A fuel efficient vehicle fleet for Victoria WHAT THE VICTORIAN GOVERNMENT CAN DO

Transcription

1 A fuel efficient vehicle fleet for Victoria WHAT THE VICTORIAN GOVERNMENT CAN DO

2 2 I A FUEL EFFICIENT VEHICLE FLEET FOR VICTORIA I WHAT THE VICTORIAN GOVERNMENT CAN DO Executive Summary Key Points The transport sector is Victoria s second largest greenhouse polluter totaling 19.3 million tonnes of CO2 equivalent in New cars purchased in Australia are approximately 41 percent more polluting than new cars purchased in the European Union. The average rate of fuel consumption in Australian vehicles has hardly changed since The NRMA-commissioned Jamison Group found in 2008 that compulsory fuel consumption standards could save the average motorist over $700 a year in fuel costs Strong mandatory vehicle fuel efficiency standards will be very important in driving vehicle fuel efficiency in Australia. However, international experience shows that standards are most effective when coupled with strong complementary measures. The Victorian Government s Green Light Report 2008 found that 84 percent of Victorians supported rewarding owners of efficient vehicles through complementary mechanisms such as registration. The Victorian Transport Plan includes over $38 billion worth of funding, but just percent of the budget is dedicated to lowering vehicle emissions. With $21 billion plus pledged for upgrading/building/planning new roads, the government s focus on road building with the justification that less polluting cars will be using them is simply not a realistic approach. The Victorian Government has a significant role to play in both advocating nationally for strong mandatory vehicle efficiency standards, as well as driving the uptake of efficient vehicles through policy and budget levers under their control. Recommendations 1. That the Victorian Government aggressively advocate the introduction of mandatory vehicle fuel efficiency standards to achieve a fleet average of 5L per 100km or better, for all new cars sold in Australia by This is in line with world s best practice in Japan and the European Union. 2. Introduce a sliding scale for car registration and stamp duty fees to provide further incentive for the purchase of low emission vehicles, and a disincentive against the purchase of vehicles with poor environmental performance. This should be introduced by the end of This would include a concession for fuel efficient vehicles and a levy on new inefficient and heavy vehicles. Further, the Victorian Government should also seek to: 3. Commit to purchase low emissions vehicles for its fleet, and to work with other state, federal and local government agencies, as well as business and industry to assist those agencies introduce similar efficiency targets for vehicle fleets. 4. Work with the federal government to ensure strong, on-going incentives for the local manufacture of fuel efficient vehicles, and to remove any perverse incentives.

3 3 I A FUEL EFFICIENT VEHICLE FLEET FOR VICTORIA I WHAT THE VICTORIAN GOVERNMENT CAN DO Introduction Climate change is a critical challenge for the Brumby Government. The transport sector is Victoria s second largest greenhouse polluter totaling 19.3 million tonnes of CO2 equivalent in But there are strong opportunities to achieve substantial savings in both greenhouse emissions and the budgets of working families. In November 2008 Environment Victoria released a detailed report, Turning it around: climate solu ons for Victoria completed by The Nous Group, which demonstrated that Victoria could cut its greenhouse gas emissions by 54 percent by 2020, based on 1990 levels. The study used the same model, methodology and consultants as an earlier study released by Premier Brumby at his Premier s Climate Summit in 2008, however modeled deeper and faster emissions reductions. The study found that it was possible to slash Victoria s emissions from transport by 9 million tonnes by 2020, and 16 million tonnes by but only with immediate action from government. The analysis identified vehicle fuel efficiency could contribute the strongest emissions reductions from the transport sector. While many of the decisions related to vehicle efficiency will be driven by the Federal Government, there are key roles for the Victorian Government to play in both advocating for strong mandatory vehicle efficiency standards nationally, and implementing policies at the state level that will both support the uptake of efficient vehicles and encourage adjustment across the automotive manufacturing industry.

