ACT to incentivize electric vehicles with a registration fee based on emissions instead of weight

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Motorists in Canberra will soon pay their registration fees based on their vehicle’s emissions output rather than its weight, as authorities look to further incentivize cleaner, electric cars.

Details of the Australian Capital Territory’s transition to an emissions-based rego system were released this week as the International Monetary Fund urged Australia to explore ways to financially discourage the purchase of high-emission vehicles and use the funds raised to further subsidize the adoption of electric vehicles. .

The ACT government expects around 96% of passenger car owners to pay the same or lower costs under the new pricing model, and 4% will face higher costs for owning more polluting vehicles.

While EV owners stand to benefit the most from the changes, the new scheme also favors cleaner fuel-burning vehicles over gas-guzzling alternatives.

Utes and other work vehicles will pay the same rates under the new scheme, but it will be cheaper to register some low-emission utility vehicles.

The update addresses a disparity in the existing weight-based system, where owners of cleaner but traditionally heavier electric cars faced higher registration costs than drivers of less heavy but highly polluting combustion engine cars.

Related: Summer holidays see people lining up to charge electric cars for the first time in Australia

The new pricing scheme will take effect from July 1, 2024, however, new and used EV owners who have enjoyed two years of free registration as part of a previous incentive initiative will be the first to move to the lower rate category when your rego expires on May 25 of this year.

Announcing details of the new system, ACT Premier Andrew Barr noted that transport contributes more than 60% of the Territory’s emissions, with private vehicles responsible for approximately 70% of that category.

“Transportation is now the largest contributor to ACT’s greenhouse gas emissions,” Barr said, adding that the changes will minimize cost-of-living pressures.

“These new initiatives are designed to ensure that we have a future-proof vehicle registration system. They will see lower rates for low emission vehicles, including low emission gasoline and diesel vehicles.”

ACT energy minister Shane Rattenbury said zero emission vehicle registrations doubled from 2021 to 2022. “ACT already leads the nation in electric vehicle adoption, accounting for 9.5% of all new cars purchased from ACT in 2022 as electric vehicles. ”

ACT’s announcement came ahead of an IMF report urging the Australian government to explore such initiatives.

In its annual review of Australia’s economy, the IMF noted the ambitious task ahead for the country to meet its net-zero emissions commitments by 2050.

The report states that introducing an economy-wide carbon price would be “the most effective way to achieve emission reductions” but acknowledges the “politically challenging” nature of doing so.

If a price on carbon proves politically unsustainable, the IMF has called on the Albanian government to pursue sector-specific policies, specifically a “rebate” system to incentivize a transition to cleaner vehicles by subsidizing lower-emission vehicles and taxing the vehicles with the most emissions. in a way that is “integrated into the vehicle registration tax system”.

The report said this would work to trigger “behavioral responses to decarbonise the vehicle fleet while avoiding a fiscal cost to the government and not driving up average car prices.”

The IMF report notes that similar systems have been effective in driving EV adoption in the Netherlands and New Zealand.

The ACT announcement contrasts with a NSW government plan unveiled last week to offer drivers the chance to buy carbon offsets when they renew their car registration, in what critics derided as a “gimmick” that could undermine efforts to reduce transportation. emissions

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