Will a weaker Clean Car Standard have only minimal impact on emissions?
Monday, 24 November 2025
ANALYSIS: A day after Climate Change Minister Simon Watts told the United Nations COP30 climate conference in Brazil the world must keep the goal of limiting global warming to no more than 1.5 degrees alive, the Government had other priorities.
On Thursday, it passed legislation slashing by 80% the penalties car importers will need to pay if they fail to keep the average carbon emissions of new and used cars they bring into the country to 108 grams per kilometre travelled next year, and to 103g/km in 2027.
The Ministry of Transport, which recommended the change, conceded in a document also released on Thursday its advice only “partially met” quality assurance criteria for the purpose of informing Cabinet decisions, because of a lack of consultation.
It only consulted vested interests ‒ the Imported Motor Vehicle Industry Association and the Motor Industry Association ‒ due to “time constraints”.
Officials didn’t, for example, consult with EV industry body Drive Electric, which described the change as “a big step backwards at a time when we urgently need to speed up, not slow down” climate action.
New Zealand suffered the ignominy of receiving the “fossil of the day award” from the German-based Climate Action Network International at COP30 last Monday, in recognition of the Government’s move earlier this month to water down its methane reduction targets.
But Transport Minister Chris Bishop has said the weakening of the Clean Car Standard would have “negligible impact” on the country’s carbon emissions.
The advice submitted by Ministry of Transport was that the two years of penalty relief would result in a total of only 28,000 tonnes of lost carbon abatement in the period between 2026 and 2030, and 23,000 tonnes in the following five-year period (reflecting the fact that many of the higher-emitting cars imported as a result would still be on the roads then).
For comparison, the country’s total carbon emissions stood at 78 million tonnes last year. So the lost abatements would be a drop in the ocean if the ministry’s advice is correct.
To be fair to the ministry, it did attach some major caveats to its emissions advice that Bishop glossed over.
The document cautioned it was “dated” — being based on a model that was 12 to 18 months old — should not be considered precise and might not take all factors into account.
But it did nevertheless maintain its advice showed the direction and (lack of) magnitude of the expected impacts.
The carbon abatement figures would appear to flunk a quick sniff test, however.
Bishop said, when explaining why he wasn’t scrapping the Clean Car Standard altogether, the only country in the OECD than didn’t have such a policy was Russia.
Russia is currently suspended from the OECD, but the material point is such policies are the main measure most developed countries are using to “green” their vehicle fleets, raising the question of why the approach would be so ineffective in New Zealand.
Last year, the Government re-aligned the settings of the Clean Car Standard to gradually converge with Australia’s emission targets for imported vehicles, on the basis that it had a similar car market.
The Australian Government estimates its equivalent of the Clean Car Standard will result in a massive 321 million tonnes of carbon abatement by 2050, as well as A$95 billion in fuel savings and $13.9 billion in maintenance savings for drivers.
Another cross-check throws up concerns with the ministry’s advice.
Its figures show “light passenger vehicles” (mostly cars, of course) travelled 35.2 billion kilometres on our roads last year.
That means an emissions reduction of just one gram per-kilometre-travelled, albeit across the whole fleet, would result in carbon savings of 35,200 tonnes per year.
The advice suggests the vast reduction in the incentive for importers to meet the standard would have virtually no impact on what cars were imported in New Zealand at all.
On the basis of past experience that would appear unlikely.
Ministry data indicates that during 2023 ‒ when both the Clean Car Standard and the since scrapped Clean Car Discount Scheme were in place ‒ the average emissions of imported cars plummeted by about 35g/km from the trend.
Bishop recited the car-industry line that “New Zealand is a technology and price-taker on this stuff” ‒ you get what you are given, basically.
But the data does prove financial incentives can greatly impact purchasing and supply behaviours and the emissions profile of cars imported into the country.
How did the policy work?
It may be worth recapping how the Clean Car Standard and the Clean Car Discount were expected to work, and why both existed.
The Clean Car Standard gives importers a monetary incentive to reduce the price of EVs and other fuel efficient cars, and increase the price of gas guzzlers, to minimise penalties they would otherwise incur for importing too many of the latter.
Essentially, in order to sell an SUV without a penalty, they might need to also sell someone a EV ‒ so it would be rational for them to cross-subsidise the sale of the latter from sales of the former.
The Clean Car Discount worked in a very similar way, but from the buyers’ perspective, creating a cross-subsidy that rewarded them for buying fuel-efficient imports and penalised them for buying imported high-emission vehicles.
In essence, as officials pointed out when they originally assessed the schemes, they were very largely overlapping policies.
It only came about that both were put in place because the discount scheme was the darling of the Green Party, and the Clean Car Standard was favoured by Labour, when they entered a coalition, so that was the political compromise.
With the Clean Car Discount gone, the Clean Car Standard should have shouldered more of the heavy-lifting.
Bishop argues it would have been impossible for importers to meet the 108g/km target for 2026, and that is an understandable perspective (for context, a third generation Suzuki Swift GL auto with a 1.2 litre non-plug-in hybrid engine emits 122g/km.)
But even if true, it doesn’t mean the higher penalties wouldn’t have had an emissions impact.
Importers don’t need to the meet the standard and avoid all penalties for the Clean Car Standard to have an impact reducing emissions — the point is, the more they miss by, the more they pay.
The effect of slashing the penalties is to make a wider emissions “miss” much cheaper for importers.
Nor, incidentally, has the New Zealand target appeared out of whack internationally.
Australia’s target for cars is 117g/km travelled next year, tightening to 92g/km in 2027 and 68g the following year. The EU’s target for new cars next year is to average 93.6g/km next year.
The Transport Ministry cited one argument, which if accepted might explain its emissions advice, despite the evidence against.
It argued that by pushing up the cost of new and second-hand imports, the Clean Car Standard might encourage Kiwis to hang on to existing, higher-emission cars for longer, potentially even making the standard counterproductive.
Bishop appeared to repeat the same argument, after the penalty reduction was enacted, saying the changes would mean Kiwis could “still upgrade to cleaner, more fuel-efficient cars, while giving us the space to make sure the standard is actually workable”.
The snag here is that this is only one part of a really rather complicated equation.
Yes, one side effect of the tougher penalties was that they might have persuaded some Kiwis to hang on to older cars a few years longer.
But the delay would mean that when they did swap out their vehicles it is more likely that would be to a much more fuel-efficient car, such as a new or second-hand EV ‒ especially given the speed at which manufacturers have been greening their production to meet more aggressive emissions-reduction targets overseas.
In contrast, many of the less-fuel efficient cars that the relaxation of Clean Car Standard will make cheaper than they would otherwise be to import, are likely to be pumping out large amounts carbon on Kiwi roads for the next 25 years.
There is no evidence in the documentation that the ministry took that into account.