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Australian car industry needs lower emissions, not handouts

The Australian Government has been bailing out automotive manufacturers since 1985. Both that year’s Button Plan and the 2008 Bracks Report recommended restructure and additional funding. But unless the…

Times have changed; the car industry needs to catch up. aussiefordadverts/Flickr

The Australian Government has been bailing out automotive manufacturers since 1985. Both that year’s Button Plan and the 2008 Bracks Report recommended restructure and additional funding. But unless the Australian industry accepts the reality of today’s automotive market, bailouts will make little difference and we’ll continue to see closures and job losses.

The global market shift to low-emitting, fuel-efficient vehicles is going to make it difficult for the local car industry - which produces predominantly large, high-emitting vehicles - to compete internationally. Not surprisingly, the Middle East is currently Australia’s main export market, given its demand for large vehicles (but we face growing competition there from the US). Emission standards mean Europe and parts of Asia no longer want our cars.

Declining global exports mean the Australian car industry is dependent on sales to the government and business sector for its future. In 2007, nearly 56% of Australian-made vehicles were sold to the business sector, and 19% to all tiers of government. With the lowering of tariffs and rising oil prices, consumer preference has shifted to either small fuel efficient vehicles or from the large passenger vehicles to sports utility vehicles. In effect, sales of Australian-made vehicles fell from 85% in 1986 to 14.1% in 2010.

So you might think it’s a positive that government is proposing to mandate vehicle CO₂ emission standards for all new light vehicles from 2015. According to the government, these standards will “represent the single most important measure with the potential to deliver the largest reductions in transport emissions.” Surely lower-emitting vehicles will mean better sales overseas and at home.

The emission standards will apply to all new vehicles sold in the country. Effectively this will discourage new car importers dumping their high emitting vehicles into Australia, and reduce the uptake and popularity of high-emitting SUVs.

But if the Australian Government comes to the aid of the local car industry, it is likely these standards will be deferred, compromised or both.

The National Transport Commission (NTC) reported that in 2010, Australian-made vehicles had higher emissions than the country’s emission standards. They averaged 247 g/km compared to the nation’s average of 212 g/km. It is questionable whether the industry can significantly reduce its emissions; on average, Australian-made vehicles reduced their emissions by only 4.7% from 2009.

Submissions to the government’s paper closed in December 2011. The Australian Conservation Foundation proposed that the mandatory emission targets ought to be similar to the EU’s: 130g of CO₂/km by 2015 and 95g of CO₂/km by 2020. The Federal Chamber of Automotive Industries proposed lenient targets of 195g of CO₂ in 2015 and 176g of CO₂ in 2020. In 2010, the EU achieved emission standards of 146 g/km: 44% less than Australia’s average emissions.

The Australian Government will most likely have to adopt lenient targets if it bails out the local car industry. But it is not as if the local car industry was caught unaware that it had to improve its vehicles' fuel efficiency and reduce emissions.

For instance, two sets of voluntary fuel efficiency target were set in 1978 and in 1987. At the time, both targets failed because consumers' preference was for bigger cars.

In 2003 a third target was set at 6.8L/100 kilometres by 2010. Holden and Ford failed to make significant cuts to CO₂ emissions. The NTC reported that in Jan-Aug 2009, Holden had the highest average emissions - 279 g/km - with virtually no improvements since 2005. In 2010 the NTC reported that Holden had improved its average emissions to 260 g/km, still well above the country average of 212 g/km and above average emissions from Australian-made cars (247 g/km).

It is unlikely that Holden would be able to meet the EU mandatory targets; it makes sense that they would be arguing for lenient targets. The Australian Government will be pressured to set lenient mandatory emission targets if it is proposing $100 million aid to Holden and $35 million aid to Ford.

Simply throwing money at the local car industry will not necessarily increase sales and save jobs. Funding should not be supported if the local car industry fails to make the necessary technological changes to significantly reduce emissions of its large vehicles to meet the government’s proposed targets. The industry must also introduce new fuel-efficient vehicles that consumers would rather buy.

Without these changes, the industry will no longer be sustainable: government and business fleet buyers will be reluctant to buy and support Australian-made vehicles that fail to satisfy the mandatory CO₂ emission standards.

Mandatory emission standards should not be comprised in order to save the local car industry. Lenient mandatory emission standards will allow the continuation of high-emitting vehicles being imported and sold in the country and Australia will fail to reduce its road transport emissions.

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9 Comments sorted by

  1. Paul Richards

    logged in via Twitter

    Anna enjoyable article.
    The fifth generation Holden HD pictured in your article was released in 1965. This was the year the Holden motor vehicle workers strike shut the plant down for most of the year. Their efforts were to bring social and financial justice to theirs and future motor vehicle builders. The model as a consequence of the protracted strike suffered early signs of rust. For nearly all the bodies were built before the strike and sat around in raw metal form in and out of shelter, a…

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  2. Michael Mazengarb

    Masters Student (Climate Change) at Australian National University

    I fully agree with this article. Sure, the Government by all means should support the nations manufacturing sector, via the automotive industry. But it shouldn't hand out money for the sake of keeping the industry going, on the path that it is currently travelling. There are good reasons why the industry needs to be bailed out, and they have everything to do with a loss of compeditiveness in a market that is undergoing a transformation.

    The Federal and State Governments, rather than offering straight cash hand-outs, should be supporting the industry by offering funds to re-tool these factories so that they can begin producing low emission hybrids or even pure electric vehicles.

    We need new investment in electric motor and battery storage, rather can keeping engine factories above water...

    1. Paul Richards

      integral operating system

      In reply to Michael Mazengarb

      Michael - Motor Vehicle in their current oil burning form have failed in Australia, no one disputes that, we are all on board with the sad truth. There are viable alternatives to manufacturing here, Better Place is one. They retro fit current models;

      We have had our chance for over sixty years, current technology is not appreciated or wanted by the world, our local market is tiny, economies of scale are only met with subsidies. The…

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    2. Douglas Cotton

      Climate Research

      In reply to Paul Richards

      Even though I know an atmospheric greenhouse effect has now been proven to be a physical impossibility* I was nevertheless interested in purchasing a Nissan LEAF all electric car soon to be released in Australia Running costs certainly looked impressive and my wife could use it to drive to just about any Sydney suburb and return, given it has a range of up to 160 Km (or 120 Km with air conditioning on.) But when I heard the price (around $55,000 I understand) for a vehicle just a little bigger…

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    3. Tim Scanlon

      Author and Scientist

      In reply to Douglas Cotton

      Doug even you can't be as blind as to say "Atmospheric greenhouse effect proven impossible". Honestly?

      If we didn't have the greenhouse effect our Earth wouldn't have an average temperature of ~14C, we'd instead be roughly -20C. This entire effect is driven by less than 0.5% of the atmosphere. So to say that the greenhouse effect isn't happening is to blindly dismiss the fact that the Earth isn't an iceblock. You can't refute this, it is a known and measured, verifiable, scientific fact.


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    4. Mike Swinbourne

      logged in via Facebook

      In reply to Douglas Cotton


      I must say a huge thank you for that link you provided. I haven't laughed so much for ages!!!

  3. David Arthur

    resistance gnome

    Instead of a handout, how about the Federal Government releases an invitation to tender for manufacture of, say, 10,000 aXcess hybrid cars, for public service use?