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RMIT ABC Fact Check

Barnaby Joyce says Labor has changed the law on fuel emissions standards. Is that correct?

Barnaby Joyce Labor Chris Bowen Fact Check Fuel Efficiency Nationals RMIT ABC Fact Check Australia electric vehicle CIE

The claim

During an address to the Electric Vehicle Summit in Canberra in August, Minister for Climate Change and Energy Chris Bowen announced a consultation period for Labor's election promise of developing a National Electric Vehicle Strategy to lower the cost of EVs and curb transport emissions.

Speaking later on the ABC's Insiders program, Nationals MP Barnaby Joyce claimed the government had changed laws on vehicle standards that would, in turn, slug regional consumers.

"[Minister for Climate Change and Energy Chris] Bowen has changed the laws on vehicle standards and now we are going to pay more for four-wheel drives in country areas," he said.

Mr Joyce made the claim in an interview on ABC TV's Insiders

Has Labor changed laws around vehicle standards?

RMIT ABC Fact Check investigates.

The verdict

Mr Joyce has jumped the gun.

The Department of Infrastructure, Transport, Regional Development, Communications and the Arts told Fact Check "there have been no changes to vehicle standards since the commencement of the new government".

Nor is there any evidence of related legislation having been passed in the parliament.

Experts said Mr Bowen had called for a discussion paper to consider options for introducing a fuel efficiency standard. However, a policy had yet to be formally adopted by Labor — let alone implemented — at the time of Mr Joyce's comments.

Assessing the claim

In an email to Fact Check, a spokesman for Mr Joyce referenced Labor's "proposed fuel emissions standards" as the basis for his claim.

However, during his Insiders interview on August 21, Mr Joyce made no such qualification, saying instead that Mr Bowen had "changed" the law.

How do fuel efficiency standards work?

Fuel efficiency standards impose target levels for the CO2 emissions of new vehicles.

They are also commonly referred to as "emissions ceilings" or "emissions standards".

These standards would normally be applied as an average across the range of new vehicles sold, incentivising manufacturers to increase the supply of zero and low-emission vehicles.

Manufacturers would still be able to import emissions-intensive vehicles. However, should these vehicles exceed the CO2 target based on the average of all sales, they would be expected to pay a penalty.

Senior associate in the Grattan Institute's Cities and Transport Program, Ingrid Burfurd, told Fact Check that "over 80 per cent of the world's car sales are already covered by an emissions standard/ceiling".

"This means that other countries take priority when global EV supplies are constrained — as is currently the case," she told Fact Check in an email.

"In the absence of an economy-wide carbon price, and across all car, 4WD and ute sales, an emission standard/ceiling would be the most practical and low-cost way to reach zero emissions from cars by 2050."

Unlike the most OECD nations, Australia has no mandatory fuel efficiency standards — only a voluntary standard set by industry with no penalties.

What did the government announce?

Mr Bowen told those attending the Electric Vehicle Summit in Canberra that the government would shortly publish a "consultation paper" on the development of a national electric vehicle strategy.

Part of this strategy, he said, would "include exploring options for the introduction of fuel efficiency standards".

"We believe now is the time to have a sensible conversation about whether fuel efficiency standards could help improve the supply of electric vehicles into our market," he said.

"If the government decides to implement and adopt fuel efficiency standards as a part of our national EV strategy after this consultation process, the detailed design work would be led by the Department of Transport under the leadership of [Minister for Infrastructure, Transport and Regional Development] Catherine King."

So, did the new government change the law?

As Mr Bowen's comments made clear, the government has not yet formally adopted a policy of fuel efficiency standards let alone legislated for such standards.

Professor of economics at the University of Queensland and former member of the Climate Change Authority John Quiggin told Fact Check that the only actions taken by Mr Bowen so far were to "propose some consultation".

Similarly, Dr Burfurd said: "Mr Bowen has not changed the law on carbon emission standards."

While Mr Bowen's comments appear to have indicated support for such a policy, the Labor government had not yet committed to a carbon emission standard.

Parliament's website shows that, as of August 21, the day of Mr Joyce's claim, just one bill had been passed by the Albanese government. This involved amendments to public sector superannuation rules.

In a statement issued to Fact Check, a spokesman for the Department of Infrastructure, Transport, Regional Development, Communications and the Arts said: "There have been no changes to vehicle standards since the commencement of the new government."

Would fuel emissions standards increase the price of 4WDs?

Given that details of any fuel efficiency proposal are yet to be developed, it is not clear what the impact of any new law would be on the cost of 4WD vehicles.

