Car makers could use New Vehicle Efficiency Standard loophole to rush higher-polluting cars into Australia, undermining EV push

(ABC) -- Car makers could use a loophole to rush their highest-polluting vehicles into the country and dodge climate laws for the first three years of the government’s New Vehicle Efficiency Standard (NVES).
It could also impact the push to bring more electric vehicles into the country — one of the key goals of the laws.

A loophole in how car emissions will be counted could let car makers rush high-polluting cars into Australia without penalty.

The NVES, which was passed in May in a watered-down version with the support of the Greens, forces car manufacturers to cut their emissions each year by requiring them to meet an average emissions limit for the vehicles they sell, or else face heavy penalties.
The government agreed to delay its official start by six months to July 2025 in negotiations with the motor industry, in part to allow time for systems to be adapted to the new laws.
But a loophole in how vehicles are registered in Australia will allow car manufacturers to import their highest-polluting cars in the first six months of the scheme and then sell them over the following 12 to 18 months without them counting against their emissions totals.
Unlike other markets which register imported cars at the point of sale at a dealership, Australia’s imports are registered at port, meaning they can be brought in and registered before the NVES formally begins, but then sold at a later date without being counted under the scheme.
Additionally, because those uncounted cars will make it easier for manufacturers to beat the emissions limits set on them, they will be able to generate more credits to use over the following two years to again more easily meet their climate obligations.
It means the loophole could undermine the emissions reduction goals of the first three years of the scheme, and reduce the need for car makers to import more electric vehicles to offset their emissions.
But the government has conceded it won’t be able to close the loophole in time before the scheme begins.
There are signs that car manufacturers are considering bringing forward stock to use the loophole.
At a recent industry conference, attendees were advised in a keynote speech that “higher-emitting vehicles should potentially be purchased in the next 12 months”.
“Penalties won’t begin to be incurred until 1 July 2025,” the presentation to the Australasian Fleet Education and Leadership Summit noted.
Car makers have suggested it would be difficult to shift their production lines at such short notice to take advantage of the six-month window.
The government acknowledged the loophole existed during a debate in parliament, but Transport Minister Catherine King said it would not be possible to close before the scheme began.
“While implementing this would be particularly complex and is not possible by 1 January 2025, the government will look to move to compliance at the point of sale, including through the review of the scheme to be undertaken in 2026,” Ms King said.

(Latest Update July 3, 2024)