Australian auto industry to adopt voluntary CO2 code

The Australian automotive industry is set to introduce a landmark voluntary CO2 code that would encourage car-makers to lower their fleet-average emissions and move Australia’s CO2 standard closer to that of Europe.

Australia’s current emissions regulations currently remain about 10 years behind those in Europe, the US and other developed nations, requiring a minimum Euro 5 standard rather than the more stringent EU6 limit enforced in Europe since 2015.

carsales has learned a draft bill for the voluntary code was set to be shared with members of the Federal Chamber of Automotive Industries (FCAI) in recent weeks, but has been put on hold because of the coronavirus pandemic.

A spokeswoman for the national auto industry body confirmed the project is continuing behind the scenes, but declined to comment on finer details.

“It’s a topic the FCAI has looked at. We have been very vocal in discussing our belief there needs to be such a standard introduced to our market,” said FCAI spokeswoman Lenore Fletcher.

“There are already similar initiatives in the US and Europe. We’re not at the point yet of having a finished product, we’re still working on it.”

Compliance with the FCAI code would not be compulsory as it is in Europe, where substantial fines are imposed on car-makers that do not meet range-wide average CO2 emissions limits.

Instead, it is hoped the voluntary Australian code would help move our new-vehicle fleet closer to the new European mandate of 95g/km CO2, which equates to about 3.8L/100km, from 2021.

In 2017, the average combined CO2 emissions for new vehicles sold in Australia was 182g/km.

Senior industry executives have welcomed the voluntary code, saying it could help Australia’s transition to cleaner internal combustion engines along with electrification.

“The FCAI are ahead of this, they’re ahead of the government,” said Volkswagen Australia managing director Michael Bartsch.

“The FCAI is doing the right thing by saying ‘the government is too slow, we know it’s an inevitability that some point, there’s going to have to be some codes and higher level governances in place in terms of CO2 and NOX. We may as well get ahead of it because at some point it will be legislated’.”

One of the biggest obstacles remains Australia’s sulphur-rich fuel, which is currently ranked 70th globally in terms of fuel standards.

Under current requirements, Australian 91-octane unleaded has a sulphur limit of 150 parts per million (150ppm), while 95 and 98-octane premium fuels have a cap of 50ppm – compared with 10ppm in Europe.

Among developed nations in the OECD, only Mexico has worse petrol quality.

Bartsch has witnessed the setbacks of not embracing the latest environmental standards first-hand, with Volkswagen Australia unable to import some of the greener petrol engines because of sub-standard fuel.

He believes adopting a voluntary code will encourage the government to fast-track the implementation of higher fuel standards.

“If we don’t we’ll only be playing catch-up and that’s a very expensive game,” he said.

“Worst of all, if we don’t do it ourselves, we’ll no longer have the ability to draw on a very broad product range, particularly out of Europe because the standards there are moving ahead of what the fuel standards here are able to operate with.”

Furthermore, Bartsch warned that without a stricter emissions code, Australia risked prolonging the take-up of EVs in Australia, as demand will be reverted to Europe where such policies already exist.

“We’re not going to get electric vehicles in Australia until the environment is conducive to bringing electric vehicles in, and the environment won’t be conducive until there’s some legislative framework to say ‘let’s do it’,” he said.

“The operating environment here that says you can still run and bring cars in on EU5. Where’s the incentive? It’s simply not there. It’s so unbelievably short-sighted.”

Bartsch vehemently rejected claims from the fuel industry that lower sulphur levels would drive up the price of petrol.

“We’ve seen the argument of fuel cost and how quickly it can be put in the waste bin simply by there being a price war between Russia and Saudi Arabia. The cost of fuel is such a variable, what is relevant today could be absolutely irrelevant tomorrow,” he said.

“It’s highly unlikely the cost of oil will go up, unless there’s a war. Either way the sooner you loosen the reigns and encourage a competitive alternative, it’s going to be better for the consumer.

“By saying you’re protecting the consumer by locking in on outdated technology, it’s only the consumer that will lose. If the government is really concerned with the short-term cost, then decrease the levy on fuel.”

The FCAI says it hopes to provide more details on the voluntary emissions code in the coming months.

“This has been a topic that’s been around for some time, and in terms of examining what it could look like and the process, this has been going on for some years,” spokeswoman Fletcher said.

“We are moving towards getting the finished product and we hope to be able to communicate that soon.”