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AAA warns flawed Government approach will lead to higher costs for little benefit

23.3.2017

Australia’s peak motoring organisation, the Australian Automobile Association (AAA) has raised serious concerns about the processes and assumptions underpinning the Government’s proposals to reduce vehicle CO2 and noxious emissions. The AAA says an uncoordinated process has failed to produce a robust cost-benefit analysis and consumers may now needlessly pay more for fuel and cars as a result, with little or no demonstrable benefit for the environment.

The AAA is concerned the Government’s approach to vehicle emissions and fuel standards appears to be predicated on a number of flawed assumptions which will ultimately be bad for consumers and the economy, while missing an opportunity to reduce the environmental impact of cars in the real world.

AAA Chief Executive Michael Bradley said: “The AAA supports the Government’s objective of delivering cleaner cars and cleaner air, but Australian consumers won’t thank the Government for a scheme that makes cars and petrol cost more than they should, but fails to deliver benefit for our environment.”

The AAA has a range of concerns, not least that the Government is considering vehicle emission standards in isolation from fuel standards. As emissions are a function of both the vehicle and the fuel it uses, these aspects must be considered together to arrive at the most cost-effective way of ensuring our cars are cleaner.

The Government’s proposal to rush implementation of new fuel standards could also see Australian households face a fuel price shock. When the European Union reduced sulphur limits in petrol from 150 parts per million (ppm) to 10ppm as proposed in Australia, they did so over nine years (between 2000 and 2009).  At this stage, the Australian Government proposes to achieve the same reduction in less than two years.

The AAA is also concerned benefits such as projected fuel savings from more efficient cars have been significantly overstated, especially as these projections are based on lab testing which has been shown by AAA real-world testing to understate actual fuel consumption by up to 35 per cent.

“The AAA does not shy away from the contribution of Australian motorists to Australia’s environmental performance, however any emissions policy must deliver for the environment at the least cost to motorists and the economy. The Government’s documents show a lack of robust science behind their assumptions and Australian motoring clubs believe the Government must update its modelling and undertake further public consultation,” Mr Bradley said.

 The Government’s current proposals fail to consider:

 

  • The inability of Australian refiners to produce by 2020, the fuels required to support new emission standards, and the resultant impact on fuel prices and fuel security.
  • Timeframes for availability of Euro 6 and low CO2 emission vehicles into the Australian market, given manufacturers’ product planning cycles.
  • The gap between real-world vehicle emission levels and laboratory results which have shown significant variations, with up to four times the allowable limit of noxious gases and up to 35 per cent more CO2 and fuel use observed. 
  • Costs of Euro 6 and higher fuel standards that would be borne by regional communities, where there is little concern over air quality. 
  • The contribution of motor vehicles to urban air pollution when compared with industrial and agricultural activity, dust storms, wood smoke, salt spray and hazard reduction burns.  The Government’s references are either not traceable to a scientific source or are based on international studies where there is a much higher penetration of diesel vehicles and different climatic and atmospheric conditions. 
  • The detailed design of a CO2 standard.  The Government is seeking comment on three proposed CO2 targets without detailing how any of those targets could be measured.  Targets are based on the composition of the entire vehicle fleet and normally include credits for selling electric vehicles, as well as banking, trading and pooling arrangements.  All these issues affect the composition of a CO2 standard and the ability of manufacturers to meet a target.  
  • A detailed analysis of utility costs associated with a CO2 standard.  A CO2 standard can reduce vehicle choice and remove vehicle features valued by Australians (eg. performance, towing capacity and number of passenger seats). Any loss of valued features as a result of a CO2 standard must be fully accounted for. 
  • A full package of measures to support a CO2 standard. Experience in other markets indicates that CO2 standards for new motor vehicles have been supported by a range of complementary measures.  For Australia, this may include incentives for purchasing low emission vehicles (removing import taxes and barriers) and providing consumers with real-world fuel consumption and noxious emissions information. 

The AAA encourages the Government to address the deficiencies of its current process, undertake further public consultation to ensure the design of a vehicle emissions reduction framework is scientifically robust, and able to be welcomed by consumers.

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