Australia’s new fuel efficiency scheme has been in place for just seven months.

But the New Vehicle Efficiency Standard has already created a new, tradeable carbon currency applying just to cars and light commercial vehicles (utes and vans) market. In just months, the scheme has created a surplus of roughly 16 million “NVES unit” credits.

When manufacturers sell efficient cars, they earn credits. When they sell high-emitting ones, they rack up a debt. Any debts will have to be settled either by buying credits from car companies in surplus or by paying financial penalties.

As a result, brands such as BYD, Toyota and Tesla are already banking millions of credits, while others such as Mazda, Nissan and Subaru are building up debts which will get harder to ignore. We don’t know how much credits are worth yet as the market is too new and carmakers haven’t started trading them yet.

The architects of the scheme deliberately designed credit trading into the laws. But the speed and scale of these market dynamics has been surprising. From next year on, the legally binding targets will progressively tighten – and the average new car on the road will get cleaner and cleaner.

For decades, Australia was one of the few developed nations with no limit on how much carbon dioxide cars could belch out in their exhaust.

That changed on July 1 2025 when the New Vehicle Efficiency Standard came into effect. It sets a limit on total emissions a manufacturer’s range of models can produce (141 grams of carbon dioxide per........

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