Good news on CO2: EV uptake plays its part in first transport emissions reduction in years
Australia’s emissions have fallen by 8.5 million tonnes over the year to September 2025, with transport emissions declining for the first time since the COVID period as electric vehicle uptake grows and renewable electricity reaches record levels.
The latest Quarterly Update of Australia’s National Greenhouse Gas Inventory shows national emissions dropped 1.9 per cent to 444.3 million tonnes of CO₂-e, leaving Australia 27.4 per cent below 2005 levels — the baseline used for the nation’s Paris Agreement commitments.
Electricity remained the biggest driver of the overall decline, with emissions from the sector down 3.1 per cent over the year, reflecting record renewable generation and the continued displacement of coal-fired power.
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Transport emissions fell 0.4 per cent to 100.6 million tonnes CO₂-e, marking the first year-on-year decline since the pandemic. The report attributes the drop mainly to lower petrol consumption for road transport, partly offset by increased diesel use and domestic aviation activity.
While the inventory does not directly assign the reduction to any single policy or technology, the result coincides with rapid growth in electric vehicle uptake.
Federal Climate Change and Energy Minister Chris Bowen pointed to the tripling of EV sales in the last three years, with EVs and plug-in hybrids accounting for 13.1 per cent of all new cars sold in 2025.
The Labor government has introduced the NVES CO2 reduction scheme which encourages the uptake of EVs.
“We are on track to meet our climate targets if we stay the course and continue to lift our efforts,” said Bowen.
Industry groups say government incentives are helping accelerate that transition. The National Automotive Leasing and Salary Packaging Association (NALSPA) said the Federal Government’s Electric Car Discount — which removes fringe benefits tax on eligible novated lease EVs — is supporting demand and helping reduce transport emissions.
NALSPA chief executive Rohan Martin said the transport sector decline showed the policy was beginning to deliver measurable results, arguing the incentive was helping improve EV affordability and uptake among everyday buyers, particularly in outer suburban areas.
According to analysis by Magenta Advisory cited by NALSPA, the Electric Car Discount contributed an estimated 105,500 additional EVs to Australian roads between 2022 and 2024, with those vehicles estimated to avoid between roughly 160,000 and 200,000 tonnes of CO₂-e annually as fleet turnover continues.
The government report also shows emissions fell across several other sectors, including fugitive emissions, which declined 3.8 per cent largely due to reduced natural gas venting and new carbon capture and storage activity, and stationary energy emissions, down 1.7 per cent.
Preliminary estimates for the year to December 2025 suggest emissions declined further to 443.1 million tonnes CO₂-e, down 2.0 per cent year-on-year.
While the electricity sector continues to deliver the largest gains, the fall in transport emissions is significant because it reverses a long-running upward trend. The report notes transport emissions have grown 23 per cent since 2005, making the sector one of the more difficult areas to decarbonise.
The latest data suggests the combination of cleaner electricity generation and early stages of vehicle fleet electrification is beginning to show up in Australia’s emissions profile, even as transport remains a challenging part of the economy to reduce.
