What does the New Vehicle Efficiency Standard mean?

The New Vehicle Efficiency Standard will come into effect from 1 January, 2025.

The New Vehicle Efficiency Standard will come into effect from 1 January, 2025. Photo: AAP

The Albanese government’s New Vehicle Efficiency Standard (NVES) legislation has passed Parliament, but what will it mean for the Australian car industry and drivers?

What is it?

The standard will reduce emissions from Australia’s fleet of vehicles by setting a cap on carbon emissions allowed across a manufacturer’s overall new car sales.

The government and proponents of the standard believe this will encourage car makers to supply lower and zero-emission vehicles into the market and cut transport pollution.

Chris Bowen, Minister for Climate Change and Energy, said Australian motorists will no longer be “at the back of the global queue for cars that are cheaper and cleaner to run”.

“This is not just a win for the environment, it’s a big win for motorists around the country who want access to a bigger variety of more efficient vehicles,” he said.

“The impact of this shift will benefit Australians for decades.”

The standard will come into effect from the start of 2025 and progressively raise the emission limit for the manufacturers over five years.

Was it needed?

Other countries — like the United States — have had vehicle emissions standards for decades, while Australia and Russia are the only two OECD countries not to have any.

Dr Jennifer Rayner, Climate Council head of advocacy, said Australia has become a dumping ground for dirty, high-polluting and expensive-to-run cars that are no longer sold overseas.

“This policy will start to change that by the end of this decade,” Rayner said.

“New cars will be producing about half as much climate pollution as they are today.”

More than 70 per cent of passenger vehicles sold worldwide are subject to emissions standards.

The standard will force manufacturers to stop dumping high-polluting cars in Australia. Photo: AAP


Both the Coalition opposition and Federal Chamber of Automotive Industries opposed the standard, with Ted O’Brien, the Coalition’s climate change and energy spokesperson, claiming it was a tax on family cars and utes.

Independent analyses from Australia and overseas found that the fuel efficiency standards will have minimal to no impact on the price of vehicles and would save drivers an average of $1000 on fuel and maintenance across five years.

Watered down?

While the New Vehicle Efficiency Standard isn’t as stringent as first proposed by the Albanese government, Rayner said the legislation passing is still a positive outcome for combating emissions and drivers.

“In some negotiations with industry and other stakeholders, the government worked through concerns that would mean people wouldn’t be able to get access to the types and range of vehicles that they need in Australia,” she said.

“The policy that has been legislated now will cover 80 million tonnes of climate pollution by 2036, which is a huge improvement for our climate, but it also means that people are using less fuel, which will be better for their household budgets.”

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