Australia's Transport Sector Achieves First Emissions Cut Since Pandemic, Driven by EV Surge
Australia's transport sector has marked a significant turning point, recording its first reduction in carbon emissions since the COVID-19 lockdowns. This encouraging decline is primarily attributed to a substantial increase in electric vehicle (EV) sales across the nation.
This decline is largely attributed to a significant increase in electric vehicle (EV) sales.
Official data highlights that EV sales have tripled over the past three years, now constituting 13% of all new cars sold in 2025. This shift contributed to a 1.9% overall reduction in the country's greenhouse gas emissions in the year leading up to September 30.
Historically, the transport sector, a major consumer of fossil fuels, has generated approximately one-fifth of Australia's greenhouse gas pollution. Decarbonizing this sector has been a persistent challenge, with emissions rising by 23% since mid-2005, marking the largest increase across any sector.
Policy Impact and Broader Emissions Success
Climate Change and Energy Minister Chris Bowen affirmed that government policies are proving effective in driving these reductions.
Climate Change and Energy Minister Chris Bowen stated that government policies are proving effective.
Data from the Department of Climate Change and Energy indicates a 0.4% fall in transport sector emissions for the year ending September 2025, largely due to decreased petrol consumption for road transport.
Across the entire economy, emissions were 2% lower than the previous year, signifying the first sustained decrease in greenhouse pollution since the pandemic. This broader national reduction is significantly propelled by the increasing replacement of coal-fired power plants with renewable energy sources in electricity generation.
Contributing Factors and Future Targets
Beyond transport, other factors contributing to the national emission reductions include a record shift from household gas appliances to electric alternatives, and the strategic use of carbon capture and storage technology in oil and gas production.
Australia remains committed to the Paris Agreement goals, aiming for a 43% emissions cut by 2030 from 2005 levels and at least 62% by 2035. Current projections suggest the country is on track to achieve around a 36% reduction by 2030.
The government emphasizes the progress stemming from policies that promote EV adoption, support the construction of wind and solar farms, and increase the uptake of household batteries. With two large coal plants slated for closure in the next four years, and more anticipated, the government is confident in its ability to meet its ambitious targets.
The EV Revolution: Progress and Policy Debate
To meet the 2035 emissions reduction target, the Climate Change Authority estimates that a nearly five-fold increase in clean car sales is necessary. This would require electric vehicles to account for every second light vehicle sold over the next decade, translating to approximately 9 million EVs sold within the next 10 years.
EV sales have demonstrated significant growth, surging from around 7,000 in 2020 to 157,000 in 2025. The federal government's tax cuts for leasing EVs have gained popularity, offering substantial fringe-benefit tax savings to employees who purchase an EV priced under $91,387 through a novated lease.
However, the future of this subsidy is under scrutiny. The Productivity Commission has advised the government to discontinue the incentive, which is projected to cost $1.35 billion in the current financial year. The opposition Coalition's policy is to eliminate this discount entirely.
The Electric Vehicle Council has stated that removing the subsidy would reduce clean car uptake and potentially impede Australia's ability to meet its climate targets.