Cash for clunkers hides new CO2 target

While most of the focus over the weekend has been on the Prime Minister's proposed $2000 Cash for Clunkers rebate, the simultaneous announcement of compulsory emissions targets for new vehicles has largely gone unnoticed.

If re-elected as Prime Minister Julia Gillard has said her government will set a national fleet average target for CO2 emissions for all new vehicles sold from 2015 -- the same year the $2000 rebate expires -- and introduce another, even more stringent target from the year 2024.

The proposed target figure for 2015 is 190g/km, which means the average emissions of all vehicles sold by each car brand must not be higher than this amount. The proposed target figure for the year 2024 is 155g/km.

A statement issued by the Prime Minister's office over the weekend said:

"New legislation will require all car companies to reduce emission levels from vehicles they sell in Australia by introducing better technologies and changing the fleet mix. The levels set will be determined in consultation with industry and stakeholders.

"The mandatory standard will set a national fleet-wide target of average carbon dioxide emissions reduction -- and each individual motor vehicle company will have to contribute to this target. Previously, Australian emission standards were voluntary, setting inadequate targets or none at all."

It is not yet clear what penalties will be imposed on car makers who exceed the fleet average emissions targets. However, in Europe vehicles are taxed according to their fuel economy and emissions -- and gas guzzlers are hit hardest.

Forcing car makers to police emissions levels means they'll need to sell a higher proportion of fuel-efficient models to offset sales of gas-guzzlers.

For example, in the case of Australia's biggest selling automotive brand, Toyota, it will need to sell a higher proportion of economical small cars and hybrids if it is to continue selling big four-wheel-drives, utilities and commercial vehicles in large numbers.

As with other car makers, it will also need to find ways to develop more fuel-efficient technology for its larger vehicles.

Toyota currently sells more HiLux utilities (pictured) than it does Corollas. The Corolla has a CO2 rating of 173g/km -- so it is under the 190g/km average.

But the V6 petrol HiLux 4WD double-cab ute has a CO2 rating of 317g/km and the diesel HiLux 4WD double-cab ute has a CO2 rating of 219g/km -- both above the target average.

The Toyota Prius hybrid has the lowest CO2 emissions of any petrol car on sale in Australia -- with a rating of just 89g/km. But, based on sale figures so far this year, Toyota only sells one Prius for every 10 LandCruiser 4WDs sold.

The emissions target will likely encourage a swing to smaller engines across all types of vehicles -- and make diesel power an increasingly attractive proposition.

A litre of diesel emits more CO2 than a litre of unleaded petrol when burned -- but because diesel engines are more efficient, they burn less fuel to travel the same distance as a similarly-sized petrol car.

The Gillard government might be talking tough on the issue of climate change, but the reality is that most car makers will achieve the proposed targets at a canter because the fuel economy and emissions regulations are already much tougher in Europe, North America and Japan than they are in Australia -- and 85 per cent of cars sold in Australia are imported.

Australia's target of 190g/km in 2015 is still well short of the current European CO2 emissions standard of 160g/km -- and well short of where the Europeans will be by 2015, with a fleet average target of 130g/km.

According to the Federal Chamber of Automotive Industries, the national average for carbon dioxide emissions from passenger vehicles in 2008 was 222 grams of carbon dioxide per kilometre (g/km).

There are several reasons the Australian emissions targets are not as stringent as they are in Europe.

Australia includes vehicles up to 3.5-tonnes in its passenger-car data, whereas European data includes passenger vehicles only.

Australia has a higher proportion of petrol-powered cars, Europe has a higher proportion of diesel-powered cars.

About 80 per cent of new passenger cars sold in Europe are diesel. Despite the recent rapid rise in the popularity of diesel-powered vehicles in Australia, more than 80 per cent of new passenger cars sold here are petrol-powered.

Australia also has a much higher take-up rate of vehicles with automatic transmission. The Federal Chamber of Automotive Industries estimates the Australian fleet average is more than 70 per cent automatic. In Europe automatic transmissions represent about 10 per cent of the total fleet.

Conventional automatic transmissions (with torque converters) use more fuel than conventional stick-shift manuals. The increasing number of vehicles with robotised manual transmissions and twin clutch transmissions will help Australia reduce its CO2 emissions.

And lastly, Europeans tend to drive much smaller cars with much smaller engines than we do in Australia.

In Europe, the top selling vehicle is the four-cylinder Volkswagen Golf hatch, which is regarded as a decent-sized family car. In Australia, the biggest selling car is the Holden Commodore sedan -- whose most efficient V6 engine is rated at 221g/km.

Most Golf models emit between 120 and 140g/km. Even the thirstiest Golf in the range -- the high performance, turbocharged Golf R -- has fewer emissions than the most basic Commodore, with a figure of 197g/km.

The proposed emissions targets will likely have little impact on motorists themselves. The changes to cars will largely be out of sight, under the bonnet, where smaller and more fuel-efficient engines will live.

The good news is that most vehicles will reach new levels of economy that will help cut fuel bills. The government estimates the changes will save the average motorist $600 a year at current rates.

One issue the proposal does not address, however, is how far we drive our cars each year.

According to CENSUS data the average distance travelled of each car annually is approximately 15,000km. However a significant number of vehicles travel much further than this. Indeed, current tax laws encourage company cars to be driven further to avoid Fringe Benefits Tax.

The executive director of the Climate Change Institute, Richard Dennis, told a Sydney newspaper over the weekend: "This is a clear case of the government driving with its foot on the accelerator and the brake at the same time. It is simultaneously using the FBT system to encourage people to buy big company cars and the cash for clunkers scheme to buy them back."

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