Electric vehicle manufacturer Polestar, with its zero-emission lineup, has emerged as Australia’s pioneer in offering to trade its emissions credits with other automakers. Under new Federal Government regulations introduced in 2024, carmakers exceeding their CO2 limits can now buy credits from manufacturers who surpass emissions standards, helping them avoid penalties by balancing their fleet averages.
Polestar has signaled its readiness to assist automakers at risk of ample penalties under Australia’s newly implemented NVES vehicle emissions standards. With zero tailpipe CO2 emissions, Polestar is the first automaker in Australia to show interest in selling its earned emissions credits to other brands. Automakers likely to breach the upcoming Australian CO2 targets for new vehicles can buy ‘credits’ from the Geely-affiliated electric vehicle brand to evade government penalties.
Polestar’s global headquarters predicts earning ‘three-digit million-dollar’ from trading carbon credits in the next few years, as conventional automakers face challenges in their shift to electric vehicles. Australia’s recently introduced New Vehicle Efficiency Standard (NVES) measures each vehicle’s CO2 emissions against specific targets, with benchmarks determined by the car’s weight classification and category. Vehicles that surpass emissions limits increase a manufacturer’s yearly emissions score, while those below the threshold help reduce it.
The brand’s annual vehicle sales are averaged over the calendar year, and if the resulting emissions value is above zero, the brand’s average emissions have not met the targets. It will face a fine of $100 per gram per km of CO2 per vehicle for exceeding the targets.
The penalties can accumulate rapidly; 20,000 sales of a vehicle exceeding its CO2 target by 10g/km would result in a $20 million fine unless offset by vehicles that meet the standards. Polestar and Tesla stand to gain, as they exclusively sell zero-emission vehicles and will not incur any fines.
Tesla reported earning $2.1 billion from global CO2 credit sales during the first nine months of 2024. This includes $890 million between April and June alone, roughly equivalent to the sale of 20,000 new cars. However, these earnings depend on other car companies’ willingness to buy ‘carbon credits’ from their competitors.
OBSERVATION | Vietnam’s Auto Market Booms Amid Chinese Competition
