Not enough electric cars to hit the target

The Productivity Commission is urging the Government to get New Zealand’s ageing vehicle fleet off the roads faster if it wants to address climate change, but even the existing target for doing so is unlikely to be met, Thomas Coughlan reports. 

The Government needs to get dirty cars off the roads if it stands a hope of transitioning to a low-carbon economy, says the Productivity Commission.

The Commission this morning released its final report into transitioning to a low-emissions economy. It recommends three key changes for achieving low-emissions goals: tree planting; changes in agriculture; and the “rapid and comprehensive switch of the light vehicle fleet to electric vehicles”. 

But with New Zealand already struggling to meet the previous Government’s goal of 64,000 electric vehicle registrations by 2021, some doubt whether this is possible. 

“A dumping ground for high-emitting vehicles” 

We have one of the oldest and dirtiest car fleets in the world. It represents a significant barrier to reducing our environmental footprint — transport is second-largest contributor to our overall greenhouse gas emissions.

The average age of a car here is 14.2 years, nearly twice that of the UK where the average age is 7.7 years. Older cars tend to pollute more, which helps to explain why the average carbon emissions per kilometre travelled in New Zealand stopped falling around 2012. 

This is largely the result of an importing scheme that encourages other countries to export old, inefficient cars here, where they stay part of the national fleet for decades.

New Zealand is one of only a handful of developed countries without mandatory vehicle emissions standards. 

There are some import standards, mainly relating to safety, which effectively prohibit the importation of most cars made before 2004, but these are circumvented by another rule which exempts cars over 20 years old from meeting certain safety requirements. 

This rule was originally intended to allow the importing of classic cars, but it has had the effect of allowing a massive number of high-emissions vehicles to enter the country. 

A report by economic consultancy BERL for MTA found 4,083 cars built between 1992 and 1997 were imported last year, mainly Toyota Hilux and Landcruisers. That compares to just 2,922 pure electric vehicles. 

New Zealand is a magnet for high-emissions vehicles nearing the end of their lifetimes in other countries — in the words of the Commission, “a dumping ground for high-emitting vehicles”. 

A “feebate” scheme 

To encourage gas-guzzling cars off the roads, the commission recommends a “feebate” system, which would force importers of high-emissions vehicles to pay a charge that would be used to subsidise imports of low-emissions vehicles.

A similar scheme had helped Norway achieve the highest per capita uptake of electric vehicles in the world. 

But Greig Epps from the MTA said there were still questions to be answered about how effective such a scheme would be in New Zealand.

A key feature of the New Zealand car market is the high number of large, low-cost, second-hand imports from countries like Japan. Electric vehicles are currently either too expensive for New Zealanders to afford, or unavailable in the popular “people mover” or SUV classes. 

This could put families who rely on larger vehicles at a significant disadvantage, as the vehicle class they require is unavailable on the electric market.

The report notes that in the long-run, low-income families will see significant “welfare gains” as cheaper, more fuel efficient transport is delivered, but concedes that the transition could be bumpy.

But there is light on the horizon, EVs are currently cheaper to run than a conventional vehicle and Bloomberg New Energy Finance expects the up front cost of an EV to hit parity with a fossil-fuel vehicle during the 2020s.

Are there enough cars?

While that sounds positive, we have only a short time to complete the transition to a low-emissions fleet. 

The Commission says that for the bulk of light vehicles to be electric by 2050, nearly all electric vehicles entering the fleet will need to be EVs by the early 2030s.

This could be a challenge under current settings. As a rule of thumb, New Zealand’s fleet tends be about seven years behind the Japanese fleet which, although increasingly electric, may not have enough second-hand exports for New Zealand and the many other countries it exports them to. 

The Japanese Shaken, equivalent to our WOF, makes it substantially more expensive to continue running a car after seven or eight years on the road. This tends to be the point at which Japanese cars are exported to New Zealand. 

Japan currently has one of the world’s largest fleets, but as demand for cheap EVs heats up, New Zealand faces increasingly faces tough competition to import them.

“We’re going to have some competition in the international space for taking those vehicles,” Epps said. 

Epps told Newsroom that the small number of electric cars on the roads in Japan means that even the previous Government's goal of 64,000 registrations was unlikely to be met.  

“We’re not so certain that the target can be met from the current stock of Japanese vehicles.”

He said New Zealand was already importing half of the total number of electric vehicles exported from Japan. 

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