Towards net zero: Practical policies to reduce transport emissions – Grattan Institute

Towards net zero: Practical policies to reduce transport emissions

by Tony Wood, Alison Reeve, James Ha

18.07.2021 report

Sales of new petrol and diesel cars should be phased out in Australia by 2035 to help cut carbon emissions to net zero by 2050.

Governments should make zero-emissions vehicles cheaper and make it easier for drivers to charge their electric cars at home, at work, and on the road.

Zero-emissions vehicles should be exempt from stamp duty, import duty, and luxury car tax.

Scrapping stamp duty would cut the cost of new electric vehicles in Australia by up to 6.5 per cent.

Removing import duty would give Australians a greater range of zero-emissions vehicles and cut the upfront cost of some models by a further 5 per cent.

Exempting zero-emissions vehicles from luxury car tax would cut the cost of many of the electric models available in Australia today.

To phase-out petrol and diesel cars, the Federal Government should impose a mandatory emissions limit on Australia’s light vehicle fleet and reduce the limit to zero by 2035.

To ensure drivers don’t have to worry about where they can recharge their electric car, governments should require all new buildings with off-street parking to include electrical cabling to allow for an appropriate number of future vehicle chargers; require all leased dwellings with off-street parking to have at least one electrical outlet near the car park by 2030; and ensure convenient, local vehicle charging is available by 2030 for all residents of homes without off-street parking.

This is the first of a series of five reports Grattan will publish in the lead-up to the international climate conference in Glasgow in November, showing how Australia can build momentum towards net-zero carbon emissions by 2050.

The best policy would be an economy-wide emissions price. But we need to accept the regrettable reality that neither side of Australian politics is going to introduce an emissions price any time soon.

The climate clock is ticking. We can’t wait around for an emissions price. So this series will identify sector-specific policies Australia should implement to set us on the path to net zero.

The transport sector is responsible for nearly 20 per cent of Australia’s emissions, and more than 60 per cent of transport emissions are from light vehicles (including the two most popular cars in Australia, the Toyota HiLux and Ford Ranger). So the best way to cut transport emissions is to supercharge the switch to electric cars.

But the Government should also introduce policies to cut other transport emissions, including:

  • Increasing the truck width limit in Australia from 2.5m to 2.6m, so low-emissions models made for the EU or US (which allow wider trucks) can be used in Australia without expensive modifications.
  • Supporting targeted trials of zero-emissions trucks, particularly hydrogen trucks, to assess their performance under Australian conditions and practices.
  • Imposing a renewable hydrocarbon standard for diesel, aviation fuel, and shipping fuel.

Net zero by 2050 is a tough target. It requires concerted government action, starting now. This series shows the way, with practical proposals that could be adopted by both sides of politics.

Recommendations

Ensure emissions from light vehicles are systematically reduced, and
that Australians have the widest choice of low-emissions and
zero-emissions vehicles


  • Set a mandatory fleet emissions standard, applied to the sale of all new light vehicles, tightening to zero emissions by 2035 to set an end date for sales of new petrol and diesel light vehicles.

Scrap inefficient taxes and regulations that slow Australians’ take-up of zero-emissions vehicles


  • Scrap import duties and stamp duty on zero-emissions vehicles, and waive luxury car tax on such vehicles for the rest of the decade.
  • Increase the truck width limit in Australia from 2.5m to 2.6m to ensure any zero-emissions heavy vehicles made for the EU or US can be used in Australia without expensive modifications.

Ensure buildings and the electricity grid are electric vehicle-ready


  • Update the National Construction Code to require that all new buildings with off-street parking include electrical cabling to allow for an appropriate number of future vehicle chargers.
  • Require all leased dwellings with off-street parking to have an electrical outlet near each car space by 2030.
  • Plan now to ensure convenient, local vehicle charging is available by 2030 for all residents of homes without off-street parking.
  • Plan the electricity tariff reforms necessary for smart management of vehicle charging in future.

Test all options for reducing heavy vehicle and aviation emissions


  • Support targeted trials of zero-emissions trucks, particularly hydrogen trucks, to assess their performance under Australian conditions and practices.
  • Develop national standards and certification for renewable hydrocarbons (low-emissions fuels, generally made from biomass or waste, that can be blended up to 100 per cent with no engine modification), based on their emissions intensity, building on work already being done on hydrogen.
  • Establish a renewable fuel standard for diesel, aviation fuel, and shipping fuel, that requires fuel wholesalers and retailers to buy certificates or to blend small amounts (e.g. 1 per cent) of renewable hydrocarbons into fuels sold by 2025, with the target rising in following years.

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