This paper provides an overview of mandatory vehicle CO2 emission (mandatory fuel efficiency) standards adopted overseas and the standards adopted by Australia.


Fuel efficiency pertains to the conversion of chemical fuel energy into vehicle movement, whereas fuel economy is the energy efficiency of a particular vehicle. Larger vehicles, for example, typically have lower fuel economy than smaller vehicles, although their efficiency may be higher. While vehicles have tended to become more fuel-efficient over time, with improved vehicle specifications, the growth in sales of larger types has resulted in little change to overall fleet fuel economy. Fuel consumption in litres per 100 kilometres (km) is actually the reciprocal ratio of fuel economy in kilometres per litre, a semantic difference perhaps, but a subtlety that belies the complexity of the standards used. Fuel efficiency, whether measured per km or per litre, can be divided into engine and total vehicle efficiency, also links to Greenhouse Gas (GHG) emissions (divided into carbon dioxide (CO2) and non-CO2 GHGs).

This paper provides an overview of mandatory vehicle CO2 emission (mandatory fuel efficiency) standards adopted overseas and the standards adopted by Australia. Fuel efficiency links also to air quality emissions (which this paper is not discussing) and issues of fuel quality supply and other combustion emission standards such as those for toxic gases and air particulates are not considered. The paper concerns itself with an emphasis on reducing fuel consumption and CO2 emissions, not on improving general air quality by reducing emissions of oxides of nitrogen and sulphur (NOx, SOx), unburned hydrocarbons (HC), and carbon monoxide (CO). The paper does not cover the possible effects of and trends for these pollutant chemicals.

In considering the fuel efficiency standards which are evolving in Australia, the paper discusses a range of questions, some of which have an automotive industry focus—concentrating on passenger car, rather than light truck or heavy vehicle, limits. The central question to be answered is what standards Australia should adopt. Some of the difficulties to be overcome may be summed up as:

The process of developing new fuel economy standards is inherently more complex than can be done justice in a short paper. The timing of standards ... is clearly a crucial element of any new standard—redesigning vehicles is a time-intensive and very expensive process that requires large engineering teams. Redesigning the large part of the new vehicle fleet will require at least a decade, and automakers must proceed cautiously in introducing new technologies to avoid maintenance and operational disasters.

Another issue ... is the economic impact of new standards. In the past, economic analyses of proposed standards have tended to follow a common script—the industry and its consultants forecast huge negative impacts, the environmental community forecasts large positive impacts. In all cases, the results flow primarily from the input assumptions, not robust analysis—the automakers tend to assume that consumers will resist purchasing new models or that they will have to shift to less profitable market segments, while the environmental community assumes that sales will remain robust and the greater vehicle content will generate new jobs.

After extensive analysis and industry consultation, any new vehicle efficiency standards might be prescribed under the existing arrangements for Australian Design Rules (see later in this paper). However, any such decisions would have to consider the initiatives undertaken by global vehicle manufacturers along with any international movements towards tightening emission standards.

This paper begins by looking at the global push for fuel efficiency standards before turning to comparing existing standards around the world and then examining Australian policy initiatives.

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