A new research report has found that favourable tax and policy treatment of fuel-guzzling utes and SUVs is driving Australia’s transport emissions. Of the top 10 most popular new vehicles in Australia, five are big utes, compared to only 2/10 in the UK.

The new research identifies a range of policy options to reduce Australia’s transport emissions. A 24% improvement in fleet-wide fuel efficiency would bring Australia to UK levels, which would save $13b in fuel costs and reduce 17% of total transport sector emissions.

Key Points:

• Australia’s fleet is 24% less efficient than the UK, despite the UK having a higher portion of its population outside of major cities.
• 5 of Australia’s top 10 sellers are big utes, compared to just two light commercial vehicles in the UK’s top 10.
  Getting to UK levels would mean:
  • $13b per year in savings from fuel costs
  • A reduction in transport emissions by 14mt, a 24% decrease from light duty vehicles, or 17% of entire transport sector emissions
  • Improving Australia’s fuel security, boosting our current reserves from 21 day to 26

Recommendations:

• Reform the tax treatment of inefficient vehicles, particularly:
  • Reform the Temporary Full Expensing policy
  • Reform the Loss Carry Back Tax Offset
• Changing fuel efficiency and emissions testing/disclosure regime
• Introducing strengthened fuel efficiency standards
• Reforms to registration charges to emissions rather than weight
• Government fleets go electric

“Poorly targeted tax incentives are encouraging Australians to drive large inefficient dual cab Utes. Government policy needs to focus on reducing emissions not increasing them,” said Matt Grudnoff, Senior Economist at the Australia Institute.

“While the political focus has been on the safeguard mechanism and the 215 biggest polluting companies, the reality is that the rest of the economy is going to have to do the bulk of work in reducing emissions. Australia could make significant emissions reductions by simply driving more fuel-efficient vehicles and save billions of dollars in fuel costs.

“Australia’s transport emissions have been going in the wrong direction in large part because these emissions have been ignored by the Federal Government. If Australia is going to reduce its emissions by 43% by 2030 at low cost, then the Government should focus its attention on the transport sector.

“Transport is an area where we can reduce emissions and at the same time save people billions of dollars a year. This is a win – win for consumers and the environment.”