Simeon Brown lays groundwork to weaken carbon targets for imported cars

Thursday, 6 June 2024

The Transport Ministry only sought advice from the motor trade and the AA during what it described as “targeted consultations” on a review of the Clean Car Standard.

The Government will follow up axing the Clean Car Discount that cross-subsidised the purchase of EVs by watering down, without adequate consultation, another rule that was designed to bring down the emissions of imported vehicles, Labour claims.

Transport Minister Simeon Brown in January instructed the Ministry of Transport to review targets set out in the Clean Car Standard that were legislated by the former Government.

As it stands, the standards would require car importers pay penalties if they fail to progressively reduce the average emissions of imported cars to 112.3 grams per kilometre travelled next year, 84.5g/km in 2026 and to 63.3g/km in 2027.

That is down from the 145g/km target that applied last year under the same regime, which was easily achieved, and a 133.9g/km target this year for which importers last appeared off course.

Car companies including Toyota and Ford have long voiced concerns that the 2026 and 2027 targets in particular are too ambitious.

Brown said prior to the October election that a future National government would “work with the industry to ensure the standard is set at an achievable level”.

The results of the Transport Ministry’s review have yet to be released, but there is every indication Brown is still intent on making changes and that he has now put the wheels the motion.

Brown last week introduced an amendment under urgency, the Land Transport (Clean Vehicle Standard) Amendment Bill, that would give him powers to change the targets without having to go back to Parliament.

Transport Minister Simeon Brown has implied the current Clean Car Standards don’t strike the right balance between cutting emissions and encouraging economic growth.

“It is important that the Clean Car Importer Standard strikes the balance between reducing transport emissions and ensuring that New Zealand’s policy settings continue to allow the automotive sector and the wider economy to grow,” he told The Post.

The Clean Car Standard operates separately to the former Clean Car Discount, which cross-subsided new and second-hand imports of EVs and other low emission vehicles before it was scrapped by the Government at the end of December.

But research that EV lobby group Drive Electric commissioned in December concluded that if the existing Clean Car Standard settings were left in place, they would achieve about 70% of the benefits that the Clean Car Discount would have delivered by 2027.

Brown has made clear the Government does not intend to scrap the standards entirely.

But Concept Consulting estimated that without either policy, New Zealand’s carbon emissions would be 3 million tonnes higher than they would otherwise have been in total in the period running up to 2030.

Drive Electric chairperson Kirsten Corson believed it was a foregone conclusion the Government would weaken the Clean Car Standard.

That would make it harder for New Zealand to meet its emissions-reduction pledges without spending more on foreign carbon credits or risking foreign trade, she said.

The Treasury forecast last year that the Government might need to spend $24 billion on as-yet unavailable overseas “carbon offsets” to meet its 2030 commitments, Corson noted.

“The Paris Agreement is a binding treaty. I feel like New Zealand doesn't quite understand the impact of it.

“You can’t ‘greenwash’ and you can't ‘green-hush’ your way out of this. You have to sincerely try to decarbonise and that's the reality for little old New Zealand as a trading nation,” she said.

Labour Party transport spokesperson Tangi Utikere said that if Brown did downgrade the emissions targets in the Clean Car Standard that would be without adequate consultations.

The Transport Ministry didn’t open up its review to public submissions and Brown attempted to pass the amendment to the Land Transport Act through Parliament under urgency before running out of sitting time on Friday, he noted.

Labour transport spokesperson Tangi Utekere says the way the Government has gone about preparing to revise the Clean Car Standard is “undemocratic”.

The Labour government had consulted widely on the original clean-car standards, but the coalition Government was proposing to “ram through all stages without any public input”, Utikere said.

“There is a lack of direct accountability if those sort of decisions are going to be taken via regulations.”

A Transport Ministry spokesperson said it consulted with “vehicle industry stakeholders” – specifically the Motor Industry Association, the Vehicle Importers Association, the Motor Trade Association and the AA – during its review, before providing advice to Brown.

Environmental groups and Drive Electric were not on the list of organisations whose views were sought by the ministry.

“Targeted consultation” was considered appropriate due to the technical nature of the proposals and because “vehicle importers are most affected by any policy changes”, the Transport Ministry said.

“It’s also in line with requirements under the Land Transport Act for the Minister of Transport to consult with stakeholders that he considers appropriate,” the ministry’s spokesperson said.

Brown said he directed the ministry to undertake a “comprehensive review” and ensure “that the automotive industry was closely engaged throughout”.

Utikere said that while Brown might think the targeted consultations had ticked a few boxes, “this continues to be an affront to democracy”.

Corson declined to say whether Drive Electric was disappointed not to have been included in the consultations.

But the rigour of the 2026 and 2027 targets, which could see New Zealand leapfrog car markets in Europe from a worse starting position, had been overstated, she said.

“It's very easy for us to say we are going to have a standard that is going to be stronger than in Europe and that's correct on today's data.

“But that doesn’t take into account that the European standard will be reviewed and China has a much stronger target than we do” she said.

“Saying we are going to have the toughest standard in the world isn’t correct.”

The Australian government last month unveiled its own version of the Clean Car Standard.

That was after its Department of Transport and Infrastructure concluded that manufacturers supplied cars to the Australian market that “aren’t as fuel-efficient as the cars they supply to other markets”.

The Australian regulations target a progressive reduction in passenger vehicles’ carbon emissions to 58g/km travelled by 2029.

Its scheme classes a number of larger SUVs, including Toyota Landcruisers, as commercial vehicles, for which there are much more lax targets.

But the penalties that importers must pay if they exceed the emissions targets are significantly steeper than in New Zealand.

Those differences make the Australian and New Zealand schemes difficult to directly compare.

Lee Marshall, chief executive of the Motor Trade Association, said he preferred to think of the standards being relaxed, rather than “watered-down”, as the latter term had negative connotations.

Motor Trade Association chief executive Lee Marshall: Ministry’s review was “absolutely the best experience that we've ever had in terms of being consulted”.

The targets originally set out in the Clean Car Standard in 2020 were “based on a view of where the world was going in the next five years, but it just hasn't moved as quickly as people imagined”, he said.

That meant the original targets would see New Zealand get “significantly ahead of our source markets”, which would make cars more costly, he said.

The best option was more achievable targets, which “rather than seeking to ‘dynamite’ the existing model would just attempt to move the needle towards manufacturers and importers making better decisions from the vehicles that they actually have to choose from”, he said.

Marshall said the MTA hadn’t considered whether it might be preferable environmentally to stick with the existing standards and accept the country might import fewer cars for a few years until manufacturers caught up.

He believed curtailing imports until manufacturers improved their emissions profiles and accepting some people would hang on to their existing cars for longer would be undesirable, given the country already had one of the oldest vehicle fleets in the OECD.

But he acknowledged the flip-side of Kiwis’ tendency to squeeze the last out of their cars was that any higher-emission cars let into the country as a result of relaxing the Clean Car Standard might be on the roads emitting relatively large amounts of carbon for a very long time.

“That’s one way of looking at it,” he said.

“We're not out there fighting for combustion engine vehicles and neither are we arguing against electric vehicles. They're a very important part of the future, and we do have members who only sell electric vehicles.”

Brown’s amendment bill has one sting in the tail for the car industry.

In a Budget cost-saving measure, the Government is proposing that the $12 million annual cost of administering the Clean Car Standard should in future be met by importers themselves, rather than the Transport Ministry.

But the MTA had no criticism of the Transport Ministry’s review of the standards themselves, which from the MTA’s perspective had been “absolutely the best experience that we've ever had in terms of being consulted”, Marshall said.