New regulation mandates lower CO2 emissions for all new light vehicles, promoting fuel-efficient options and aligning Australia with global standards.

The Australian Government is introducing the New Vehicle Efficiency Standard (the Standard), which provides a greater choice of new fuel-efficient cars, increases fuel savings and helps the environment by reducing emissions. 

In May 2024, the Australian Parliament passed the New Vehicle Efficiency Standard Act 2024, which will commence on in 2025.

The Standard is a regulatory measure which incentivises car manufacturers to supply cars that use less fuel per kilometre and emit less carbon dioxide. Under the Standard, vehicle manufacturers selling new cars in Australia will be required to meet or beat a mandated average CO2 emissions target. The Standard will apply to all new light vehicles whether they are diesel, hybrid, electric and petrol (including sedans, SUVs, hatchbacks, 4WDs, utes and vans). 

Australia is one of the last advanced economies to adopt a Standard for new cars. These standards are sometimes referred to as a ‘fuel efficiency’ or ‘fuel economy’ standard. Over 85% of the cars sold in the world are already covered by a fuel efficiency standard - including the US, EU, China, India, Japan and New Zealand. 

Many migrants may have personal experiences of fuel efficiency standards in other countries. The Standard will bring a range of benefits to Australia, including greater choice in new fuel-efficient, low and zero emission cars – some of which may only be available overseas at the moment. We can also expect to see long term benefits for even more drivers, as these fuel-efficient cars become more common and start to enter the second-hand market. 

Cars that are more fuel efficient, low and zero emission, have lower running costs than petrol and diesel vehicles, saving money each and every day at the petrol pump. Having more fuel-efficient cars on the market will mean more drivers will benefit from savings - around $95 billion in fuel savings for Australian drivers by 2050.

Cars are one of the largest contributors to greenhouse emissions in the transport sector in Australia. Research informing the Standard found that cars contribute nearly 13 per cent of Australia’s carbon dioxide emissions, which is a significant polluter impacting our environment and air quality. 

The Standard is an important step in protecting our air quality by helping to reduce pollution as an increase in fuel-efficient cars will be better for the environment. This will benefit Australians by delivering around $5 billion in health savings by 2050 and help Australia reach the United Nations goal of ‘net zero emissions’ by 2050.

The Standard brings Australia in line with the rest of the world and with it, drivers in Australia can look forward to increased access to more fuel-efficient cars, increased savings and a healthier environment.

For more information about the Standard, visit cleanercars.gov.au.