An emissions ceiling on new vehicle sales would give Australia a fighting chance of reaching its 2050 net zero target — and provide big savings for drivers.
Some in the Morrison government seem to think net zero is all about cost. They fear that getting down to net-zero carbon emissions by 2050 will push household budgets and the economy to breaking point.
But when it comes to our cars, they couldn’t be more wrong. In fact, the road to net zero looks great for drivers.
The best step the government can take towards net zero in the transport sector is to introduce an emissions cap, or ceiling, for all new vehicle sales in Australia. Once the ceiling is in place, it should be gradually ratcheted down until it reaches zero.
A new Grattan Institute report shows that an emissions ceiling would be good not just for the environment, but also for drivers.
It could get Australia 40 to 50 per cent of the way to our 2030 emissions reduction target, and give us a fighting chance of reaching net zero by 2050.
And drivers would be better off too. On average, they would save more than $900 within the first five years of purchasing a zero-emissions or low-emissions vehicle — because electric cars are much cheaper to run than the petrol and diesel cars that most of us drive today.
Any net-zero conversation in Australia has to include the transport sector, because light vehicles cause 11 per cent of Australia’s carbon emissions. That number is so high because we drive a lot, and we drive high-emitting vehicles. An average Australian passenger car pumps out about 170 grams of carbon dioxide each kilometre it travels — about 40 per cent more than European passenger vehicles.
One reason our cars are such gas guzzlers is their size — we love our SUVs and utes.
But another reason is that Australia has failed to get and use the best technology to reduce emissions. In the absence of good policy, we’ve been left with a backwash of old-technology, gas-guzzling cars — and bigger fuel bills for drivers.
To get to net zero by 2050, we need to turn this trend around, and quickly. But when it comes to cars, we need to act even more quickly. Most of the cars we buy will be on the road for 15 years or more. So we should be aiming to ensure that all vehicles sold in Australia after 2035 are zero-emission vehicles.
The best way to achieve this is by imposing an annual average emissions ceiling that ratchets down to zero emissions by 2035 at the latest.
The ceiling would put a cap on the average emissions from new vehicles that manufacturers sell each year. If they breached the cap, they would be fined.
The idea is to encourage manufacturers to sell us the best-technology cars they can, instead of the gas-guzzlers on offer today.
It would be up to the manufacturers how they choose to meet their targets. They could offer more affordable electric vehicles to those who want them. Or they could choose to sell more hybrids and advanced combustion engine vehicles across their entire range.
Either way, the result would be a win-win, for the environment and for drivers.
Under an emissions ceiling, Australia could more than halve its emissions from light vehicles between now and 2050 — saving almost 500 million tonnes of carbon dioxide from going into the atmosphere.
And drivers have no reason to fear an emissions ceiling. In fact, the average driver would be better off because the costs of running a vehicle would plummet. Why? Because decreasing emissions from our cars means improving the fuel economy of our cars. And the less fuel we use, the less we pay to drive. In the case of electric vehicles, we don’t need any fuel at all, only electricity — which is far cheaper than petrol or diesel per kilometre.
Grattan Institute modelling shows that within five years of purchasing a new vehicle under an emissions ceiling, the average driver would have saved more than $900, even considering the fact that at the moment electric cars cost more than similar-sized petrol and diesel cars. Over a vehicle’s lifetime, the average driver’s savings would grow to well over $2000.
There’s also no reason to fear that an emissions ceiling would mean the death of the ute or the great Australian weekend.
Drivers who need or want a powerful ute for work, or an SUV to tow a boat or caravan, will remain free to purchase one until the technology catches up and their needs can be met by high-performance low-emissions or no-emissions vehicles.
Australian drivers should rest easy: the road to net zero will be a lot smoother than they may have been led to believe.
Marion Terrill is a leading policy analyst who has provided expert analysis and advice on labour market policy for the Commonwealth government, the Business Council of Australia and at the Australian National University. She is transport and cities program director at the Grattan Institute.
Lachlan Fox is an associate at the Grattan Institute.
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