In Focus
April 2024

Have your say – An Australian New Vehicle Efficiency Standard

The Australian Government is introducing a New Vehicle Efficiency Standard. New Vehicle Efficiency Standards are common around the world to encourage vehicle suppliers to sell cleaner, fuel efficient cars that use less fuel, and to supply more low and zero emissions vehicles.

A New Vehicle Efficiency Standard helps by:

  • reducing transport emissions, improving the air that you and your family breathe
  • giving you more choice about the cars that you can buy
  • saving consumers money at the petrol pump.

The Australian Government has now released the Cleaner, Cheaper-to-Run Cars: The Australian New Vehicle Efficiency Standard Consultation Impact Analysis, which sets out the options we have considered, the Government’s preferred option and detail about how the Standard will be implemented. We invite you to consider this document, and to participate in our consultation.

To have your say, and for more information – including the Cleaner, Cheaper-to-Run Cars: The Australian New Vehicle Efficiency Standard Consultation Impact Analysis please visit

Consultation on the Impact Analysis will close at 11:59pm on Monday, 4 March 2024. Late submissions will not be accepted, and all submissions must be lodged via the Cleaner Cars Have Your Say portal.

Angela Byron
Cleaner Cars Policy
Department of Infrastructure, Transport, Regional Development, Communications and the Arts

In early February 2024 the Australian Federal Government released its proposal for new vehicle fuel efficiency standard (NVES), designed to reduce emissions from vehicles and promote cleaner, cheaper alternatives. On 04-February and as part of the programme, the government published the “Cleaner, Cheaper to Run Cars: An Australian New Vehicle Efficiency Standard Consultation Impact Analysis”, which set out the options and government’s preferred design.

The proposal aims to present the costs and benefits of different options for developing the NVES and ultimately lay out the government’s proposed policy. Approximately one million new cars are sold in Australia each year which are not currently required to meet any level of fuel efficiency. 

The government wants to implement a NVES legislation by 01-January 2025, which it said means that Australia would catch up to the US average vehicle emissions intensity by around 2028. The NVES is designed to reduce Australia’s CO₂ emissions by close to 100m MT by 2035, and up to 369m MT by 2050.

The public was invited to have their say on the NVES proposal, for which the submission closed on 04-March. 

The Australian Climate Council, which urged the Federal Government to lock in the new settings before the end of 2024 to help Australians start saving, has welcomed the proposal. It said that a simple and transparent standard for new vehicles will help get Australia on track to deliver more choice for people by increasing access to all kinds of low and zero emissions vehicles. 

The published analysis presents the costs and benefits of different options for developing the NVES, and identifying a preferred policy, and it addresses some of the key questions being asked about the 2025 NVES.

In more detail, the NVES will regulate vehicle exhaust emissions rather than fuel consumption. Three emission limit scenarios have been modelled, and each model regulates “Passenger” and “Light Commercial” (LC) vehicles to different standards, some SUVs, for example, are included in the LC category.

Year-by-year NVES emissions, total CO2 reduction, and average annual CO2 reduction for options A, B and C are shown in the table below:

The required decrease in passenger vehicle emissions from 2025 to 2026 for Option A is small, then ramps up from 2026 to 2029. Light commercial vehicles emissions do the opposite, with the rate of required reductions highest initially and then slowing from 2026 to 2029.

Option B’s 2026-2028 emission reductions for both categories are significantly higher than for Option A. This approach is intended to catch up with the United States’ NVES by 2028, resulting in far lower emissions levels at 2029 when compared with Option A. The government of Prime Minister Anthony Albanese has already expressed its preference for Option B. 

Passenger and LC emissions would drop by approximately 25 percent from 2025-2026 under Option C. This scheme would equal the United States’ NVES by 2026 and then bring forward its 2029-20 targets to 2028-2029, with 2029 emissions approximately 25 percent of 2025 emissions.

Australia’s Climate Council assesses the following savings from Option B of the NEVS:

  • Consumers would save around AUS$ 5,710 in fuel cost over the 5-year scheme,
  • or AUS$ 17,000 over a vehicle’s average lifespan,
  • which translates onto an overall saving of AUS$ 108 billion across the Australian economy.

The assessment also highlights that the implementation of NWES will significantly reduce transportation sector emissions, with passenger and light commercial vehicles emissions currently comprising more than 60 percent of Australia’s total transport emissions. 

The Climate Council cites research estimating that transport pollution in Australia is currently a significant contributor to 11,000 premature deaths each year, more than 19,000 admissions to hospital for cardiovascular and respiratory issues, and some 66,000 asthma cases. 

Apart from the cost savings and significant reductions in emissions, the Climate Council also claims that “there is no evidence to suggest Australia’s New Vehicle Efficiency Standard will increase vehicle prices”. This claim is based on a comparison of the preferred Australian NVES model with similar schemes elsewhere, and as manufacturers are already producing low and zero emissions vehicles, importing more of those vehicles here should not significantly increase prices.

However, Australia's peak motoring body, AAA, says the government should be more transparent regarding its proposed NEVS, as motorists deserve to know how it will change vehicle choices and prices. The AAA has long supported the Commonwealth introducing an efficiency standard, which could help Australia maintain access to a first-world vehicle fleet. However, the AAA is mindful that a poorly designed standard and overly stringent targets will deliver bad outcomes for both consumers and the environment.

An economic analysis by The Centre for International Economics, which had been commissioned by the AAA, suggests compliance with the government's preferred model will require very dramatic changes to Australia's passenger and light commercial fleets and quantifies the relative price changes needed to shift motorists' behaviours and preferences. The submission also flags the issues relating to growing EV uptake which the government must urgently address, including Australia's roll-out of charging infrastructure, skills shortages and the inequity and unsustainability of motoring taxation.

In response to public comments and in cooperation with the local car industry, the Australian Government introduced more relaxed and revised emissions regulations to parliament on 27-March, which entail some key concessions made to carmakers to assure its passage through Parliament.

The Climate Change and Energy Ministry and the Transport Ministry presented the draft legislation, proposing the scheme to come into effect on 01-January 2025. 

The main changes announced are:

  • Penalties will not come into effect on 01-July 2025
  • A 60m AUS$ support package for car dealers for charging infrastructure will be granted
  • A “limited number” of “workhorse-type” four-wheel drives will be moved from the passenger car category to the light commercial vehicle category
  • A “smoother” emissions trajectory for the light commercial vehicle category will be applied
  • The Government also will adjust the weight-based relative emissions limits, known as the break point, recognising that heavier vehicles emit more.

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