Calculating IEVs and issuing units

PAGE LAST UPDATED: 28 Jun 2025

Overview

An entity’s interim emissions value (IEV) is worked out by calculating their performance for their entire fleet of vehicles for a performance period. If their IEV is:

Above zero, the entity has not met the requirement for the performance period.
Below zero, the entity has beaten the requirement for the performance period. This means the entity will be issued NVES units.
Zero, the entity has met the requirement for the performance period.

The first IEV will be issued in February 2026 for the 2025 performance period. This is also when the first NVES units will be issued.

A final emissions value (FEV) for a performance period is an entity’s IEV less any units they have extinguished to balance their IEV. This can be accomplished through purchasing units or changing their fleet mix to earn additional units prior to the FEV being determined.

The New Vehicle Efficiency Standard Act 2024, the NVES Act, sets carbon dioxide or CO2 emissions targets from 1 July 2025 for new passenger cars and light commercial vehicles, such as utes and vans, entering the Australian market.
Regulated entities such as car manufacturers and suppliers have a legislated duty to meet or beat the CO2 targets set out in the Act.
Each year the CO2 targets are lowered, meaning entities are encouraged to supply more fuel-efficient or low emissions cars, year on year, giving Australian consumers more choice.
Before a road vehicle can be provided for the first time in Australia, it needs to be entered on the Register of Approved Vehicles (RAV).
Entities must enter 4 NVES-specific data fields on the RAV in order to comply. They are:
1. NVES vehicle type
2. carbon dioxide (CO2) emissions number
3. mass in running order (MIRO) value and
4. rated towing capacity.
We use this data to calculate an entity’s interim emissions value, or IEV.
So, how is an IEV calculated?
Let’s take 2 cars from the same supplier.
They are both passenger cars, but one is heavier than the other.
Each car will get a different CO2 target because it is adjusted up or down depending on how heavy the car is: heavier cars have higher targets.
We then assess how the cars performed against the CO2 target set in the NVES Act for that year.
In February of the following year, the entity will receive their IEV which represents their performance across their fleet.
- If their IEV is below zero, they have beaten the CO2 target and will be issued units.
- If their IEV is zero, they are compliant.
- If their IEV is above zero, they have not met the CO2 target.
Entities with an IEV above zero will need to act over the next 2 years to reach a FEV of zero.
Otherwise they may receive a penalty.
To comply they could:
- provide more low-emissions cars in another year and earn units to balance their performance
- choose to trade for units with another entity and use those units toward reducing their IEV.
If they don’t want to trade for units, or they can’t earn enough, they can pay the penalty.
We want to make sure entities voluntarily comply with the NVES Act by making the process clear and as easy as possible.

Numerical precision and calculations guidance

You can access the numerical precision and calculations guidance note (PDF 287 KB) which has been developed for entities to:

Understand how the NVES Regulator calculates the IEV and FEV.
Understand what the relevant equations are for making these calculations.
Understand what the rounding rules are for decimal points.
See worked examples on how these equations and calculations can be applied.

Scenario 1: IEV greater than zero

This scenario is for a fleet of vehicles, focusing on the calculation for a single type within the fleet.

Crimson Motors is importing a fleet of vehicles in 2025. The fleet is a mix of large sport utility vehicles (SUVs), utility vehicles (utes) and small sedans. The Divinity is a ute.

Crimson Motors has already submitted their vehicle type approval(Opens in a new tab/window) on the Register of Approved Vehicles(Opens in a new tab/window) (RAV) for the Divinity. Here’s what they entered under the NVES-specific data fields

NVES-specific data field	Entry for the Divinity
NVES Vehicle Type	Type 2
CO₂ Emissions Number	280 g/km
Mass in Running Order (MIRO)	3150 kg

The Headline Limit (CO₂ emissions target) for a Type 2 Vehicle in 2025 is 210.
The Mass Adjustment Factor is 0.0324
The Designated MIRO is 2400
The Reference MIRO is 2155

Using the below formula, we can now calculate the performance for the Divinity.

Formula: HL+MAF (DM−RM)
Calculation: 210+0.0324 (2400−2155) =217.9380

Calculating an IEV

On 31 December each year the data entered on the RAV will be used to calculate an entity’s IEV in February of the following year. An IEV is an entity’s total emissions across the fleet of cars they supply over a performance period.

Performance

It is December 2025 and Crimson Motors has imported 500 Divinity utes and 2 other vehicle types. To forecast their performance for the Divinity ute, Crimson Motors can use the formula below.

Formula: 𝑸𝒖𝒂𝒏t𝒊𝒕𝒚 𝒐𝒇 𝑽𝒆𝒉𝒊𝒄𝒍𝒆𝒔 𝑰𝒎𝒑𝒐𝒓𝒕𝒆𝒅 𝒙 (𝑪𝑶_𝟐 𝑬𝒎𝒊𝒔𝒔𝒊𝒐𝒏𝒔 𝑵𝒖𝒎𝒃𝒆𝒓−𝑪𝑶_𝟐 𝑬𝒎𝒊𝒔𝒔𝒊𝒐𝒏𝒔 𝑻𝒂𝒓𝒈𝒆𝒕)
Calculation: 500 x (280− 217.9380) = 31,031

The emissions value for the total number of Divinity utes entered on the RAV is 31,031. After entering data for the rest of their fleet, the NVES Regulator can now determine Crimson Motor’s IEV for 2025.

Vehicle model	Quantity imported	CO₂ emissions number	CO₂ emissions target	Emissions value
Divinity	500	280 g/km	217.9380	31,031
Vehicle 2	600	250 g/km	217.9380	19,237
Vehicle 3	200	210 g/km	216.4803	-1,296
	IEV		48,972

Crimson Motors IEV for 2025 is 48,972.

As this is above zero, Crimson Motors has not met their requirement for the performance period. They have 2 years to balance their IEV otherwise they may receive a penalty when their FEV is issued.

To comply they could:

Ensure their IEV in the next performance period is below zero and extinguish the units they earn to balance their 2025 IEV.
Get units from another entity and extinguish these units to balance their 2025 IEV.
Pay the penalty, if they don’t want to trade for units, or they can’t earn enough,

Read How units can be traded for information on unit trading.

Scenario 2: IEV less than zero

In 2025 Voltara Automotive imports a fleet of electric, hybrid and fuel-efficient cars into the Australian market. Their RAV data is in the below table.

Vehicle model	Quantity imported	CO₂ emissions number value	CO₂ emissions target	Emissions value
Vehicle 1	500	85 g/km	126.1250	- 20,562
Vehicle 2	300	0 g/km	149.4202	- 44,826
Vehicle 3	200	210 g/km	216.4806	- 1,296
	IEV		-66,685
	Units Issued		66,685

The NVES Regulator takes that data to calculate Voltara Automotive’s IEV in February 2026 for the 2025 performance period. Their IEV is –66,685, meaning they have beaten the requirement and are issued 66,685 units.

Voltara Automotive may choose to trade these units with another regulated entity under a commercial agreement or hold the units for up to 3 years to extinguish against future IEVs.

These are fictional scenarios and are not based on any real regulated entity.