by introducing the FCAI’s CO2 voluntary standard.

“And, frankly, this will profoundly change everything about our local industry and confirm our commitment to reducing emissions in Australia.”

The standard will calculate annual industry and individual brand goals on a sales-weighted average mass per unit basis against registrations recorded in the VFACTS reporting system, divided into MA (passenger cars and light SUVs) and MC+NA (heavy SUVs and LCVs).

Reporting will commence early next year and will allow a variety of “carry forward” credits and/or debits, as seen in the US. 

Credits are weighted based on a detailed formula assessing each vehicle’s green status – for example, whether it carries a full-electric powertrain (super credit) or simply has a highly efficient air-conditioning unit (off-cycle credit) – and can be carried forward for up to five years starting this year.

Debits, on the other hand, will be waived until 2024, when these will also be recorded and carried forward for up to five years.

Car-makers can report as individual brands or as an automotive group made up of several brands, such as Volkswagen Group Australia covering VW, Skoda and, potentially, Audi, Porsche, Bentley, Bugatti and Lamborghini.