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Vehicle Fuel Efficiency Vehicle Fuel Efficiency Potential measures to encourage the uptake of more fuel efficient, low carbon emission vehicles Public Discussion Paper Prepared by Australian Transport Council (ATC) and Environment Protection and Heritage Council (EPHC) Vehicle Fuel Efficiency Working Group With support from The Australian Government September 2008 Closing date for comments: 7 November 2008 © Commonwealth of Australia 2008 This work is copyright. You may download, display, print and reproduce this material in unaltered form only (retaining this notice) for your personal, non-commercial use or use within your organisation. Apart from any use as permitted under the Copyright Act 1968, all other rights are reserved. Requests and inquiries concerning reproduction and rights should be addressed to Commonwealth Copyright Administration Attorney General’s Department Robert Garran Offices National Circuit Barton ACT 2600 or posted at http://www.ag.gov.au/cca Disclaimer The discussion paper has been prepared by the Australian Transport Council/Environment Protection & Heritage Council Vehicle Fuel Efficiency Working Group. The opinions, comments and analysis expressed in the discussion paper are for discussion purposes only and cannot be taken in any way as an expression of current or future policy of the Australian Government nor any state or territory government. The views and opinions expressed do not necessarily reflect those of the Australian Government or the Minister for the Environment, Heritage and the Arts, the Minister for Infrastructure, Transport, Regional Services and Local Government, or the Minister for Climate Change and Water. While reasonable efforts have been made to ensure that the contents of this publication are factually correct, the Commonwealth does not accept responsibility for the accuracy or completeness of the contents, and shall not be liable for any loss or damage that may be occasioned directly or indirectly through the use of, or reliance on, the contents of this publication. 2 Vehicle Fuel Efficiency – Public Discussion Paper Contents Abbreviations................................................................................................................................. 4 1 Introduction.............................................................................................................................. 5 1.1 Overview ......................................................................................................................... 5 1.2 Aim .................................................................................................................................. 6 1.3 Scope .............................................................................................................................. 6 1.4 Submissions .................................................................................................................... 7 2 The Nature of the Challenge ................................................................................................... 8 2.1 Profile of the Australian Vehicle Fleet ............................................................................. 8 2.2 Greenhouse Emissions and the Transport Sector ........................................................ 18 2.3 Consumer Behaviour in the Road Transport Sector ..................................................... 21 2.4 Current Measures.......................................................................................................... 21 2.5 Impact of Current Measures.......................................................................................... 25 3. Capacity for Improvement ..................................................................................................... 26 3.1 The Role of Vehicle Technology.................................................................................... 26 3.2 The Role of Fuels.......................................................................................................... 26 3.3 Policy Measures Overview............................................................................................ 31 4 Assessment of Potential Measures ....................................................................................... 35 4.1 Measures to Increase the Supply of Low Emission Vehicles ....................................... 35 4.2 Measures to Increase Demand for Low Emission Vehicles.......................................... 46 4.3 Measures to Improve Consumer Awareness ................................................................ 69 5 Conclusion............................................................................................................................. 86 6 Next Steps ............................................................................................................................ 88 7 Your Views............................................................................................................................. 88 8 Glossary ................................................................................................................................ 89 Appendix A – Notes on CO2 Emission Scenarios for Measure 2.1............................................. 91 Vehicle Fuel Efficiency – Public Discussion Paper 3 Abbreviations ACIS Automotive Competitiveness Investment Scheme ADR Australian Design Rule AFCP Alternative Fuels Conversion Program AfMA Australasian Fleet Managers Association ATC Australian Transport Council BITRE Bureau of Infrastructure, Transport and Regional Economics CAFE Corporate Average Fuel Economy CCP Cities for Climate Protection CNG Compressed Natural Gas COAG Council of Australian Governments CPRS Carbon Pollution Reduction Scheme EC European Commission ECMT European Council of Ministers for Transport EEBP Energy Efficiency Best Practice EPA Environmental Protection Agency EPHC Environmental Protection and Heritage Council EU European Union FCAI Federal Chamber of Automotive Industries GRPE Group of Rapporteurs on Pollution and Environment GTR Global Technical Regulation GVG Green Vehicle Guide GVM Gross Vehicle Mass ICLEI International Council for Local Environmental Initiatives IEA International Energy Agency ISO International Organisation for Standardisation ITF International Transport Forum LEEV Light duty Environmentally Enhanced Vehicle LNG Liquefied Natural Gas LPG Liquid Petroleum Gas MVP Motor Vehicle Producer NACE National Carbon Emissions NAFC National Average Fuel Consumption NEDC New European Driving Cycle PULP Premium unleaded petrol SUVs Sport Utility Vehicles ULP Unleaded petrol/Premium unleaded petrol UNECE United Nations Economic Commission for Europe VFE Vehicle Fuel Efficiency WHDC Worldwide Harmonised Duty Cycle 4 Vehicle Fuel Efficiency – Public Discussion Paper 1 Introduction 1.1 Overview At its meeting in February 2006, the Council of Australian Governments (COAG) requested the Australian Transport Council (ATC) and the Environment Protection and Heritage Council (EPHC) to provide a report on programs and incentives to encourage the uptake of more fuel-efficient and low emission passenger and freight vehicles, and to provide advice on opportunities for reforms to regulations, standards, codes and labelling requirements to improve vehicle fuel efficiency. A joint ATC/EPHC working group prepared an initial report which was endorsed by ATC and EPHC, and transmitted to COAG at the end of 2006. COAG noted the report at its 13 April 2007 meeting. The then Prime Minister, as chair of COAG, subsequently wrote to the chairs of ATC and EPHC requesting the councils to “develop jointly a package of vehicle fuel efficiency measures designed to move Australia towards international best practice”. In response to that request, the COAG Vehicle Fuel Efficiency (VFE) Working Group has prepared this public discussion paper to assist in the preparation of a report to ATC and EPHC in early 2009. Since the commencement of the report, a number of events have occurred which are relevant to Australia’s transport and climate change agenda, and have a material impact on a discussion of potential measures. In late 2007, the Australian Government committed Australia to cutting greenhouse gas emissions by sixty per cent from 2000 levels by 2050. On 16 July 2008, the Australian Government released a Green Paper outlining a Carbon Pollution Reduction Scheme (CPRS).1 The CPRS is expected to commence in 2010 and will be the primary mechanism to address the market failure of uncapped greenhouse gas emissions and encourage activities and investment to reduce emissions. The CPRS will place a limit on the amount of carbon pollution Australia can emit through the ‘Carbon Cap’. Parties will be required to buy a ‘pollution permit’ for each tonne of carbon they contribute to the atmosphere, providing a strong incentive to move to more greenhouse efficient practices and technologies. The Government proposes including the transport sector in the CPRS. The carbon price arising from the CPRS will be reflected in the price of transport fuels. In order to give households and businesses time to adjust to the scheme, the Government will cut fuel taxes on a cent for cent basis to offset the initial price impact on fuel, associated with the introduction of the CPRS. The Government will periodically assess the adequacy of this measure for three years and adjust this offset accordingly. At the end of the three year period the Government will review this adjustment mechanism. For heavy vehicles, it
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