The following is an articled featured in The Conversation. Click here for the full article.
Australia’s new fuel efficiency scheme has been in place for just seven months.
But the New Vehicle Efficiency Standard has already created a new, tradeable carbon currency applying just to cars and light commercial vehicles (utes and vans) market. In just months, the scheme has created a surplus of roughly 16 million “NVES unit” credits.
When manufacturers sell efficient cars, they earn credits. When they sell high-emitting ones, they rack up a debt. Any debts will have to be settled either by buying credits from car companies in surplus or by paying financial penalties.
As a result, brands such as BYD, Toyota and Tesla are already banking millions of credits, while others such as Mazda, Nissan and Subaru are building up debts which will get harder to ignore. We don’t know how much credits are worth yet, as the market is too new and carmakers haven’t started trading them yet.
The architects of the scheme deliberately designed credit trading into the laws. But the speed and scale of these market dynamics have been surprising. From next year on, the legally binding targets will progressively tighten – and the average new car on the road will get cleaner and cleaner.
Read the article further here.
