Carmakers have been urged not to lose sight of gains made in cutting back CO2 exhaust emissions, now that the National Government has moved away from the specific target set by the previous Labour administration.

Labour wanted to see in place by 2015 a fleet average CO2 limit of 170 grams per kilometre, for vehicles under 3.5 tonnes. National chose to step back from the 170gr/km standard and impose a tax on transport fuel under the Emissions Trading Scheme.

Motor Industry Association CEO Perry Kerr says the car companies must not become complacent. "I keep telling the industry, 'Don't lose focus - keep the 170gr/km in mind because it will come back on the agenda at some stage. Transport is the only sector under ETS where the government has room to move."

Globally, transport is recognised as one of the main contributors to global warming. "The motor industry is being driven by governments in Britain, Europe, the United States, Japan, Australia and China to develop more fuel-efficient and cleaner vehicles," said Kerr.

"They are meeting this challenge. While at the moment the New Zealand Government is not considering any specific initiatives aimed at improving fuel consumption, the new vehicle industry is conscious that it continues to reduce the industry's average CO2, which it has done for the past four years, or since we have been able to accurately calculate this figure."

Kerr said the MIA believed that the transport fuel component in the ETS should be progressively increased. "It would give a clear signal to all motorists that it is important they consider how they drive, how much they drive and the fuel efficiency of the next car they buy."

The National Government is understood to be watching what Australia does with its CO2 standard. National will review the effect of the ETS transport tax around the middle of next year but won't report its findings until after the 2011 general election.

Across the ditch, Prime Minister Julia Gillard's Labor government - if it returns to office - says it will look at a mandatory CO2 target of 190gr/km by 2015, reducing further to 155gr/km in 2024.

A Tony Abbott-led Liberal coalition government is likely to adopt a similar proposal, given the plan already has qualified support from the Australian car industry which has floated its own figure of 195gr/km.

Both political parties have left room for negotiation with the Australian car industry, specifically Holden, Ford and Toyota, says website GoAuto. The final figures might not change much, but, as has happened in Europe, there could be allowances based on factors such as vehicle mass.

In Europe, the EU is phasing in a 130gr/km limit for passenger cars by 2012 - and has set a limit of 95gr/km by 2020 - but the initial target for each carmaker varies according to the average weight of their vehicles.

That means that the makers of bigger cars, such as the prestige English and German brands, might only have to reach, say, 140gr/km, while small-car specialists such as Fiat will not have the same luxury.

Among the criticisms levelled at this approach is that it discourages carmakers from reducing vehicle mass and could even prompt some to build bigger and heavier cars to receive a less demanding CO2 target.

While New Zealand's and Australia's CO2 figure is moving in the right direction, other countries are moving at a much faster rate. At the end of last year - the most recent finding - New Zealand's CO2 fleet average was 204gr/km; Australia's was 222gr/km. Both findings were better than the US figure of 256.6gr/km but well behind Britain (149.5gr/km), Europe (145.9gr/km, taken across 21 countries) and Japan (131.2gr/km).

Meantime, vehicles capable of running on biofuels such as E85 ethanol are likely to get room to move from mandatory fuel efficiency standards in Australia.

Although the volume of CO2 emitted from the E85 car's tailpipe is little different to those of cars running on fossil fuels, proponents of ethanol argue that up to 50 per cent of CO2 is either recaptured in the growing of plants such as sugar cane or sorghum or uses carbon that would otherwise be emitted as methane.