From the beginning of January, the penalties incurred by newly imported light vehicles under the Clean Car Standard (CCS) were substantially cut under legislative changes passed in November.
Introduced in 2023, the CCS imposed CO2 targets against importers of new and used light vehicles (excluding motorcycles), which grew tougher each year. In the first year, importers had to meet an average CO2 target across all light passenger vehicles sold in that year of 145g CO2 per km (the target for light commercials – vans and utes – was 218.3g/km CO2 reflecting their larger size). By this year, that target had fallen to 84.5g/km CO2 and 116.3g/km CO2 respectively.
The penalties for failing to meet these targets were $67.50 for every gram of CO2 exceeded for new light vehicles and $33.75g/km CO2 for used imports (the logic of a halved penalty being that used imports don’t remain in the fleet as long as those sold new).
The targets were meant to incentivise importers to bring in more fuel-efficient models, but the problem is that no pure internal combustion-engined (ICE) vehicles meet them – and not even all hybrids do. They are in fact amongst the toughest CO2 targets in the world. Of course, importers could supplement their product range with plug-in electric vehicles to offset ICE models, but with the demise of the generous Clean Car Discount rebate in late 2023 (which cost the government some $300m), demand for more expensive electric vehicles plummeted.
The end result was that importers were facing million-dollar annual penalties, which would be passed onto consumers in higher retail prices. Both the new and used vehicle import industry had been lobbying the government to review the targets, claiming that the CCS had morphed into a costly compliance scheme rather than a policy that actually reduced vehicle CO2 emissions.
The upshot of that was an announcement by Transport Minister Chris Bishop in November that the penalties would be slashed to $15g/km CO2 for new light vehicles and $7.50g/km CO2 for used imports, for 2026 and 2027 while the whole scheme is reviewed.
“Most importers are unable to meet passenger-vehicle targets. In fact, 86 per cent are facing a net charge rather than net savings from credits. The scheme is so out of whack with reality that even some hybrids will attract charges rather than credits,” Bishop said.
The government predicts this will save some $264m in penalties.
And before you think heavy vehicles are off the hook, the Ministry of Transport had investigated whether a similar scheme could be developed to reward the most efficient trucks, although we understand work on this ceased.
