Submission to the Victorian EPA Regulatory Impact Statement - Environment Protection (Vehicle Emissions) Regulations 2013
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Submission to the Victorian
EPA Regulatory Impact
Statement – Environment
Protection (Vehicle
Emissions) Regulations
2013
Federal Chamber of Automotive Industries
Level 1, 59 Wentworth Avenue
Canberra ACT 2604
Phone: +61 2 6229 8200
Facsimile: +61 2 6248 7673
Contact: Mr Ashley Wells (Policy Director)/James Hurnall
(Technical Director)
Page 1 of 7
OVERVIEW
The FCAI welcomes the opportunity to respond to the EPA Regulatory Impact Statement – Environment
Protection (Vehicle Emissions) Regulations 2013. The FCAI is the peak industry organisation representing
vehicle manufacturers and importers of passenger motor vehicles, SUVs, light commercial vehicles and
motor cycles in Australia, and has a strong interest in this matter.
The FCAI is supportive of moves by Government to improve the air quality for citizens. The FCAI has taken a
consistent approach that this can and should be done through the consistent application of measures at
technological, behavioral and regulatory levels.
To this end, the FCAI considers that a comprehensive or integrated approach to reducing emissions from
passenger vehicles (reducing kilometres travelled, reducing the number of vehicles on the road and
improving the energy efficiency of the entire vehicle fleet together with improved road infrastructure) will
result in larger, more cost-effective emission reductions from road transport than targeting one area in
isolation. Indeed, reducing emissions through one area (e.g. a sole focus on vehicle technology) can be
more expensive than measures such as the increasing use of alternative fuels, improved fuel quality, better
infrastructure and traffic management, and adopting an economic driving style.
The Victorian EPA scientific report Future air quality in Victoria shows vehicle emissions will continue to
decrease over time on a business as usual basis. Accordingly, greater regulatory control will deliver
proportionately less benefit to air quality standards than can be achieved by a greater focus on regulating
other sources of emissions in various areas of domestic, commercial and industrial activity.
RIS COVERAGE
The FCAI notes that the broad objectives of the proposed regulations are to:
minimise negative impacts of motor vehicle use on Victorians and the environment, and
minimise the release of petrol vapours.
We further note that specifically for motor vehicles, the proposed regulations are to:
Prescribe air emission standards and standards of maximum permissible concentration for emissions
from motor vehicles, other than new vehicles and heavy vehicles, to minimize the negative impacts of
motor vehicle use on Victorians and the environment.
Prescribe noise emission standards for motor vehicles, other than new vehicles and heavy vehicles, to
minimise the negative impacts of motor vehicle use on Victorians and the environment.A
The FCAI welcomes the EPAs acknowledgement that the RIS will apply to vehicles in service in the Victorian
motor vehicle fleet and that the appropriate standards set for new motor vehicles is undertaken through
the Australian Vehicle Standard Rules and the Australian Design Rule process.B We further welcome that
the Victorian Government has affirmed its commitment to these national processes, together with the Fuel
Quality Standards Act.
Motor vehicle emissions reductions
Motor vehicle brands are on average reducing annual vehicle CO2 emissions of around 2.2 per cent per
yearC in response to consumer demand. Similarly there have been significant reductions in pollutant
emissions through the introduction of progressively more stringent vehicle emission standards since 2000
(i.e. Euro 3, Euro 4 and Euro 5 standards) and also improved fuel quality standards. Delivering reductions in
both CO2 and pollutant emissions is challenging for vehicle manufacturers and has been achieved through
the development and application of new technologies, developed globally and in Australia. This is helping
Page 2 of 7deliver better air quality outcomes across the country as vehicle emissions continue to reduce across the
Australian in-service fleet.
It should be borne in mind though that undertaking such improvements is not a short-term process.
Indeed, undertaking R&D of new technologies to improve the fuel consumption and lower emissions from
new motor vehicles is a long-term undertaking. Results of research programs initiated today can only be
expected to reap benefits in the medium to long term.
While welcoming that the application of the RIS is intended for vehicles in service and is not intended to
impact the new motor vehicles, we nonetheless note that the RIS confirms that “over the life of the
Environment Protection (Vehicle Emission) Regulations 2003…exhaust emissions from vehicles have
generally decreased. This has been primarily due to improvements in vehicle design standards and the
renewal of the fleet.D
We also note that the EPA Scientific Report, Future air quality in Victoria – final report, found that
“…changes in vehicle technology and population are the main factors likely to affect urban air quality
impacts over the next two decades”;E and that by 2030 it is predicted that:
“…total motor vehicle exhaust emissions will have significantly reduced, despite the large growth
expected in the use of cars and trucks” [emphasis added].F
This is quantified at page 11 of the Future air quality in Victoria report which forecasts that average daily
PM2.5, NOx, CO and SOx emissions from motor vehicles (both petrol and diesel) are estimated to fall, while
emissions from other sources (wood heaters, domestic & commercial activity, and industrial activity) are
forecast to either remain relatively static or increase over the period to 2030.
