EV sales linked to Australia's first sustained transport emissions decline

New government data suggests Australia's transport emissions may have peaked, with growing EV sales helping drive the nation's second consecutive annual reduction in transport-related greenhouse gas output outside the COVID period.

The figures come from latest Quarterly Update of Australia's National Greenhouse Gas Inventory, with the percentage points equating to 9.7 million tonnes of greenhouse gasses.

The report found national emissions fell 2.1 per cent year-on-year to 458.9 million tonnes of CO2-e (Carbon Dioxide Equivalent), with reductions recorded across electricity generation, transport, stationary energy, fugitive emissions, agriculture and waste.

Of particular significance was a 0.6 per cent reduction in transport emissions, driven largely by a three per cent decline in petrol consumption.

According to the report, transport emissions fell from 101.5 million tonnes of CO2-e in 2024 to 100.8 million tonnes in 2025, marking the second consecutive annual decline outside the disruption caused by the COVID pandemic.

The Department of Climate Change, Energy, the Environment and Water said the result could indicate Australia's transport emissions are approaching, or may already have passed, their peak.

Climate Change and Energy Minister Chris Bowen attributed part of the decline to increasing uptake of electric vehicles.

"EVs have grown from less than four per cent of new light vehicle sales in 2022 to more than 20 per cent in the first four months of 2026," he said.

"Our New Vehicle Efficiency Standard is making sure Australians get more choice of efficient vehicles that save money at the bowser and cut emissions."

However, it is important to note the inventory data only covers emissions through to December 2025.

While the report includes preliminary economy-wide estimates to March 2026, the transport analysis does not fully capture the substantial growth in EV sales seen throughout the first four months of 2026.

That period coincided with sharply higher global oil prices following instability in the Middle East, helping accelerate consumer interest in battery-electric and plug-in hybrid vehicles.

The report also noted preliminary transport emissions estimates for the March 2026 quarter do not include data on potential changes in fuel purchasing or consumption resulting from the Middle East conflict.

While transport emissions declined, diesel consumption continued to grow, rising 0.4 per cent over the year as freight demand and Australia's large diesel-powered SUV and commercial vehicle fleet continued to expand.

The inventory found diesel vehicle numbers have more than doubled since 2014, while petrol vehicle numbers have grown by only five per cent over the same period.

Outside transport, electricity remained Australia's largest source of emissions but also delivered some of the biggest reductions.

Electricity sector emissions fell 3.8 per cent over the year as renewable energy generation reached record levels, with renewables accounting for 43.2 per cent of National Electricity Market generation.

Battery storage also played an increasingly important role, with battery discharge across the National Electricity Market almost tripling during 2025 and reducing gas-fired generation during evening peaks by around 30 per cent.

The report found Australia's emissions are now 24.5 per cent below 2005 levels, though emissions from industrial processes rose threw per cent due largely to increased steel production.

The findings arrive as Australia prepares for the first full year of operation of the New Vehicle Efficiency Standard (NVES) and amid record EV market growth in 2026.

With EVs now accounting for more than one in five new vehicle sales and fuel prices remaining elevated, future emissions reports will provide a clearer indication of whether Australia's transport emissions have genuinely peaked and entered a sustained period of decline.

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