Carmakers in Australia Face Heavy Fines for Climate Target Non-Compliance
Major car brands, including Mazda, Nissan, and Subaru, are facing potential penalties in the millions of dollars due to their failure to meet climate targets for new vehicles in Australia. This comes as a result of the Albanese government's introduction of a new vehicle efficiency standard.
In the first six months of data collection, 40 companies, or 68% of the total, surpassed their initial target for the average emissions efficiency of the new cars they sold. Notable brands such as BYD, Toyota, Tesla, Kia, Ford, Volkswagen, BMW, and Polestar achieved this by selling cars that, on average, released less carbon dioxide per kilometre than required.
However, 19 companies fell short of their targets and may have to buy credits or pay penalties if they don't significantly improve their performance over the next two and a half years. Mazda's potential liability stands at approximately $25 million, Nissan at over $10 million, and Subaru at $7 million. These liabilities can accumulate or reduce and become due in 2029.
Other companies that missed their initial target include Hyundai, General Motors, Honda, Porsche, Ferrari, and Jaguar. Despite this, the federal transport minister, Catherine King, highlighted that the average pollution for new light passenger vehicles across the industry outperformed the target by 21%.
Electric vehicles accounted for 12% of new sales in the second half of last year, an increase but still significantly short of the target for the scheme's role in meeting national climate goals. The remaining 88% were petrol and hybrid vehicles. Globally, about 25% of new cars sold last year were electric, with China being the world's largest EV market, accounting for over 60% of global EV sales.
The Australian vehicle efficiency standard mandates that carmakers supply new vehicles meeting an average per-kilometre emissions target, which will be reduced over time to encourage cleaner cars. No cars are banned, and more polluting models can still be sold, offset by EVs or low-emissions vehicles. Companies that beat their target earn credits, which can be sold to those that miss their target and need to offset extra pollution.
In the first six months, companies earned 17.2 million credits for beating their targets, while those that missed their target faced a combined potential liability of 1.3 million tonnes, resulting in a net surplus of 15.9 credits. The Electric Vehicle Council praised the standard's success, with its CEO, Julie Delvecchio, stating that critics' warnings of supply shortages, soaring prices, and market disruption were unfounded.
Delvecchio argued that the first performance report demonstrated strong industry performance, healthy competition, and a clear acceleration in cleaner vehicles coming to Australia. She emphasized that clear and predictable standards drive innovation and investment, modernizing markets rather than breaking them.
However, the National Automotive Leasing and Salary Packaging Association expressed concern, suggesting that the removal of a contentious fringe benefits tax exemption on clean cars could hinder Australia's EV uptake and climate targets. This controversy highlights the ongoing challenges and debates surrounding the implementation of climate targets and the role of carmakers in achieving them.
