Announcement date
21 December 2023
Link to announcement
Joint media release: Cleaner fuel and cars leads to multi-billion dollar health and fuel savings | Ministers (dcceew.gov.au) and Cleaner fuel and cars leads to multi-billion dollar health and fuel savings | Ministers for the Department of Infrastructure
Problem being addressed
Noxious emissions produced by road vehicles are a major contributor to air pollution in Australia that can cause negative human health effects, including reduced lung function, ischemic heart disease, stroke, respiratory illness and cancer. The current regulatory settings for fuels and vehicles in Australia result in a higher level of noxious and carbon emissions when compared with other developed economies and are a barrier to reducing noxious emissions, suggesting that the exploration of policy options to reduce health impacts is warranted.
Proposal
The Department of Infrastructure, Transport, Regional Development, Communications and the Arts (DITRDCA) and the Department of Climate Change, Energy, the Environment and Water (DCCEEW) proposed opportunities to update the fuel and light vehicle standards that optimise the benefits to the Australian communities, considering economic, health and environmental impacts.
The options considered to reduce noxious emissions from new light road vehicles included:
- Business as usual: Allow the existing Euro 5 noxious emissions standards and market forces to provide a solution.
- Option A: Fleet purchasing policies (not considered viable): Maintain Euro 5 noxious emissions standards but seek to influence vehicle purchasing decisions by adopting minimum noxious emissions performance requirements in the Australian Government fleet.
- Option B: Voluntary standards (not considered viable): Maintain Euro 5 noxious emissions standards but encourage vehicle manufacturers, through peak industry groups, to enter into an agreement with the Australian Government to meet increased minimum noxious emissions performance requirements.
- Options C and D: Increased mandatory standards – mandate Euro 6d standards for light vehicles under the Road Vehicle Standards Act 2018.
Following stakeholder feedback on the draft regulation impact statement (RIS) Light Vehicle Emission Standards for Cleaner Air, released for public consultation in 2020–2021 and the draft regulation impact statement Better Fuel for Cleaner Vehicles, released for consultation by DCCEEW in November-December 2022, the following approaches were evaluated in the joint Impact Analysis (IA):
- Option C: Mandate Euro 6d standards from 2027–28 (original approach considered in the Light Vehicle Emission Standards for Cleaner Air draft RIS to align with the introduction of improved fuel quality standards, if adopted from 2027).
- Option D: Mandate Euro 6d standards from 2025–28 (an alternative approach proposed to align with the introduction of improved fuel quality standards, if adopted from 2025).
The options to improve fuel quality were:
- Business as usual: Continuation of the current policy settings.
- Option 1 (not considered viable): From 2024, specify the maximum level of aromatics in 91 RON as 35% and the maximum grade average for the 95 RON grade as 35%. No change to 98 RON petrol.
- Option 2 (considered viable): From 2025 specify the maximum level of aromatics content as 35% for 95 RON. No change to other grades.
- Option 3 (considered viable): From 2027 specify the maximum level of aromatics content as 35% across all grades of petrol.
- Option 4 (considered viable, but unnecessary): Align key diesel specifications with the EU standard
Three viable packages were considered in the joint impact analysis, combining fuel quality and noxious emissions standards.
- Package 1 – Noxious Emissions Standards Option C (mandate from 2027–28) and Fuel Quality Option 3 (35% aromatics across all grades from 2027)
- Package 2 – Noxious Emissions Standards Option D (mandate from 2025–28) and Fuel Quality Option 2 (35% aromatics limit for 95 RON petrol from 2025)
- Package 3 – Noxious Emissions Standards Option C (mandate from 2027–28) and Fuel Quality Option 2 (35% aromatics limit for 95 RON petrol from 2025)
Assessed Impact Analysis outcome
The Office of Impact Analysis’ assessment is that the quality of the analysis in the IA is good practice.
Assessment comments
To have been assessed as ‘exemplary’ under the Guide, the IA would have benefited from additional data on assumptions, further alignment between the assumptions for analysis of options relating to fuel quality standards and vehicle emissions standards and more detail on the evaluation approach.
Regulatory burden
DITRDCA and DCCEEW estimated the regulatory burden of the preferred package, Package 2, to be $300.6 million per annum. This includes $263.3 million for implementing Option D for Euro 6d standards, and $37.3 million for implementing Option 2 for fuel quality standards improvements.