Australia finalizes first-ever CO2 emissions standards for light vehicles, sending its clearest signal yet to the automotive industry.

May 17 (Washington, D.C.) – On May 16, the Australian Parliament passed the bill for New Vehicle Efficiency Standard (NVES), which sets the first-ever CO₂ emission standards for Australia’s light-duty vehicles. The standards set annual gCO₂/km emission targets from 2025 to 2029 for passenger cars, SUVs, utes, and vans.

The adoption of the NVES marks a critical step toward putting Australia on track to meet its decarbonization goals. The standards follow Australia’s first National Electric Vehicle Strategy, which emphasized the adoption of CO₂ standards as a key strategy to promote electric vehicle uptake.

The standard will drive down average CO₂ emissions from passenger cars (including most SUVs) by about 17% per year and from light-commercial vehicles (including utes, vans, and some heavy SUVs) by about 12% per year from 2024 to 2029. Overall, it is expected to lead to a cumulative emissions reduction of 20 million tons through 2030 and 321 million tons through 2050. This translates to more than AU$95 billion in fuel cost savings for consumers and health benefits valued at AU$5 billion through 2050.

The NVES is also expected to increase electric vehicle (EV) sales share of new light-duty sales, including battery-electric and plug-in hybrid electric vehicles. In 2023, approximately 8% of light-duty vehicles sold in Australia were EVs, compared to about 21% in Europe and about 33% in China. The United States had a light-duty EV sales share of about 9% in 2023 but has projected that EV sales could reach 53% by 2030 and 68% by 2032 under its recently released multi-pollutant standards for light-duty vehicles. The European Union and the United Kingdom also have set CO₂ standards or zero-emission vehicle mandates that require 100% zero-emission vehicle sales by 2035.

The standard shows the determination of the Australian government to bring cleaner and more efficient vehicles to the market. The strong signal sent to vehicle importers is critical to the transition to low- and zero-emission technologies and puts Australia in position to catch up to other major markets.

“As the 10^th biggest vehicle market in the world, this final efficiency standard is a clear signal to industry, and an important step for Australia to catch up with the pace of decarbonization in other major markets” said Zifei Yang, Global Passenger Vehicle Lead at the International Council on Clean Transportation.

Figure 1. Passenger car CO2 emissions, normalized to NEDC.

Figure 2. Light commercial vehicle CO2 emissions, normalized to NEDC.

Media contacts
Kelli Pennington, Global Communications Manager
Zifei Yang, Program Lead
communications@theicct.org

About the International Council on Clean Transportation
The International Council on Clean Transportation is an independent nonprofit organization founded to provide first-rate, unbiased research and technical and scientific analysis to environmental regulators. Our mission is to improve the environmental performance and energy efficiency of road, marine, and air transportation, in order to benefit public health and mitigate climate change.