Australian petrol and diesel vehicle ban proposed for 2035

Australia must end the sale of new petrol and diesel vehicles by 2035 if it is to cut carbon emissions to net zero by 2050.

That’s the call from public policy thinktank the Grattan Institute, which in a wide-ranging report on the transport sector also calls on Australian governments to make electric vehicles cheaper and easier to charge to encourage a higher take-up rate.

A key plank of the report is a recommendation the federal government impose a mandatory emissions limit on Australia’s light vehicle fleet and reduce the limit to zero by 2035, thus eliminating petrol and diesel-engined car, SUV and light commercial sales.

The institute has warned an expensive ‘cash for clunkers’ program might have to be funded to get petrol and diesel vehicles off our roads if the switch to EVs is not aggressive enough.

“The transport sector is responsible for nearly 20 per cent of Australia’s emissions, and more than 60 per cent of transport emissions are from light vehicles [including the two most popular cars in Australia, the Toyota HiLux and Ford Ranger]. So the best way to cut transport emissions is to supercharge the switch to electric cars,” the report authors wrote.

This is the first of five reports the Grattan Institute plans in the lead-up to an international climate conference in Glasgow in November, showing how Australia can build momentum towards net-zero carbon emissions by 2050.

All Australian state and territory governments have the goal of reaching net-zero carbon emissions by 2050 at the latest, and prime minister Scott Morrison says the national goal is net zero, preferably by 2050. As it stands, Australia will not hit that target.

Some states have introduced incentives for EV buyers but the federal government has so far avoided such a commitment.

“The best policy would be an economy-wide emissions price,” the authors noted. “But we need to accept the regrettable reality that neither side of Australian politics is going to introduce an emissions price any time soon.

“The climate clock is ticking. We can’t wait around for an emissions price. So this series will identify sector-specific policies Australia should implement to set us on the path to net zero.”

The Grattan Institute says governments can reduce EV purchase pricing by exempting them from stamp duty, import duty and luxury car tax.

Scrapping stamp duty would cut the cost of new EVs by up to 6.5 per cent it states.

The institute argues removing import duty would ensure a wider choice of EVs for Australia buyers as well as cut the upfront cost of some models by up to five per cent.

The luxury car tax is currently applied to any fuel-efficient vehicle costing more than $77,565. Removing that would further lower EV prices.

The call to cut taxes on EVs drew support from the Federal Chamber of Automotive Industries (FCAI), the umbrella body of car brands sold in Australia.

“Tax reform would reduce the cost of electric vehicles in Australia,” declared FCAI chief executive Tony Weber in a statement today.

However, he was less enthusiastic about phasing out petrol and diesel sales by 2035.

“This approach does not recognise the significant differences in market preferences across Australia, which is unique among the global markets,” said Weber.

“Governments should pick targets, not technologies. Decisions around technology should be left to the experts – the vehicle makers.

“The aim should be to reduce CO2 rather than give preference to one technology over another.”

In regard to charging, the Grattan Institute report recommended governments should require all new buildings with off-street parking to include electrical cabling to allow for an appropriate number of future vehicle chargers.

The report says they should also require all leased dwellings with off-street parking have at least one electrical outlet near the car park by 2030.

Also called for is convenient, local vehicle charging is available by 2030 for all residents of homes without off-street parking.

Other policies the Grattan Institute called on government to introduce included:
- Increasing the truck width limit in Australia from 2.5m to 2.6m, so low-emissions models made for the EU or US (which allow wider trucks) can be used in Australia without expensive modifications.
- Supporting targeted trials of zero-emissions trucks, particularly hydrogen trucks, to assess their performance under Australian conditions and practices.
- Imposing a renewable hydrocarbon standard for diesel, aviation fuel and shipping fuel.