The practical impact of this is that motor vehicle emissions will continue to have a diminishing impact on
the health and wellbeing of the broader population, both in total terms and as a significantly reduced
impact on a proportionate basis in comparison to other sectors of the economy.
Fuel standards
Air quality and vehicle emissions cannot be considered without also looking closely at fuel quality
standards. It is the FCAI’s long-held position that fuel quality and vehicle emission standards need to work
together to deliver the Government’s objectives of reducing vehicle emissions. This is also recognised by
the United States Environmental Protection Agency, as demonstrated in their recent technical report into
reviewing vehicle emission and fuel standards. In the report introduction they note the importance of:
“…considering the vehicle and its fuel as an integrated system.”G
It should also be noted that other markets with advanced vehicle emission and fuel consumption standards
have reviewed and implemented improved fuel quality standards in line with vehicle emission
standards. For example;
European Union—market fuel is 95 RON, 10 ppm sulphur.
United States—the US EPA has recently released their Draft Regulatory Impact Analysis: Tier 3 motor
Vehicle Emission and Fuel Standards. The US is proposing to move to a test fuel (gasoline) with sulphur
levels 8-11 ppm and an in-service fuel (gasoline) standard of 10 ppm sulphur on an annual average
basis from 1 January 2017.
The FCAI and member companies consider a whole of Government approach is required to incorporate all
associated issues, including fuel quality standards, which have a significant impact on vehicles’ ability to
meet both CO2 targets and air pollution emission standards.
Page 3 of 7If appropriate market fuel quality is not available, higher exhaust emissions (both CO2 and pollutants) will
be generated in-service with lower than expected improvements to air quality and health outcomes.
Vehicle operability and durability issuesH will also be experienced such as:
reduced time between regeneration of NOx catalysts leading to increased fuel consumption and
reduced catalyst life
early activation of malfunction indicator warning lamps (MIL), and
increased operating and servicing costs.
The potential for degraded performance, operability and durability of some vehicle technologies due to
low-quality market fuel could lead to reputational damage if the vehicle does not operate as expected. To
protect against such damage, some brands may instead choose to restrict from Australia the introduction
of new technologies that require higher fuel standards.
Conversely, improved fuel quality standards not only benefit new vehicles—there will be an immediate
improvement in exhaust emissions across the entire in-service fleet if fuel quality standards are improved.
Other emissions sources
Officials at the EPA public consultation on 28 August indicated that the proposed RIS is only one component
of the Government’s broader response to air quality standards in Victoria.
Given the forecast continued reduction over time of in-service vehicle emissions, and the increasing
contribution to the air quality issue from other emission sources, the FCAI questions if the proposed
regulations will make a perceptible difference to air quality standards in Victoria. It also asks if a better
outcome for the cost to the community could be achieved through a greater focus on emissions in other
areas, such as industrial activity, or domestic and commercial activity (such as stationary diesel generators,
greater regulation of non-road-going diesel vehicles) and greater regulation of wood heaters and stoves.
CONCLUSION
The FCAI welcomes the opportunity to respond to the EPA Regulatory Impact Statement – Environment
Protection (Vehicle Emissions) Regulations 2013.
The FCAI considers that a comprehensive or integrated approach to reducing emissions from passenger
vehicles (reducing kilometres travelled, reducing the number of vehicles on the road and improving the
energy efficiency of the entire vehicle fleet together with improved road infrastructure) will result in larger,
more cost-effective emission reductions from road transport than targeting one area in isolation.
Motor vehicle brands are reducing both CO2 emissions and pollutant emissions year on year with the
introduction of new technology in response to both new regulations and consumer demand. An important
component of being able to deliver new vehicle technology to continue to achieve improvements in vehicle
emissions is improved fuel quality standards.
Page 4 of 7APPENDIX A THE AUSTRALIAN AUTOMOTIVE INDUSTRY
The FCAI is the peak industry organisation representing vehicle manufacturers and importers of passenger
vehicles, light commercial vehicles and motor cycles in Australia. The automotive industry is a major
contributor to Australia’s lifestyle, economy and community and is Australia's largest manufacturing
industry. The industry is wide-ranging and incorporates importers, manufacturers, component manufacture
and distribution, retailers, servicing, logistics and transport, including activity through Australian ports and
transport hubs.
