Rene August 10, 2017 No Comments

With talk last month of a proposed ‘carbon tax’ on new vehicles, motorists have reason to be concerned.  Even if the government did subsequently reject the claims as being false. You see, while the overarching objective to reduce emissions is a noble cause, imposing fines against auto makers only leaves room for one possibility. That is, for these fines to be passed onto motorists in the form of increased car prices.

Now, it’s important to make a distinguishing factor from the get-go. The measures noted last month were in fact, not a tax. In some ways they might be akin to a tax through their end result, but the implementation of financial penalties under the proposed model would not be a mandatory burden. That is, not all auto makers would be levied by the government. Only vehicle manufacturers that are in non-compliance with the stricter than expected standards would be liable for a financial penalty.

However, for all the media’s obsession with the semantics of the proposed model for fuel efficiency standards, focus was diverted from the real matter at hand. Managing the environmental burden from vehicles in an equitable manner. Or should we be content in punishing motorists for driving cars that are less fuel efficient than their peers?

Looking at it from a manufacturer’s point of view, they have as much reason to be concerned compared with drivers. First of all, the timeline for implementing the drastic changes would be only a few years away – phasing in from 2022 to 2025. Next, the scale of the reduction in emissions would be a cut beyond two thirds down to 105g/km CO2. And while there may be a credit policy based on ‘overachieving’, such credits don’t appear to be tradeable like in Europe. So manufacturers instead will turn elsewhere to recoup their ‘losses’.

But the key point that seems to have been missed is fuel quality. Already Australia is considered among the worst developed nations in terms of fuel quality. Our unleaded fuel contains up to 150 parts per million of sulphur. How does this fare against the leading countries in the world? They operate with less than 10 parts per million of sulphur. Naturally then, trying to achieve levels of best practice similar to Europe is just not realistic when the playing field is so uneven. Oil majors have indicated quality can improve, although they’ve flagged this would come at a cost. Predictably, through Increased prices at the pump – another sensitive topic.

And with just about all of the country’s most popular vehicles currently some distance away from meeting these targets, experts are predicting the cost of these vehicles could increase by up to $5000. Sure, financing is at an all-time low, but we all know one of the biggest detriments to purchasing a new car is the initial price. After all, this is the starting point at which a consumer will be charged interest.

The result is that we also have reason to be concerned about motorists holding onto their vehicles for longer – in the process, increasing the average age of cars on our road. Not only does this serve little to stimulate the economy but it won’t do much to tackle emissions across the nation’s entire fleet. We’re still some time away from an answer to the problem. But that doesn’t mean we should overlook a balanced discussion.