The Grattan Institute has released a new report urging Australia to implement a zero emissions standard for cars, vans and utilities by 2035.
Grattan notes that the nation’s light vehicle fleet is responsible for two-thirds of Australia’s transport emissions, and it argues that just relying on market forces to ‘decarbonise’ it is a risky strategy.
Grattan wants property developers to be forced into installing vehicle chargers, and for the luxury car tax to be abolished, claiming that this makes the importation of electric vehicles more expensive.
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Below is the Overview, along with some key charts:
Governments around the world are moving to ‘net zero’, to limit the impacts of climate change. All Australian state and territory governments have the goal of reaching net-zero carbon emissions by 2050 at the latest, and the Prime Minister says the national goal is net zero, preferably by 2050.
Yet Australia is not on track to hit this target. The best way to reduce emissions in every sector in an economically efficient way would be to introduce a single, economy-wide emissions price coupled with support for technology development and removing non-price barriers. But the political reality is that carbon pricing is out of reach, at least for now. So Australia should pursue sector-specific policies.
Australian governments can and should act now to create momentum towards the net-zero goal. This report, the first in a series on net zero, recommends policies for the transport sector, which was responsible for 18 per cent of Australia’s emissions in 2020.
Annual emissions from transport grew from 82 million tonnes in 2005 to 101 million tonnes in 2019. The reasons include population growth, larger vehicles, increased freight movements, and more flights. Emissions dropped sharply, by 7 million tonnes, in 2020 due to the COVID-19 pandemic, but the Federal Government projects they will rebound and reach 100 million tonnes by 2030.
The best way to cut transport emissions is to switch to zero-emissions vehicles, mainly battery electric vehicles, in the light vehicle fleet. The range, performance, upfront price, and total ownership costs of zero-emissions vehicles are rapidly improving. But relying on technology and market forces alone won’t be enough to get on track for net zero by 2050.
The vehicle fleet takes more than 20 years to replace; any new petrol and diesel cars sold in the 2030s could still be in use after 2050. Australia needs a national fleet emissions standard for new passenger and light commercial vehicles, and the standard should tighten to zero emissions by 2035. This would signal an end date for the sale of new petrol and diesel light vehicles, consistent with other major economies and with International Energy Agency advice. And it would encourage car manufacturers to supply low- and zero-emissions vehicles that meet Australian consumers’ range and performance demands.
Governments should encourage a thriving market for zero-emissions vehicles by exempting them from inefficient taxes such as import duties, luxury car tax, and motor vehicle stamp duty. They should ensure drivers across the country have somewhere to charge electric models.
Cutting emissions in the light vehicle fleet would ease the pressure to find emissions reductions in other modes of transport, such as aviation and long-distance trucking, where affordable alternatives to fossil fuels are harder to identify. In these sectors, governments should make small bets on all the alternatives, and plan scenarios for each should it become the clear winner. Increasing the truck width limit to match the US standard would mean zero-emissions models designed for overseas markets could be more easily adapted for Australia. A renewable hydrocarbon fuel target would also be a smart bet, especially for the aviation industry.
Action today is crucial to avoid locking in emissions for decades to come, and to ensure the transport sector contributes to Australia reaching net zero by 2050. Governments have set the goal; this report identifies the practical, no-regrets policies they can adopt to steer Australia in the right direction.