New Vehicle Efficiency Standard

The Australian Government is currently working towards introducing a New Vehicle Efficiency Standard. Car companies inherently have prioritised sending lower emission vehicles to countries that already have fuel efficiency standards for new vehicles. Introducing this scheme will bring Australia in line with other developed countries with similar mechanisms to reduce car emissions. 

Potential CO2 emissions from new cars to be sold form the basis of the scheme. Each vehicle manufacturer has a set average CO2 target for the vehicles they produce, which they must meet or beat. Over time, the CO2 target is lowered and in order to continue to meet or beat the target, companies must provide more choices of fuel-efficient, low or zero emissions vehicles. Car companies are able to sell any car they want, but they will need to offset the sales of less efficient cars with those that are fuel efficient to meet national targets.  

This will only apply to new cars and will not affect the used car market at this stage. 

In meeting or beating the emissions target, the car company will accrue credits that are tradeable. If they exceed the target, the company has two years to offset this result with credits. If after this two-year period, the target has not been met, then a financial penalty will apply. 

No vehicle will be banned, and SUVs, 4WDs and utes will still be available, companies will just need to sell more lower emission vehicles to offset the sales of less efficient models. 

The Standard scheme is due to commence on the 1st January 2025, with some modifications required around recategorising of a limited number of 4WDs before it is put in place.  

To assist in the transition to the new scheme, as infrastructure to support the program needs to be enacted, credits and penalties will not accrue until 1st July 2025. 

For more information about the scheme visit the New Vehicle Efficiency Standard website.