Fuel efficiency standard laws will pass federal parliament on Thursday after the government secured backing for the proposal from the Greens.
Under the laws, the government will seek to reduce emissions for passenger cars by 61 per cent by 2029, while emission cuts for light commercial vehicles such as utes will be 35 per cent.
The government said the changes were overdue given light vehicles produce 11 per cent of carbon emissions, and the standards would help meet the target of a 43 per cent cut in total emissions by 2030.
The Greens agreed to back the proposal in the Senate without any changes in exchange for the government scrapping measures that would fast-track new gas projects.
Greens leader Adam Bandt said while he would have liked to have seen the efficiency standards go further, the party would not stand in the way of the proposal.
"The Greens have killed Labor's gas fast-track bill. This is a win for climate, a wine for First Nations' voices, a blow to the gas corporations," he told reporters in Canberra on Thursday.
Greens leader Adam Bandt said his party would not stand in the way of the fuel efficiency proposal. (Erik Anderson/AAP PHOTOS)
The fuel efficiency standards passed the lower house on Thursday morning and are set to pass through the Senate later in the day.
Transport Minister Catherine King said Australia had been behind the rest of the world in implementing fuel standards for vehicles.
"We have stood alongside Russia as one of the only advanced economies that does not have a fuel efficiency standard," she told parliament on Thursday.
"Consumers in Australia are not getting the benefits of the most efficient vehicles, whether they be petrol vehicles, whether they be hybrid vehicles or diesel vehicles."
Penalties and credits under the standard will not apply until July 2025, six months after the law comes into effect, and a $60 million fund will be established for electric vehicle chargers in car dealerships.
The new regulations are designed to help reach a 43 per cent cut in total emissions by 2030. (Flavio Brancaleone/AAP PHOTOS)
Climate Council chief executive Amanda McKenzie said the backing in parliament was a win for the environment.
"This law will see Australia slash climate pollution from one of our biggest sources, steering the transport sector towards a cleaner future," she said.
"We look forward to seeing the positive impacts this important change will have on our hip pockets, our health, and our environment."
Ms King told parliament the laws would help Australia reach its emissions-reductions targets.
"It's an important measure to make sure that regional areas get the fuel savings that are desperately needed," she said.
"This bill is very much part of making sure that people in regional Australia get the benefit of fuel-efficient cars."
The Greens have also agreed to back government laws on changes to a resources tax on offshore oil and gas companies as part of the deal on scrapping the gas fast-tracking measures.
National climate policy adviser at the Australian Conservation Foundation Annika Reynolds welcomed the move to drop the gas project bill.
"It sparked serious First Nations' concerns about consultation and environmental governance," they said.
"It would have been a free kick for multinational gas companies and would have undermined the Albanese government's own climate policies, including the reformed safeguard mechanism."
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