Tailpipe tax agenda

THE federal government has moved to toughen its stance on the fuel consumption of Australian-built and imported new vehicles sold in Australia, releasing a discussion paper last weekend that laid out “potential measures” that could come into force.

Prompting the Federal Chamber of Automotive Industries (FCAI) this week to describe the “barrage” of far-reaching new fuel-saving measures as unnecessary, the paper evaluates eight specific actions to reduce fuel consumption and will become an important instrument for the government as it moves towards a tough emissions trading scheme in 2010.

The measures include: CO2 emission targets for new light vehicles (voluntary or mandatory) differential registration and stamp duty charges for new light vehicles based on CO2 emissions direct financial incentives for low-emission vehicles fleet purchasing frameworks which incorporate CO2 reduction objectives inclusion of fuel consumption and CO2 data in new vehicle advertisements and international standards/labelling requirements for non-engine components which impact on CO2 emissions.

Other measures include an environmental rating scheme for heavy vehicles and a technology demonstration scheme for Australian commercial road transport fleets linked to CO2 outcomes.

The forthcoming emissions trading scheme will increase the cost of the fuel by at least six cents a litre, an impost the government will offset for the first 36 months through a cut in fuel taxes but which, in the longer-term, is designed to force consumers and car companies to move toward more “greenhouse-efficient practices and technologies”.

As GoAuto reported in July, the local car industry gave its support to the scheme recommended by government advisor and economist Ross Garnaut, despite it directly affecting local manufacturing industries and putting further pressure on Australia’s three embattled car-makers in an already difficult market environment.

Left: Environment minister Peter Garrett, transport minister Anthony Albanese and FCAI chief executive Andrew McKellar.

However, FCAI chief executive Andrew McKellar told GoAuto that the proposed measures outlined in the vehicle fuel efficiency paper issued this week would not be needed if the government got the emissions trading scheme right.

He also said the measures were an admission of sorts that the government did not expect the trading scheme to be fully effective.

“An emissions trading scheme inclusive of transport should be the core strategy to reduce carbon emissions across the economy as a whole,” he said.

“The inclusion of transport in a wellstructured emissions trading scheme will achieve that objective, provided that the scheme is well designed, that the targets are well specified and that the trajectories to achieve the longer-term targets are realistic.

“If that’s the case, if you think you’re going to hit your target, then frankly the need for a whole barrage of other measures is unnecessary. The only reason you would put in place other measures was if you didn’t think your emissions trading scheme was going to be effective – if you thought that it wasn’t going to work, that it wasn’t going to achieve the targets that were set in its own right.

“What we need to do is go through the process of developing an emissions trading scheme. That process is underway, and we’ve got to get that in place. But I think beyond that, to contemplate a barrage of other measures really would be an admission upfront that you don’t expect the emissions trading scheme to be fully effective.” The report was released by environment minister Peter Garrett and transport minister Anthony Albanese on behalf of the Australian Transport Council and the Environmental Protection and Heritage Council “in response to a Council of Australian Governments (COAG) request to investigate vehicle fuel efficiency measures aligned with international best practice”.

Public submissions are being sought on the report until November 7, 2008.

“The transport sector is the third largest and one of the fastest-growing sources of carbon pollution in Australia, with more than 14 million registered vehicles on our roads,” the ministers said in a joint statement.

“There is no silver bullet for reducing CO2 emissions from the transport sector – instead we need a structured and measured approach to this issue.

“The Australian Government’s Carbon Pollution Reduction Scheme (CPRS) will be the primary mechanism for reducing CO2 emissions on an economy-wide basis.

Reforms to address fuel efficiency will need to be complementary to the scheme to help reduce travel costs and carbon emissions for Australian motorists.” Mr McKellar said the car industry would now analyse the proposed measures in detail and respond accordingly.

“We fully accept that there is a responsibility for the car industry to contribute to efforts to reduce carbon emissions in Australia, as part of a global solution,” he said.

“We’ve already seen substantial change in the marketplace in the last two to three years, and we know that people have responded to the impact of higher fuel prices in their buying patterns of vehicles already.

“So if you see an effective price signal coming through as a result of an emissions trading scheme, then I think you will drive results through that channel.” There is currently no requirement for Australian car-makers to reach a certain level of fuel economy for their vehicles. In 2003, local manufacturers entered into a voluntary agreement to achieve an average fuel economy figure of 6.8L/100km for all passenger cars by 2010.

However, that code was changed in 2005, when the FCAI adopted a new CO2 emissions target of 222g/km.

This coincided with the adoption in Australia of the Euro III emissions standard, which took into greater account the levels of emissions than of fuel economy.

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