Transport emissions specialist at the University of Technology Sydney, Robin Smit, told Fact Check that short-term increases in the cost of vehicles, including 4WDs, were possible but not guaranteed following the introduction of fuel efficiency standards.

He said that Australia did not appear to have lower-cost vehicle options when compared to other OECD nations that did enforce mandatory fuel standards.

"If you invert the argument made by Barnaby Joyce, it would mean that Australian cars are now much cheaper than those sold overseas because we do not have mandatory fuel efficiency standards at the moment. I have not seen any evidence this is the case."

In an email to Fact Check, a spokesman for Mr Joyce highlighted two sources that he said showed fuel efficiency standards would see "everyone pay more for 4WDs in Australia".

"A 2016 Centre of International Economics report ("Reducing greenhouse gas emissions from light vehicles") noted that costs associated with a 105g/km [CO2 reduction] target could increase the price of cars up to $4,863," the spokesman said.

The report, which was commissioned by the Australian Automobile Association, pointed to a potential increase in the cost of vehicles of $4,863 by 2025 under such a policy.

The CIE report presents a range of extra cost scenarios beginning at $1,500. The $4,863 estimate represented a "worst case scenario" where manufacturers would be forced to invest in new lines of research and development.

The spokesman's email also referenced an article written by an electric vehicle expert illustrating the difficulties of accessing a 4WD electric vehicle in Australia and a likely price tag for them of $120,000.

In contrast to the CIE's findings, a report published in 2016 by the former Coalition government's Ministerial Forum on Vehicle Emissions, which was chaired by Mr Joyce, modelled three scenarios incorporating new efficiency measures, estimating the additional cost for new passenger vehicles to be significantly lower.

Noting many caveats of unknowns surrounding technology development, the report projected that any increases in costs of new vehicles would peak in 2025 and range between $827 and $1922.

Importantly, these projections excluded the net benefit of savings associated with the operation of more fuel-efficient vehicles.

While electric 4WDs are currently more expensive than those powered by petrol or diesel, Dr Burfurd said price parity was expected for "most models of cars, 4WD and utes in the mid-to-late 2020s".

As the article referenced by Mr Joyce's spokesman points out, Australia's lack of fuel efficiency standards is likely to have constrained the supply of electric 4WD vehicles in Australia, thereby pushing up costs.

Furthermore, Dr Smit noted that fuel efficiency standards applied as an average across the entire new car fleet, not at the level of individual models, meaning offsets within fleets could occur.

"You can still have inefficient high-emission gas guzzlers being sold but they need to be — increasingly — compensated by sales of low-emission vehicles," he said.

Dr Burfurd said it was possible any emissions target could be met through the sale of smaller electric or low-emissions vehicles where the technology was more mature.

"If this is the case, there wouldn't need to be much movement in the price of 4WDs in the short term," she suggested.

Dr Burford observed that, ultimately, the cost of vehicles would depend on sales patterns and decisions undertaken by vehicle manufacturers.

Average savings for Australian consumers

The experts told Fact Check that any potential increase in the capital cost of vehicles as a result of mandatory fuel standards would likely, on average, be offset by other savings achieved through the measures.

That's because the purchase price of a vehicle was just one dimension of the costs associated with owning a vehicle, Dr Burford said.

"Diesel and petrol vehicles are much more expensive to drive than zero-emission vehicles because diesel and petrol are so expensive."

Dr Smit said: "More fuel-efficient vehicles save on operational daily fuel costs which will offset — partly, fully or more — any increases in purchase price."

Modelling undertaken by the Grattan Institute based on a proposal to progressively reduce light vehicle emissions to net zero by 2035 via a fuel efficiency standard showed significant net savings for consumers.

"We calculate that a person who buys a new vehicle under this emissions ceiling would save, on average, more than $900 over the first five years, and more than $2,000 over the life of the vehicle," its report notes.

The institute isn't alone in this assessment. In fact, all three scenarios modelled in the former Coalition government's Ministerial Forum report pointed to net savings by 2040 ranging from $6 billion to $14 billion.

Reports published by the Australia Institute and the Climate Change Authority similarly found significant overall net benefits for consumers under a mandatory fuel efficiency framework.

Principal researcher: Sonam Thomas

Editor's note (September 26, 2022): A previous version of this fact check stated the government convened an electric vehicles summit. The summit was convened by the Smart Energy Council, Electric Vehicle Council, The Australia Institute, Boundless and FIMER. This does not change our verdict.