Light-duty vehicle classification for Australia’s fuel efficiency standards

A key element of the design of light-duty vehicle (LDV) fuel efficiency or carbon dioxide (CO2) emission standards is how vehicles are classified. This briefing reviews LDV classification approaches in the European Union and the United States and then evaluates how different classification choices would likely impact the CO2 emissions from the LDV fleet in Australia in the long term.

Fuel efficiency standard curves can be either one curve for all LDVs or two separate curves, one for passenger cars (PCs) and the other for light commercial vehicles (LCVs). The latter allows LCVs to be subject to less-stringent emissions reduction targets even though PCs and LCVs have similar construction and power train technologies, and technologies that reduce fuel consumption or CO2 emissions in PCs can also be used on LCVs. In addition, if a single-curve standard is based on attributes such as vehicle mass or size, then the difference in vehicle mass or footprint naturally leads to a difference in stringency. However, a few countries, including the United States and Canada, go even further and allow certain heavy SUVs to be classified as LCVs instead of PCs; this method of classification risks promoting more heavy SUVs in the market, to take advantage of the less-stringent standards.

The authors modeled the CO2 emissions reductions expected from Australia’s fleet under three standard designs, one standard curve for all LDVs (“One-curve”), two standard curves that align with Europe’s existing approach (“Two curves–PC/LCV”), and two standard curves that align with the U.S. approach (“Two curves–SUV split”). SUVs are “split” in the United States in that they can fall under either the PC or LCV category, depending on certain attributes. Results show that the One-curve approach would yield fewer cumulative CO2 emissions from Australia’s LDV fleet from 2019 to 2050 than the other approaches. Even with the most ambitious world-leading standards, the Two curves–SUV split approach would yield 35 Mt more cumulative CO2 emissions than the Two curves–PC/LCV approach and 48 Mt more than the One-curve approach, due to changes in fleet composition that are expected to result from the classification choice. Based on this, we suggest that Australia adopt a one-curve approach for all LDVs, including passenger cars and light trucks. In case Australia chooses to adopt a two-curves approach, we suggest designing one standard curve for all light-duty passenger vehicles, including all SUVs and passenger cars, and a separate standard curve for LCVs.