The Australian automotive sector exported around $3.3 billion in vehicles and components in 2011 and
annual turnover in the industry exceeds $160 billion. The industry directly employs almost 52,000 people
through Australia’s three vehicle manufacturers, dozens of importers and thousands of related component
manufacturers. Further, the automotive industry employs nearly 280,000 people directly and indirectly
throughout Australia. In 2011, around $470,000 worth of product was generated per employee, a
significant contribution to the Australian economy. The industry paid around $3 billion in wages and salary
in 2009/10 and since 2007 the industry has invested more than $4.5 billion on research and development.I
As the tariff barriers on automotive products have reduced from 57.5 per cent in the 1980s to between
3 and 4 per cent the number of vehicle brands and models in the Australian market has increased. There
are now over 67 brands in the Australian market, with just over 1.1 million new vehicle sales per year. That
is a lot of brands to service a market of our size equating to only around 16,000 new vehicles sold per
brand. The following table provides a comparison of the competitiveness of global markets with double the
number of new vehicles sold per brand in Canada, almost three times as many in the UK and more the
255,000 new vehicles sold per brand in the USA.
J
Table A.1 Competitiveness of Global Vehicle Markets
Australia Canada UK USA
No. of brands in market 67 49 53 51
Sales 1,112,032 1,620,221 2,249,483 13,040,632
Market size per brand 16,597 33,066 42,443 255,699
In 2012, only 13 per cent of new vehicles sold were manufactured locally with the remaining 87 per cent of
new vehicles imported from many countries and regions of the world including Asia (more than 60 per
cent), Europe (14 per cent), North and South America (3 per cent), other Asian countries (3 per cent) and
South Africa (3 per cent) (see Table A.2).
K
Table A.2 Country/Region of Origin for New Vehicle Sales in 2012
Country/Region of Origin % of New Vehicle Sales
Japan 35%
Thailand 15%
Europe 14%
Korea 13%
Australia 13%
Americas 3%
Other Asia (incl China and India) 3%
Other (incl South Africa) 3%
Page 1 of 7The motor vehicle is increasingly a global product and one of the most comprehensively regulated
products. In considering regulations, the government’s role is to balance social and economic benefits with
safety and environmental performance.
As economies of scale are critical in the automotive industry all manufacturers have tended to limit the
number of locations any one model is produced and that model is then cross‐shipped to markets where
there is demand. This approach initially benefits the manufacturer through reducing costs and ultimately
benefits the consumer by improving affordability and increasing product choice.
Australia is a small player with less than 1.5 per cent of the global build sold in this market. Consequently,
Australia’s ability to influence global design and investment is limited and as individual states are even a
smaller proportion of the market and their ability to influence multi‐national companies is correspondingly
very limited.
It has become much easier to afford a new car since the mid-1990s, as earnings growth has exceeded the
movements in motor vehicles prices. Figure A.1 shows the affordability of new passenger cars on three
separate indices, CPI motor vehicle index, Australian Automotive Intelligence Report index and an index
based on a ‘Family 6’ car.
Figure A.1 - Car Affordability IndexesL
Motor vehicles are more technologically advanced today than ever before. While the structural changes in
the Australian market, in terms of lower tariffs and more brands, has resulted in significant consumer
benefits with improved affordability and choice it has also greatly increased the knowledge base required
of repairers. The industry has had to change to compete in this global market place and cannot slow the
rate of adoption of these technologies, or limit consumer choice.
The expansion of new and global brands and models into the market has led to the introduction of
advanced security, safety and environmental features in motor vehicles. The introduction of these features
is in response to increasingly strict environmental regulations and growing demands from consumers for
advanced security and safety features.
Vehicle brands face a range of de-facto regulations in the form of safety and environmental star ratings and
buyer requirements. They face a range of competitive pressures to continually improve environmental
performance and safety standards. For example, between 30 to 50 per cent of vehicle sales are to
governments and fleets that frequently require a 5 star ANCAP rating and/or 4 star GVG rating.
Page 2 of 7A
http://www.epa.vic.gov.au/~/media/Publications/1543.pdf, p.4
B
EPA consultation, Melbourne 28 August 2013.
C
Carbon Dioxide Emissions from New Australian Vehicles 2012, National Transport Commission (NTC) Information Paper, March 2013
D
http://www.epa.vic.gov.au/~/media/Publications/1543.pdf, p.5
E
Future air quality in Victoria – final report, EPA Victoria/CSIRO, publication 1535 July 2013, p.3
F
Future air quality in Victoria – final report, EPA Victoria/CSIRO, publication 1535 July 2013, p.3
G
Opening statements in Executive Summary of US EPA Draft Regulatory Impact Analysis: Tier 3 Motor Vehicle Emission and Fuel Standards, March
2013.
H
These issues are also recognised in the SEWPaC review of sulphur in petrol
I
Australian government, Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education, Key Automotive Statistics
2011.
J
Australian government, Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education, March 2013 Automotive
Update.
K
FCAI, VFACTS National Report, New Vehicle Sales, December 2012.
L
Johns R, 2012, Australian Automotive intelligence 2012 Yearbook.
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