If Australia Had Implemented Fuel Efficiency Standards We Would’ve Saved $6 Billion in Fuel Costs by Now

If Australia Had Implemented Fuel Efficiency Standards We Would’ve Saved $6 Billion in Fuel Costs by Now
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The Australian Institute has released a report outlining that $5.9 billion in fuel costs could have been saved if fuel efficiency standards were adopted in 2015.

The report comes as the think tank is preparing to refresh its push on the Australian government to impose standards on vehicle emissions.

“Australians are being left behind simply because, as a nation, we are still accepting gas-guzzling cars with no emissions standards. This is costing commuters money at the petrol pump and holding Australia back from reducing our emissions,” said Richie Merzian, the climate and energy program director at the Australian Institute.

“Fuel efficiency standards are a widespread and modest policy mechanism used by policymakers globally to ensure new cars are more efficient and less polluting. These standards exist across 80 per cent of the vehicle market but not in Australia despite numerous reports, inquiries and government commitments saying we need them.

“The [government] has a golden opportunity to implement robust fuel efficiency standards in line with Europe. The policy is popular, helps Australians with cost-of-living, and will help drive the uptake of cleaner vehicles.”

In 2014, as The Guardian has reported, the Climate Change Authority recommended that Australia introduce standards similar to other countries. 80 per cent of the global car market has introduced fuel efficiency standards since 2014, but Australia still doesn’t have any.

At the moment, there’s nothing encouraging car makers to bring more efficient vehicles to Australia when they’re still selling more inefficient vehicles here than the rest of the world. Australia, to a large extent, has the least efficient vehicles in the world.

So here we find the need for fuel efficiency standards. Let’s explain.

What are fuel efficiency standards?

Fuel efficiency standards are rules put in place on automakers to reduce the emissions used by the vehicle. They’re a cap placed on a fleet of cars, incentivising the development of more efficient vehicles, strictly regulating the emissions output of cars.

“Car makers are incentivised to bring more fuel efficient and electric vehicles to a market in order to meet targets and avoid penalties,” Behyad Jafari, CEO of the Electric Vehicle Council, told Gizmodo Australia.

“It’s been the lack of those standards that has meant car companies haven’t brought more fuel efficient and electric vehicles to Australia.

“Because these standards are in place in all of the rest of the developed world, car companies have to invest in the development of electric vehicles.”

It’s not a carbon tax on wheels, as was argued by some during the 2019 Federal Election, and it’s difficult to link to vehicle price increases. Analysis has actually shown that it would save Australians money, with more efficient vehicles (and especially electric vehicles) being used. If the standards are not met, the automakers are punished.

“In 2018, the average carbon dioxide intensity for new passenger vehicles in Australia was 169.8gCO2/km compared to 129.9gCO2/km in the United States, 120.4gCO2/km in Europe and 114.6gCO2/km in Japan,” the Australian Institute report outlines.

“Emissions equivalent to a year’s worth of domestic flights would have been avoided, if robust fuel efficiency standards were adopted in 2015.”

Rules like this incentivise hybrid and electric vehicle development and sale, but because Australia is one of the few markets in the world where (mandatory) fuel efficiency standards aren’t in place, we get the scraps. That is, we’re one of the last places that get electric vehicles before they go on sale elsewhere in the world (it took years for the Tesla Model Y to arrive in Australia, and we’re still yet to get many of the electric vehicles currently on sale in Europe).

Put simply: there are no efficiency restrictions placed on car manufacturers in Australia, so why bother?

The International Energy Agency is also a major supporter of fuel efficiency standards:

“Ambitious fuel economy and/or CO2 emissions standards should be a policy focus to support and accelerate widespread uptake of more fuel-efficient vehicles. Policies that counter ongoing growth in vehicle weight and power should also be implemented, and road fuels should be taxed at a rate that reflects their impact on people’s health and the climate.”

We know they work because they’re working overseas. It’s just a matter of if they’ll be regulated in Australia or not. Labor floated them during the 2019 Federal Election, but has stayed fairly quiet on them since.

How is fuel efficiency measured?

Australia uses the NEDC (New European Driving Cycle) fuel economy test, the former fuel economy test of the European Union, to measure the fuel efficiency of vehicles. It’s a test that relies on urban driving cycles, measuring the grams of emissions per kilometre (g/km).

This is, however, an outgoing test overseas. WLTP (World Harmonised Light Vehicle Testing Procedure) is the new standard in the European Union. You’ve probably seen “WLTP” in our articles before, when we highlight the range of an electric vehicle. There are key differences between the tests, such as distance, speed and temperatures, but it’s through efficiency tests like this that fuel efficiency standards make their case.

What standards establish mandatory fuel efficiency for vehicles?

Fuel efficiency standards measure the efficiency of a vehicle and how it consumes fuel. The calculation made to determine the fuel efficiency of a vehicle, as earlier said, is applied to vehicles sold within a country, adding to a total fleet cap.

Effectively, it’s a cap placed on how many vehicles can be sold by a car maker without fuel-efficient vehicles (like hybrids and EVs) being added to the equation. Selling these fuel-efficient vehicles typically alleviates the fleet cap, balancing sales out. If too many non-fuel efficient vehicles are sold, the car maker may be penalised.

Additionally, effective fuel efficiency standards need to be in line with other countries, otherwise a country like Australia that, hypothetically, introduced weak standards, will still only get less efficient vehicles than European markets. If we’re getting standards, they need to be strong.

We need fuel efficiency standards

Unless we want to be one of the last markets in the world to be still selling petrol vehicles, fuel efficiency standards will need to be implemented in Australia. Otherwise, we’ll continue to lag behind.


If you’re interested in buying an EV, here are the vehicles that are available, and here are the upcoming electric cars in Australia.