Our blueprint for cutting transport emissions might have hit a snag, one with a distinctly Australian flavour
“It’s clear that electric vehicles are the future,” Transport Minister Simon Bridges said in May 2016, announcing a target to double the country’s electric vehicles every year to reach 64,000 by 2021.
The package included: extending an exemption from road user charges, worth about $600 a year; creating a contestable fund for innovative projects of up to $6 million a year; and $1 million a year for a nationwide publicity campaign. An electric vehicles leadership group was established.
“If we start to replace New Zealand’s fleet with electric vehicles, we can begin to significantly reduce our greenhouse gas emissions,” Bridges said.
If only. Advice to Bridges from the Ministry of Transport (MoT) said emissions from transport were 63 percent above 1990 levels, and, without intervention, were projected to be 75 percent above 1990 levels by 2020.
It’s worse than that. By 2018, two years earlier, road transport emissions had increased by 101.6 percent. And the number of EVs and plug-in hybrids in the country has only just hit a modest 24,000 vehicles, almost half of them used Nissan Leafs.
Months after Bridges’ EV announcement in 2016, New Zealand ratified the Paris climate agreement, including our target of cutting greenhouse gas emissions by 30 percent below 2005 levels by 2030. Climate Change Minister Paula Bennett said the big challenge was to develop an effective plan to reach that target.
The plan, if there was one – including by the first term of a Jacinda Ardern-led Government – hasn’t worked. As set out in Sunday’s report from the Climate Change Commission, the country is on track to miss that target, which wasn’t compatible, anyway, with the international goal of limiting harmful temperature increases to 1.5°C above pre-industrial levels.
Reminded of the rhetoric from 2016, readers of the commission’s draft advice – on a set of carbon budgets now out for public consultation – might have had a bad case of the ‘what ifs’. What if electric vehicle uptake had been incentivised by Bridges?
The evidence was there. In 2015, MoT commissioned Auckland consultancy Emission Impossible to research long-term trends for electric vehicle prices and supply. The report said: “We conclude that supply of electric vehicles in New Zealand will continue to be limited until costs reduce, or policies are introduced to reduce cost or increase demand.”
Further advice, produced by MoT itself, seemed more worried about the possible loss of revenue from extending a road user charge exemptions than giving EV owners a leg up. So much so, that the ministry promised to tell Bridges if EV uptake – and therefore revenue loss – was higher than expected.
The Tauranga MP wouldn’t tinker with fringe benefit taxes (FBT). “I do not support using the tax system to encourage uptake,” Bridges says in a Cabinet paper. That’s despite a perverse situation that use FBT to basically subsidise the purchase of double-cab utes.
Hard policy choices seemed off the table in 2016, leaving officials and the electric vehicles leadership group – disbanded last year – tinkering around the edges.
Few people would be more disappointed with weak Government follow-through than Steve West, founder and chief executive of ChargeNet.
Since 2015, when there were just 500 electric cars in the country, he and wife Dee, with help from taxpayers via the Energy Efficiency and Conservation Authority (Te Tari Tiaki Pūngao) have invested in a nationwide network of fast-charging stations. There are about 220 stations, right now, including a bank of hyperchargers at Bombay, south of Auckland, for the next generation of EVs.
West’s five years of frustration includes the last Government dropping a proposed feebate scheme and emissions standards, the public airing of which has had a chilling effect on EV purchases, as has Covid-19, of course.
But the commission’s razor-sharp focus on electric vehicles – “electric vehicles are key and need to be widely adopted” – has brought some relief. West says it’s “some level of vindication that we’ve been on the right path this whole time, and New Zealand is catching up with our vision”.
Some might be tickled that our uptake, while modest, is higher per capita than Australia’s. However, it’s this country’s direct link to Australia’s car market that might be one of the biggest handbrakes on the commission’s blueprint for tackling climate change.
Before we drift across the Tasman, however, it’s worth asking West how he thinks the commission’s vision can be implemented.
To recap, the commission calls for vehicle travel to be rapidly electrified, with incentives for purchasing EVs – including targeted support for lower income households – being an urgent policy priority.
Fossil fuel vehicle imports should be banned by 2035, while freight would move from roads to rail and coastal shipping. All this would be paired with improved access to walking, cycling and public transport.
EVs would make up 40 percent of the light vehicle fleet by 2035, the commission suggests. There are 3.36 million light vehicles in New Zealand. Based on the country’s 30 percent increase over the last 14 years, the fleet could rise to 4.39 million by 2035. Forty percent of that is 1.75 million EVs.
Isn’t that a steep uptake? Not really, says West. It’s been steeper in years gone by.
“When I ran the numbers it looked like they were modelling about a 50 percent growth per annum in the EV fleet, and we’ve had over 100 percent growth [in some years],” he says.
“I don’t think it’s actually an outrageous growth that they’re suggesting.”
What is essential is “absolute crystal clarity” from the Government on its assistance package. (There are whispers Transport Minister Michael Wood might make an announcement later this week.)
Unsurprisingly, West favours a subsidy to bring down the purchase price of EVs, but for a short period, roughly until price parity is reached with internal combustion engine (ICE) cars, and not costing billions of dollars. It should be enough, he says, to make people buy now instead of in five years.
Manufacturers favour countries with subsidies, he notes.
“So long as New Zealand doesn’t have any kind of subsidies then we’re going to be at the bottom of the list, and we will get only a smaller allocation on the manufacturing side.”
How much should a subsidy be? West says the figures tossed around in the scrapped feebate scheme, of up to $8000 for a new car, and up to $2600 for a used EV, are “the right sort of numbers that would really make a significant impact”.
A cap of $80,000 is also fair he says – “otherwise you’re open to criticism you’re subsidising rich people’s toys.”
