Car industry slams government's carbon car tax proposal

Car makers in Australia have criticised a proposed new “carbon tax” on cars, questioning how stringent new targets can be enforced with Australia’s sub-standard fuel quality.

Reports have emerged revealing the Government is proposing carbon penalties that will be slapped on car distributors who fail to meet emission targets.

As part of the proposal from the Department of Infrastructure and Regional Development (DIRD), consumers would be slugged thousands of dollars extra for new vehicles which exceed emission targets enforceable from 2022.

The Federal Chamber of Automotive Industries said after 18 months of talks with the Government over the issue, it was disappointed with the “unrealistic and ill-considered” proposal. The Government has distanced itself from the proposal, insisting that no decision has been made.

Almost every one of today’s top 10 most popular models (including Toyota HiLux, Ford Ranger and Toyota Corolla) would exceed the rules, which aim to slash the national fleet emissions average to the equivalent of 105g/km CO2 - down from 335g/km CO2 in 2015.

While the proposed Australian measures are still more lenient than European emission standards, which target a 95g/km CO2 fleet emissions average by 2021, the enforcement is less straight-forward.

Mercedes-Benz Australia corporate communications manager David McCarthy said the government’s proposal was “unrealistic” with Australia’s poor fuel quality.

“This whole idea of an emission standard hinges so much on fuel quality,” McCarthy said.

“At the end of the day, the industry has said for us to continue to reduce emissions, you need to improve fuel quality.

“Without an improvement in fuel quality, that reduction in emissions is going to be much harder to achieve.”

Australia’s fuel quality is considered sub-standard with much of the developed world due to higher levels of sulphur.

Local regulations set sulphur levels at 150 parts per million (150ppm) in 91 Octane unleaded and 50ppm in 95 and 98 Octane unleaded. Among developed nations in the OECD, only Mexico has worse fuel quality.

For its part, petroleum companies insist real-world sulphur levels are substantially lower than said standards.

“We have some of the worst fuel in the world,” McCarthy said.

“We all want to reduce emissions, the industry wants to, but fuel quality is key to this. It’s pretty sensible to have harmony with European regulations, but unless you have the same fuel quality, you’re not going to achieve the reductions they’re looking for.

Stakeholders have also expressed concern with the proposed measures given Australia’s insatiable appetite for SUVs and utilities - among the market's biggest polluters. In a statement the FCAI said the proposal would "severely impact on the work, utility and lifestyle options of Australian consumers".

The department proposes a four-year phase in period starting in 2022, when 65 per cent of car sales would need to meet the target average of 105 grams, rising to 100 per cent in 2025.

Vehicles which fall under the ‘target value’ would accrue credits that can be offset against cars that are over the carbon dioxide limit.

Car sellers who breach 105g/km target average over a three-year period will have to reportedly pay $100 for every extra gram of carbon dioxide per kilometre generated.

Preliminary estimates by automobile industry experts forecasted popular models of cars could increase by more than $5000.

There are fears that Australia’s car fleet age could also blow out from the current average of 10 years, as consumers hold onto older vehicles longer before upgrading.

According to the Australian Financial Review, car makers selling zero emission electric cars would receive additional credits worth three cars to “encourage the supply of ultra-low emission vehicles”.

However, unlike Europe, where car makers who fall afoul of regulations can buy abatement from rivals who have built up credits, the Coalition is reluctant to include a trading component in its proposal.

A spokesman for DIRD said the government had not made a decision on the fuel efficiency standards proposal.

"The Department of Infrastructure and Regional Development released the proposed model for consultation only, and welcomes any stakeholder feedback," the spokesman said.