How will Australia achieve its post-2020 climate target? In announcing the new target of 26-28 per cent below 2005 levels by 2030, Prime Minister Tony Abbott and Environment Minister Greg Hunt outlined a range of policies that could help achieve this target, including extending Direct Action, a yet-to-be-announced National Energy Productivity Plan and improved efficiency of vehicles.
ClimateWorks’ research suggests improving vehicle efficiency by 50 per cent would cut emissions by nine million tonnes each year after 10 years.
But vehicle efficiency isn’t just about reducing emissions. It can also save us money, and reduce our heavy reliance on imported oil.
How reliant are we on oil imports?
A recent Senate Committee report into Australia’s vulnerability to potential oil supply interruptions highlighted the intersection between energy security and environmental impacts.
According to a report from the National Road Motorists Association (NRMA), Australia’s reliance on imported oil and fuel has grown from 60 per cent in 2000 to over 90 per cent in 2014.
What’s more, Australia is in breach of its obligations under the International Energy Agency (IEA) treaty to maintain a minimum of 90 days worth of stocks of oil. For instance, in January 2014 we had 60 days of oil stocks. This requirement is in place to manage the event of a severe disruption to global oil and fuel supplies such as was experienced in the 1973-74 oil crisis.
Maintaining reasonable supplies of oil also helps avoid the unlikely but catastrophic economic impacts of a country actually running out of oil. To give you an idea of what might happen if we ran out oil tomorrow, the NRMA’s submission states that Australia would run out of hospital medicines within three days, petrol at service stations within three days, retail pharmacy supplies within seven days, chilled and frozen goods (refrigerated food) within seven days, and dry goods (all other food) within nine days.
In other words, it would pose a serious threat to our economy, to essential services and to human health and well being.
While other submissions downplayed the risk, the committee was sufficiently concerned about “the fact that a substantial disruption in fuel supply would have serious consequences across the Australian community” to recommend further action be taken, including the development of a “comprehensive Transport Energy Plan directed to achieving a secure, affordable and sustainable transport energy supply”.
The multiple benefits of improving vehicle efficiency
This is fundamentally a problem of supply and demand. It can be fixed by either increasing supply, or decreasing demand – or both.
Increasing supply would involve expanding production of oil in Australia, which seems unlikely – with the possible exception of biofuels – given projections for declining oil production in Australia.
Building and maintaining more fuel storage tanks can also act as a short-term buffer in the event of supply interruption.
The other strategy is to decrease demand for oil. There are several options here, all of which not only help reduce our vulnerability to fuel supply interruptions, but have multiple other economic, social and environmental benefits.
The first option is to improve the fuel efficiency of our new cars and heavy vehicles. Australia happens to be one of the very few developed countries in the world that does not set a minimum standard for fuel efficiency of our new cars. Australia could move to introduce best practice vehicle fuel efficiency standards, targeting a 50 per cent improvement within 10 years, similar to other markets.
Our research has shown that meeting this target would bring significant benefits to consumers who will be paying less in fuel bills, with net annual savings of approximately A$350 for average drivers over a five-year ownership period.
It would also address broader national issues such as reducing greenhouse gas emissions by almost nine million tonnes of CO2 equivalent per year after 10 years, and reduce demand for oil by between 40 million and 66 million barrels per year.
These improvements will also help ensure that Australia keeps pace with productivity gains in other comparable countries.
The federal government is currently developing a National Energy Productivity Plan – part of its Energy White Paper – which could include measures to lay the groundwork for the introduction of fuel efficiency standards after 2017, when domestic auto manufacturing is planned to close, alongside complementary measures to drive consumer demand for more efficient vehicles, and to address any technical and infrastructure issues, including concerns raised about fuel quality in Australia.
The second option is to reduce the need for transport full stop, by encouraging the use of teleconferencing and videoconferencing and through better urban design to encourage walking, biking and use of public transport.
The final option is to encourage a shift from oil-based fuels to other fuels. In particular, a shift from petrol cars to hybrid, electric and fuel-cell cars, from diesel trucks to gas, and increased use of biofuels particularly for aviation – all of which reduces the demand for imported oil.
ClimateWorks’ energy and emissions calculator, which includes a fuel security feature built with support from NRMA, shows that Australia could reduce demand in 2030 for imported oil for transport by more than half and increase the number of days we could go without oil imports for transport from 14 to 32 days, even without building a single additional tank.
And of course, we’d be saving money, reducing greenhouse gas emissions and improving the quality of the air in our cities at the same time.