How Australian new-vehicle emissions rules have been relaxed to help utes, 4WDs

28/03/2024 07:27

Utes and large four-wheel-drives are the biggest winners of changes to Australia’s proposed new-vehicle emissions standards presented to parliament yesterday.

The bill – announced Tuesday but brought in front of Canberra politicians Wednesday – slows the roll-out of the emissions standards, and weakens the limits for utes, vans and now off-road 4WDs compared to the proposal published by the Federal Government in February.

Here is a run-down of all the main changes to what is formally known as the New Vehicle Efficiency Standard (NVES).

MORE: Australian new-vehicle emissions rules weakened after car-maker backlash

Delayed introduction

The New Vehicle Efficiency Standard (NVES) is due to be implemented from 1 January 2025, as proposed in February.

However – to allow for a “transition period for industry” – only vehicles entered into the Register of Approved Vehicles (RAV), the government website listing every individual vehicle certified for sale in Australia, from 1 July 2025 will count.

It means that for 2025, car makers will only have to pay penalties – or earn credits – for the CO2 emissions of the vehicles they import in the second half of the year.

It will revert to a full calendar year in 2026 and beyond.

Many heavy-duty 4WDs reclassified in less stringent ute and van category

Acknowledging calls from car makers such as Toyota, Isuzu and Nissan, some large four-wheel-drives designed for towing and off-road use will be subject to less stringent emissions limits.

SUVs with ute-like body-on-frame construction, and with a braked towing capacity of 3000kg or greater, will be moved from the ‘type 1’ category that includes smaller passenger cars, to the ‘type 2’ category for light-commercial vehicles (utes and vans), which has higher CO2 caps.

It means vehicles such as the Toyota LandCruiser 300 Series, Nissan Patrol, Ford Everest, Isuzu MU-X and Lexus LX will now have a ‘headline’ emissions target of 210 grams of CO2 per kilometre, rather than 141g/km, in 2025.

Car-derived family SUVs such as the Toyota Kluger and Kia Sorento will remain in the passenger-car category, as will body-on-frame SUVs with lower towing capacities such as the Suzuki Jimny and GWM Tank 300, and SUVs which can tow more than three tonnes, but use car-derived underpinnings, such as the Porsche Cayenne.

These vehicles in the passenger-car category are considered “light off-road passenger vehicles” – while the 4WDs moved to the ute and van category are considered “heavy off-road passenger vehicles”.

Less stringent emissions targets for utes and vans

Vehicles in the ‘type 2’ category – which now include many heavy-duty 4WD SUVs, alongside utes and vans – will now face less stringent CO2 emissions limits from 2025 to 2029.

The 2025 cap has been increased from 199g/km in the government’s February 2024 proposal, to 210g/km – while by 2029, after the target is reduced each year, the limit is 110g/km, compared to 81g/km previously.

The Federal Government says this “reflects adjustments announced by the US EPA to its vehicle Standard” – on which Australia’s scheme is modelled – and is said to “smooth the transition for utes, vans and 4x4s”.

For example, a Toyota HiLux SR5 4×4 dual-cab diesel auto pick-up – which emits a claimed 207g/km of CO2, without mild-hybrid tech – would now earn a credit of about $400 in 2025, compared to an estimated fine charged to the car company of about $700 under the previous plan.

However after 2025 – as the targets get stricter – the credit would turn back into a fine for Toyota.

Meanwhile, for a Ford Ranger Raptor twin-turbo V6 performance pick-up – which emits a claimed 262g/km of CO2 – the estimated emissions fine billed to the manufacturer for each example sold in 2025 falls from about $6200, to about $4400 under the revised targets.

The ‘headline’ CO2 emissions targets for passenger cars and light-duty SUVs – in the ‘type 1’ category – remain unchanged, at 141g/km in 2025, down to 58g/km in 2029.

These emissions targets are called ‘headline’ figures as they are adjusted based on the weight of each vehicle – which will become important in the next section.

Heavier vehicles given a lighter load

While the emissions targets are adjusted based on weight – so heavier vehicles can emit more CO2 than the headline limit, and lighter vehicles must emit less to avoid fines – there are upper and lower ‘break points’ that flatten the curve to ensure this system is not abused.

This mechanism is carried over from the February 2024 proposal,and means vehicles of a particular type weighing more than the upper break point will need to meet the same emissions target – while those that weigh less than the lower break point must hit the same target.

It is designed to prevent giving exceptionally heavy vehicles – for example, a super-sized, three-tonne pick-up – an easy ride with high emissions targets, and hitting lightweight city cars with unreasonably low emissions targets they cannot meet at a reasonable price.

However under the revised version of the NVES, the upper break point for ‘type 1’ vehicles has been raised from 2000kg to 2200kg – while for ‘type 2’ vehicles it has been lifted from 2200kg to 2400kg.

It means a 2500kg light commercial vehicle has a CO2 emissions target of 218g/km, rather than 211g/km if the upper break point was set at 2200kg under the higher emissions caps outlined above – or 200g/km under the February 2024 proposal.

For reference, the ‘headline limits’ are the CO2 emissions targets for vehicles with a weight matching what the Federal Government calls the ‘Reference Mass in Running Order’, which is the average Mass in Running Order (MIRO) of new vehicles sold in Australia in each type.

MIRO is measured with a fuel tank 90 per cent full – or more – plus all vehicle fluids topped up, and a 75kg driver onboard.

What hasn’t changed

Much of the New Vehicle Efficiency Standard bill presented to Parliament on Wednesday is unchanged from the February 2024 proposal.

The emissions targets still only apply to new cars – and there is no government mandate on the types of vehicles that can be sold by car companies. Manufacturers are allowed to sell whatever they like, as long as they meet their CO2 emissions targets.

High-pollution models that exceed their own CO2 targets can remain on sale, but to avoid paying fines, they must be balanced out by enough low- or zero-emissions vehicles which beat their targets.

Each vehicle that beats its CO2 target earns credits – referred to as ‘units’ in the government’s legislation – which can be used to balance out other models, or be sold to other car makers who have not met their targets, for up to three years after they are issued.

Car brands have two years to offset any emissions ‘debit’ they may be in from the sale of high-pollution vehicles, meaning low-emissions vehicles sold in 2026 can be used to offset high-emissions vehicles sold in 2025.

Monetary fines – issued for not lowering their emissions ‘balance’ to zero with the sale of low-emissions vehicles, or units bought from other brands – are not charged until this two-year period has concluded.

There is no requirement for car makers to pass-on fines they earn for not meeting the new rules, to their customers.

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