4 4 I A FUEL EFFICIENT VEHICLE FLEET FOR VICTORIA I WHAT THE VICTORIAN GOVERNMENT CAN DO The need for mandatory vehicle efficiency standards Vehicle fuel efficiency is repeatedly cited as some of the low hanging fruit of climate change action - i.e. one of the more painless and obvious ways to reduce our greenhouse emissions. Despite this, Australia is yet to take the necessary steps to ensure these easy savings of greenhouse emissions are achieved. In tough economic times there are many actions the government can take to both reduce our greenhouse emissions and save consumers much needed dollars for the family budget. Analysis conducted by the NRMA-commissioned Jamison Group in 2008 found compulsory fuel consumption standards could save the average motorist over $700 a year in fuel costs. As petrol prices continue to rise, so too will this potential saving to Australian families. have recognised the need for a strong mandatory standard to drive the level of change required and keep their industries competitive internationally. Within the OECD Japan, South Korea, the USA and European Union all have mandatory standards for vehicle fuel efficiency, and China joins these nations with its own stringent fuel consumption regulations. The European Union, for example, has a mandatory emissions limit that will see the average emissions of new passenger cars in the EU reduce to 130g of CO2 per km by This policy is reinforced with monetary penalties for non-compliance. Australia s performance on fuel efficiency standards compares badly to the rest of the world. The Federal Chamber of Automotive Industries advises that in 2009 new Australian made passenger vehicles averaged 218g of carbon dioxide (CO2) per km, or put differently, 9.6L of fuel to travel 100km 2. This is approximately 41 percent higher than for new passenger vehicles in the European Union. Australia s existing vehicle fleet in 2007 had an average fuel consumption of 11.5L per 100km 3 - approximately the same as it was when figures were first collected in While Australia has relied on weak voluntary standards, other countries

5 5 I A FUEL EFFICIENT VEHICLE FLEET FOR VICTORIA I WHAT THE VICTORIAN GOVERNMENT CAN DO The role of the Victorian Government in achieving a strong mandatory fuel efficiency target for new vehicles The Council of Australian Governments (COAG) is currently undertaking a Regulatory Impact Statement (RIS) to assess the costs and benefits of introducing CO2 emission standards for light vehicles. COAG will then make a final decision on what the standard will be, and whether such standards should be voluntary or mandatory. Although national fuel efficiency standards are the responsibility of the federal government, the Victorian Government has a key role to play driving this process forward through COAG. Environment Victoria recommends that the Victorian Government advocate strongly through COAG for a mandatory standard that will achieve a fleet average of 5L per 100km (114g CO2/km) or better for all new cars sold in Australia by 2015, bringing Australian vehicle standards in line with European and Japanese standards by this date.

6 6 I A FUEL EFFICIENT VEHICLE FLEET FOR VICTORIA I WHAT THE VICTORIAN GOVERNMENT CAN DO Complementary policies - driving support for efficient vehicles International experience has shown that to make mandatory fuel efficiency standards more effective, secondary measures that stimulate demand for fuel efficient vehicles are required. Environment Victoria believes the Victorian Government can and must play a key role in delivering strong reductions in Victoria s greenhouse gas emissions from the transport sector, via these secondary measures. While some moves have been made by the state government towards efficient vehicles through the Victorian Transport Plan, more can and needs to be done. These complementary measures can include policies and incentives such as subsidies, tax cuts, registration concessions and levies, education and behaviour change campaigns (for individuals as well as fleet purchasers), and government fleet purchase decisions. For example, Japan supports its strong mandatory efficiency standards with a range of subsidies and tax cuts. In April 2009 Japan s top selling car, for the first time, was a hybrid. This performance was repeated the following month. Key to the hybrid s success was subsidies and tax cuts for fuel efficient vehicles which were a part of Japan s stimulus package 4 ; however tax reduction incentives for fuel efficient vehicles have existed in Japan since The taxes are based on the gross weight and engine displacement of vehicles, when purchased and registered, which promote the purchase of lighter vehicles with smaller engines - saving consumers in the realm of US$4000 over the life of the car. Meanwhile if motorists own a hybrid in the UK their road tax bill will be just 15, but if they have a 4WD it will be 400 under a system that has been in place since This model has been further improved in the UK as of April 2010, with the introduction of a new first year rate that could be as much as 950 for the most polluting cars 6. This acts as a larger disincentive for inefficient vehicles at the point of purchase. China also has in place progressive taxation laws directed at both automakers and consumers, which reduces the cost of selling and purchasing vehicles with smaller engines. In China today, fuel efficient vehicles are subject to a 1 percent sales tax whilst sports cars and 4WDs attract a 40 percent sales tax 7. In the US, the Gas Guzzler Tax, enacted in 1978, is assessed on new passenger cars that do not meet the required fuel economy standards 8. Victoria doesn t yet have any similar incentive for efficient vehicles. However, the Victorian Government s Green Light Report 2008 found that 84 percent of Victorians supported rewarding owners of efficient vehicles through mechanisms such as registration 9. By making fuel efficient vehicles more financially attractive to customers through measures such as those mentioned above, demand for fuel efficient vehicles would be stimulated. As mentioned above, the Victorian Government has shown some support for efficient vehicles through the recent Victorian Transport Plan - the state government s blueprint for transport infrastructure and growth in

