Impacts from scrapping feebates
New research shows the coalition’s policy to bin the clean car discount (CCD) and weaken the clean car standard (CCS) could mean between 100,000 and 350,000 fewer electric vehicles on New Zealand’s roads by 2030.
Drive Electric also warns such action risks increasing emissions by between 900 and 3,000 kilotonnes. It could also increase costs to the economy by between $900 million and $3.5 billion, mainly from importing more fossil fuel.
The not-for-profit has released the research to demonstrate the need for incentives to maintain rates of electric vehicle (EV) uptake out to 2030 to save the economy money and increase emissions reductions.
Kirsten Corson, who chairs Drive Electric’s board, says: “The new government intends to remove the CCD by December 31, 2023. What this research shows is there are costs associated with doing so, both to the economy and emissions.
“The clear implication is that we need an alternative form of EV incentive. A new ICE [internal combustion engine] vehicle bought today will stay on roads for 20 years consuming costly oil and releasing emissions.
“Cumulatively, this research is telling us this will cost the economy at least $900m and probably more, and make it much harder to hit our 2030 emissions targets.
“Without EV incentives, the carbon price will need to be higher to hit New Zealand’s emissions targets. This increases costs to households in terms of energy bills, and could result in more sheep and beef farms being converted to forestry to offset those emissions.”
Corson, pictured, adds that EV incentives are an effective and comparatively cost-effective way to reduce transport emissions from transport. They won’t be needed forever because when EVs reach upfront price parity, they can be removed.
This view is supported by the Climate Change Commission in its consultation draft advice on the second emissions reduction plan, which will run from 2026-30.
The document states: “Continued policy support is essential to encourage the purchase of new EVs at the pace needed to achieve the second and third emissions budgets. Supports to address the upfront cost barrier are especially important.”
Drive Electric stresses there are a range of different options that could considered in New Zealand to create a fiscally neutral incentives scheme to encourage Kiwis into EVs, such as adjustments to the CCD.
These include the staged withdrawal of discounts to provide consumers with time to adjust, reducing rebates and tightening eligibility, and exempting certain categories of vehicles, such as utes, from fees.
There are other options as well, including removing fringe-benefit tax (FBT) and accelerating depreciation for commercial fleets. Businesses buy 50-60 per cent of new vehicles – and 60 per cent of new EVs – and usually only keep them in their fleets for two to five years.
“This could be a great source of second-hand vehicles,” explains Corson. “This model is being used in Australia and, so far, is proving to be successful.
“We know the government wants to electrify New Zealand and intends to invest in public charging. This is essential work.
“However, we’re also going to need to accelerate demand for EVs to take full economic advantage of electrification. We are working with industry right now on solutions to EV incentives and look forward to discussing these with the government.”
Findings of the research
The research for Drive Electric was undertaken by Concept Consulting using its whole-of-the-economy model, known as ENZ.
The government has indicated that it intends to adjust – or “weaken” – the CCS, but details of this have yet to be announced.
As such, two scenarios were modelled to represent the range of possible impacts from the effect of removing the CCD and retaining the CCS unchanged to removing the entire clean-car programme.
If only the CCD is removed and the CCS stays in its current form, depending on the responses from car importers:
• There would be approximately 100,000 fewer EVs on the road by 2030.
• The reduced rates of EV uptake will increase non-emissions economic costs to the economy – mainly petrol and diesel – by at least $900m.
• The cumulative emissions associated with increased ICE travel would increase by at least 0.9 metric tonnes of carbon dioxide-equivalent (MtCO2e) out to 2030.
If both clean-car policies – the CCD and CCS – are scrapped:
• It could result in as many as 350,000 fewer EVs – BEVs and plug-in hybrids – being on the road by 2030.
• The reduced rates of EV uptake will increase non-emissions economic costs to the economy, mainly petrol and diesel, by $2.7b in present-value terms, rising to $3.5b if the increased emissions are valued using the Treasury’s recommended shadow carbon price.
• The cumulative emissions associated with increased ICE travel could increase to 3.0 MtCO2e out to 2030. Click here to read the full research report.
