Dr Kuschel weighs in

August 10th, 2021

Feebate pushing up ute sales, as well as EVs

Electric car sales skyrocketed in July, thanks to a Government discount – but carbon-intensive utes and vans had a notable bump as well.

Last month, EV buyers could claim a rebate of between $2300 and $8625 on used and new fully electric or plug-in hybrid cars – and 1934 people took advantage, pushing up registrations 400 per cent on last July.

Most were passenger vehicles, but 28 buyers purchased a fully electric commercial vehicle, according to NZTA data. But 5329 fossil-fuelled vans, trucks and utility vehicles were registered in the same month – a 12 per cent increase compared to a year ago.

This rise may be in response to the announcement that, from January, the plug-in discounts will be replaced by a complex system of rebates on low-carbon vehicles and fees on high-emitting models.

The fees (which became popularly known as the “ute tax”) sparked controversy, particularly in rural communities. Some commercial vehicle buyers may have brought forward their purchase to avoid the added expense.

Another, lesser-known green transport policy, which will kick off next year, targets the behaviour of new and used car importers. This also has the potential to boost the marketing of utes, according to ministry officials.

From next year, a car showroom will need to tally the tailpipe emissions of every vehicle imported, and calculate an average for the year. From 2023, if that figure is above a threshold, the showroom must pay a penalty.

In 2023, that threshold is 130 grams of carbon dioxide per kilometre for cars and 190g for commercial vehicles such utes, vans and light trucks. By 2025, that drops to 102g and 132g respectively.

A car showroom could still import an SUV with emissions of 200g, but this would need to be balanced out by bringing in much more efficient vehicles.

Originally, the Government proposed a single threshold: 105g. But after industry feedback, then-Associate Transport Minister Julie Anne Genter​ agreed to one target for cars and SUVs (categorised as passenger vehicles) and another for commercial vehicles.

Larger, heavier vehicles haven’t been able to achieve the same fuel efficiency gains as smaller ones, said the Motor Industry Association’s Mark Stockdale​. “Vehicle manufacturers are electrifying vans, so we are seeing that. But there hasn’t been much development so far in terms of electrifying or the hybridisation of utes.”

The split would also protect companies that only sell commercial vehicles.

But in multiple briefings, the Ministry of Transport warned that splitting the target could boost ute imports and sales.

“As light commercial vehicles face a less stringent target, suppliers will be incentivised to intensify their current marketing of utes as ‘lifestyle vehicles’ to replace cars and SUVs,” officials told the Transport Minister last year. “This would increase the number of utes sold and slow the decline in average vehicle carbon dioxide emissions.”

Dealers will need to import enough low-emissions utes to balance out higher ones. If the cleaner ones are sitting unsold, salesrooms could be incentivised to nudge customers from a EV or hybrid car towards a low-emissions ute.

Transport Minister Michael Wood​ told Stuff the combined and the split target options both carried risks.

Wood acknowledged the concerns about the marketing of utes, and agreed the industry “has made a particular play” to portray larger vehicles as a mainstream option. But he had no plans to dictate how car companies marketed vehicles.

Genter, who no longer holds a transport portfolio, shares the ministry’s concerns about the split targets – though they are common overseas. “I thought it would be pretty difficult to argue that we should go down a different route when I couldn’t point to any other countries.”

She thinks the feebate could counteract any additional incentives to market utes as about-town vehicles. “They really need to work together.”

The target of 132g for commercial vehicles in 2025 is lower than many of the models on sale today, Genter said.

Of the 42,135 utes and vans sold last year, only 106 were under this target – including 101 vans and one ute with zero tailpipe emissions, according to ministry data.

“New Zealanders are getting offered less fuel-efficient versions of the same vehicle,” Genter said. “I’m sure these policies will provide an incentive for vehicle manufacturers to bring some in, so there will be more choice for people.”

Most commercial vehicles arriving in 2020 exceed the 2025 target

A small number of zero-emissions vehicles were imported in 2020, but the majority of utes and vans produce at least 200 grams of emissions.

This graph shows the number of utes and vans imported in 2020, based on the grams of carbon dioxide they emit per kilometre. The cars are grouped in 10-gram bands. Of the 40,724 commercial vehicles imported, at least 40,555 are above the average fleet target that will apply from 2025.

This 2020 data uses the WLTP emissions measurement of grams of carbon dioxide emitted for each kilometre travelled. Under this system, New Zealand’s 2025 target for vans and utes is 155g. Source: Ministry of Transport

Gerda Kuschel​ of air quality and greenhouse gas consultancy Emission Impossible said it was a pity the country failed to introduce fuel consumption standards more than a decade ago. “We’ve really got seven years to make some pretty major change. If we’d had the extra years, it would have been a lot less painful.”

The policies would be bolstered by a groundswell of public awareness of vehicle emissions and post-lockdown habits of avoiding travel, she added. “I’m supportive of a policy that’s not 100 per cent perfect, if it means we can get it in place, start sending the right signals, and we can review it to see that it isn’t causing unintended consequences.”

The briefing documents show that the Government offered few major concessions to the vehicle sales industry, beyond the split target.

After the current emissions policy was proposed in 2019, the industry lobbied against it. The Motor Vehicle Association and Toyota both pushed for significantly laxer targets.

The documents show Genter had agreed to push back the target of 105g from 2025, to 2028. According to a briefing, the former minister agreed to halve the penalties for breaching the standard.

Genter said the compromises were made to court the approval of coalition partner, NZ First. But the gamble failed, with NZ First killing both clean car policies.

However, Labour campaigned on the 105-by-2025 emissions standard. After receiving a majority at the election, Cabinet formalised the policy in January. The penalties were halved for 2023 and 2024, but will rise progressively from 2025.

Wood said the country needed to urgently clean up our fleet. “We have one of the dirtiest fleets in the developed world. Other jurisdictions achieved the 105g target some time ago – Japan way back in 2014.”

To make things easier for used car importers, the Government also agreed the emissions targets could be applied to each shipment of used vehicles.

Robert McLachlan​, of Massey University, thought the emissions standards were suitably ambitious. With the feebate scheme, it would nudge urban drivers in particular towards lower-emissions cars. “This is a collective issue. The benefit is not just for them, but for the whole of society.”

The carbon footprint of passenger cars imported in 2020

The majority of New Zealand-new cars and SUVs had much high per-kilometre emissions than the 2025 target.

This 2020 data uses the WLTP emissions measurement of grams of carbon dioxide emitted for each kilometre travelled. Under this system, New Zealand’s 2025 target for cars and SUVs is 112.6g. Source: Ministry of Transport

[Source: Stuff, 5th August 2021]