The Australian Government is considering recommendations to base registration costs for all cars on environmental performance, a policy that would be unworkable in New Zealand under current motor vehicle regulations.

"It would be unworkable in the future, too," says Motor Industry Association CEO Perry Kerr, "unless a whole new Motor Vehicle Registry is developed.

"But this is unlikely - we have been told that it would cost anything between $60 to $90 million to replace the existing system and that there is no money to do this, in spite of a compelling case that it needs to be done."

The MVR lists all the vehicles registered in New Zealand: make, model, engine, number of doors and so on. But updating it with information like CO2 exhaust emissions and safety equipment is said to be cost-prohibitive and a drain on resources.

"The MVR is constrained by the number of details about a vehicle or model that can be collected," says Kerr. "Currently the only safety feature on which information is [held] is compliance with frontal impact standard, added in the late 1990s or early 2000s.

"It is now virtually impossible to change or add information to the MVR. As an example, when the motor industry had a problem with the year of manufacture of vehicles and wanted to submit the notation 'not available', or something similar, the quoted cost ran over $1 million.

"The MVR therefore has no information on emissions, safety equipment or features such as crash ratings.

"Fuel economy figures have only been collected since 2005/06 - so you would be lucky to have 15 per cent of vehicles with fuel data."

The Green Vehicle Guide across the ditch rates new Australian vehicles based on greenhouse and air pollution emissions. The rating is calculated using data provided by carmakers from testing the vehicle against Australian standards.

The Australian Government is basing new tax incentives on fuel efficiency, especially in the luxury sector. BMW Australia has just launched the 3-Series 330d, the sixth new BMW diesel to attract a dispensation from the luxury car tax because it uses less than 7 litres of fuel per 100km.

Cars costing more than A$53,710 ($66,632) in Australia attract a 33 per cent luxury tax. But those that meet the new fuel standard aren't taxed as much. For example, the 330d costs A$87,250 against A$97,900 for the diesel Mercedes-Benz C320 CDI, which uses 7.4litres/100km.

But the recommendations to the Australian Government suggest the charges be based on the Green Vehicle Guide, which penalises diesel cars in its ratings because they emit more NOx (oxides of nitrogen) and particulate matter.

BMW argues the guide's rating system, which awards one to five stars based on CO2 emissions, fuel efficiency and air pollution, lumps too many cars in the same category.

"One car scoring four stars can emit 150 grams more CO2 than another that gets the same score. It makes more sense to rank cars on their CO2 emissions, as they do in Europe," says BMW spokesman Tony Andreevski.

Exhaust emissions and fuel economy ratings are especially relevant today, highlighted by the Energy Greenhouse Gas Emissions report showing the transport sector in New Zealand reduced carbon dioxide emissions by 4 per cent in the past year.

But Kerr says the reduction was primarily brought about by the increasing price of fuel alongside global economic uncertainties.

"It's certainly noteworthy that CO2 emissions are lower," he says. "But this isn't a result of any specific government policy - it's due to vehicle owners making rational decisions to plan journeys effectively and use their cars less."

The MIA wants the Government to put in place a complimentary policy that deals to CO2 emissions and vehicle safety - like a CO2 levy on fuel, in addition to the Emission Trading Scheme under consideration.

"One of the main barriers facing consumers wanting to upgrade their vehicle is affordability," says Kerr.

"A scrappage incentive, funded by the CO2 emission levy, would go some way towards overcoming that hurdle."