Australia has become an outlier in the global light vehicle market, with a comparatively inefficient and anachronistic vehicle fleet. In 2018, the average carbon dioxide (CO2) intensity for new passenger vehicles in Australia was 169.8gCO2/km compared to 129.9gCO2/km in the United States, 120.4gCO2/km in Europe and 114.6gCO2/km in Japan.
Regulatory approaches to increase fuel efficiency and lower carbon emissions from vehicle fleets are commonplace internationally. Fuel efficiency standards (sometimes referred to as CO2 emissions standards) have been adopted in around 80% of the global light vehicle market. Fuel efficiency standards regulate the efficiency of new vehicles sold. They involve a fleet average efficiency target, where manufacturers pay a penalty for exceedance of that target (based on the average of the new vehicles they sell). Manufacturers can sell vehicle models with emissions performance above the target but must also sell low emissions/high efficiency models to meet the average and avoid penalty.