However, West doesn’t favour taxing gas-guzzling cars to pay for the subsidy. In principle, penalising cars you don’t want on your roads makes sense, he says, but why bother going through the rigmarole of collecting a tax on 97 percent of vehicle sales?
It might as well come from the Government’s consolidated fund, “it’s all the same people anyway”.
Special treatment for gas guzzlers via fringe benefit tax needs to stop, he says. “It’s ridiculous with accountants driving round in double-cab utes.” (The Climate Change Commission agrees, stating the tax system should discourage the purchase and continued operation of ICE vehicles.)
Say the country had a million electric vehicles. What kind of infrastructure investment would be needed to service them? Less than you think, West says.
“It is going to require investment, but the scale of that investment is really not a big deal compared to the scale of other infrastructure investments. It’s not like we’re building roads or bridges – it’s tens of millions of dollars, which on the scale of Government is nothing.”
(Kathryn Trounson, chair of Better NZ Trust, which promotes zero-carbon renewable technologies, says AC charging units need to be installed at hotels and motels, and city businesses with parking areas.)
What about the zero-carbon electricity to power it? The commission wants renewable electricity generation to increase by 170 percent by 2035, and 400 percent by 2050.
“The generation side is really not even an issue,” West says. “The electricity generated to supply Tiwai Point is enough to power our entire fleet – so, three million EVs.”
Norway, with a similar population to New Zealand and similarly high levels of renewable electricity generation, is the world-leader of EV uptake. In 2019, it had 329,000 electric and plug-in hybrid vehicles – encouraged through a suite of measures, including exemptions from road and import taxes, reduced fees for parking and ferry trips, lower company car tax, and access to bus lanes.
West says we would benefit from being a fast follower. In the future, newer technology for batteries and fast chargers will mean a car will be able to add 400-500kms of range in 15 minutes.
“What we’re going to see then is an experience that’s much more like a petrol station. Yes, for a lot of people it’s convenient to charge at home. But not everyone has that option. A lot of people have apartments, or don’t have off-street parking.
“That’s the focus for us, is to build that network that means we can handle a million EVs.”
“My members would dearly love to be able to sell them, it’s a question of can we source them quickly enough?” – David Crawford
Not everyone’s charmed by the commission’s report, including David Crawford, chief executive of the Motor Industry Association, which represents car importers.
“We would dearly love to be able to get the percentage of EVs that they want us to have, but we just have significant concerns about whether we’ll be able to get the volume required to be able to do it in time,” he says.
The ‘Australasian mix’ snag
Car distributors have an “Australasian mix”, Crawford says. That becomes a problem when New Zealand is out of step with Australia and, say, wants to import more fuel efficient cars.
“If Australia doesn’t want them, we can’t generally get them in the numbers that we might need. Because of the way the market works in Australasia, and the way distribution from manufacturers work, it’s quite hard if they’re not going as fast or hard as we are. That is a challenge we have to face.”
So if Australia doesn’t offer the same incentives for EVs as we do? Crawford: “Australia becomes a drag on what we want to do.”
Crawford claims the industry’s not opposed to a fuel efficiency standard, that one is “probably required”. But if it can’t be achieved then importers will be slapped with penalties, which, in turn, will push up car prices. (Some might say that’s the market signal working.)
Fuel economy standards – which have been flagged for years, even back to the dying days of Helen Clark’s government – are too aggressive, he says, because the country is starting late. The lead-in time is too short, Crawford complains.
He paints a picture of a tiny market with little sway with those manufacturers who re-engineer the cars for New Zealand. “My members would dearly love to be able to sell them, it’s a question of can we source them quickly enough?”
He argues distributors import what sells fast, and because people have “particular buying patterns” people might decide not to buy the car you’ve imported. (That’s the point of fuel efficiency standards, surely – to offer low-emissions vehicles across the board. Also, it’s those “buying patterns”, influenced by marketing, that got us here in the first place.)
According to the International Energy Agency, in 2019 New Zealand had 17,700 battery electric and plug-in hybrid vehicles for a population of 5 million. Compare that to Australia had 20,100 electric cars for 25.5 million people.
A draft electric car strategy by Australia’s federal government, leaked to the ABC last year, has been criticised for doing the bare minimum – not offering direct subsidies to lower purchase prices and not setting a target for new car sales.
Behyad Jafari, chief executive of Australia’s Electric Vehicle Council, says he spends most of his time dealing with state governments, which are increasingly trying to fill the policy gaps left by Prime Minister Scott Morrison’s government.
“We don’t have meaningful policies to help people get into electric vehicles,” he says. “We’re going to remain stagnant for years to come as the rest of the world moves ahead.”
That poses a problem for New Zealand – something the Climate Change Commission seems aware of. Its report says the Government should work with the private sector to find ways to bulk purchase EVs. Another suggestion is working with the private sector to establish operations to refurbish, collect and recycle EV batteries.
There’s another point of view to this EV-centric one. You could argue the commission has missed the (electric-powered) boat by putting electric cars squarely at the centre of its policy to reduce transport emissions. How can cities be reconfigured if people are still reliant on their cars?
West, of ChargeNet, is quick to point out switching to electric vehicles doesn’t relieve congestion. Sure, people who have to drive should be encouraged to get EVs. But as many people as possible need to get into walking, cycling and low-emission public transport, he says.
“It’s one of the measures that we need to adopt if we’re going to have a more liveable city, at least in Auckland.”
For now, the commission’s draft advice appears to have eased West’s frustration, despite the same arguments made by the commission being evident five years ago and longer.
“That’s been true of global warming and climate change for decades – we’ve known all this, and it’s just about the political will.”
We’ll know more about this Government’s political will by the end of the year, when it has to release its emissions reduction plan.
“Fingers crossed,” West says.