7 7 I A FUEL EFFICIENT VEHICLE FLEET FOR VICTORIA I WHAT THE VICTORIAN GOVERNMENT CAN DO Victoria for 2020 and beyond. The plan includes a $5 million program to increase the use of low emission vehicles. The program aims to achieve mandatory carbon emissions targets for state government fleets, encourage commercial fleets to do likewise, and support small-scale trials of emerging technologies, such as electric vehicles 10. Its inclusion is an important acknowledgment that the state government has a role to play in generating the shift to a more fuel efficient vehicle fleet, but it is not enough. The program is neither widespread nor deep enough to achieve the cuts in emissions required by this sector within the next decade and beyond. For the greenhouse savings demonstrated in Turning it around to be achieved, decisive action needs to be taken immediately by the Victorian Government. In particular, the Victorian Transport Plan states the Victorian Government will encourage the uptake of low emission vehicles through its fleet, however this is a secondary priority under the current government commitment to buy locally manufactured vehicles. Although it s a positive step that the government has stated it will set a mandatory target for lowering the emissions of its vehicle fleet, the fact that Australia s car manufacturers currently produce predominantly medium-large vehicles will undermine this, unless action is taken to address what cars Australia produces. A recent federal government discussion paper reported that 75 percent of Australian made vehicles are sold into vehicle fleets, with government purchases making up 45 percent of these 11. Government fleet purchase decisions can therefore send a strong signal to the Australian car manufacturing industry. Small cars are overwhelmingly favoured by the Australian car-buyer 12 so there are additional benefits of the Victorian Government working with the local car manufacturing industry to encourage the local production of smaller, more fuel efficient vehicles. With 86 percent of Victoria s transport emissions coming from cars, vans and trucks, the Victorian Government must focus on ways to make these vehicles more fuel efficient. The Victorian Transport Plan includes over $38 billion worth of programs and infrastructure - but with just $5 million, or percent, of the budget dedicated to lowering vehicle emissions and $21 billion plus pledged for upgrading/building/planning new roads, the Brumby Government s focus on road building with the justification that less polluting cars will be using them is simply not a realistic approach.

8 8 I A FUEL EFFICIENT VEHICLE FLEET FOR VICTORIA I WHAT THE VICTORIAN GOVERNMENT CAN DO Recommendations If Victoria is serious about moving its vehicle fleet into the 21st century and achieving the greenhouse savings available in this sector, then the state government should: Aggressively advocate the introduction of national mandatory vehicle fuel efficiency standards to achieve a fleet average of 5L per 100km or better, for all new cars sold in Australia by 2015 The Jamison Group, convened by the NRMA after their Alternative Fuel Summit in 2006, proposes Australia should adopt mandatory standards in staged increments to 2015, when a standard of 5L per 100km or better be required. This is in line with world s best practice in the Japanese and European Union markets. Introduce car registration and stamp duty fees to provide further incentive for the purchase of low emission vehicles, and a disincentive against the purchase of vehicles with poor environmental performance. This should be introduced by the end of This would include: A concession for fuel efficient vehicles A levy on new inefficient and heavy vehicles Commit to purchase low emissions vehicles for its fleet The Victorian Government should introduce a vehicle fuel efficiency target as committed in the Victorian Transport Plan for government vehicle fleets by the end of 2010 that strengthens over time. This would influence the purchasing decisions of government fleet managers, and indicate the direction that vehicle fleet decisions are moving in to Australian manufacturers. The Victorian Government should work with other state, federal and local government agencies, as well as business and industry to assist those agencies introduce similar efficiency targets for vehicle fleets with the intention of influencing local manufacturers. The Victorian Government should also work with local manufacturers to assist them move toward manufacturing of efficient vehicles Cleaning up the government s vehicle fleet has a carry-on benefit to the buyers of second hand vehicles. As vehicle fleets experience comparatively high turnover, many of the vehicles in the second hand car market are from government and private fleets. If fleets were made more efficient, this would flow through as a economic benefit to those of low socio-economic background accessing the second hand car market. Work with the federal government to ensure strong, on-going incentives for the local manufacture of fuel efficient vehicles The Green Car Innovation Fund is a good example, which led to Victoria securing the regional manufacture of Toyota s hybrid Camry from however more is required. Work with the federal government to remove perverse incentives for the local manufacture and importation of fuel inefficient vehicles

9 9 I A FUEL EFFICIENT VEHICLE FLEET FOR VICTORIA I WHAT THE VICTORIAN GOVERNMENT CAN DO References 1 territory_inventoryv.pdf pg E5Q 5 transportintheuk, and briefings/snbt pdf, pg pdf, pg Victorian Government, Green Light Report, pg Australian Transport Council and EPHC Vehicle Efficiency Working Group, Vehicle Fuel Efficiency, p. 12, September