Government considering scrapping entire clean car standard

The government is considering scrapping the clean car standard altogether, months after slashing the fees importers pay to bring dirty vehicles into the country.

By Kate Newton of RNZ

An EV advocate said if the proposal goes ahead, New Zealanders will be sold "the high-emitting leftovers" that manufacturers can no longer sell in Australia.

The Motor Industry Association said it wants to keep the standard, but it needs "recalibration" to make sure it works for importers, car distributors, and consumers.

Transport Minister Chris Bishop said the government is carrying out a first principles review, so "obviously" an option to scrap the standard is on the table.

Introduced by the previous government, the Clean Vehicle Standard charges importers a penalty for cars that exceed the target emissions level, but that can be offset by also importing cars with lower emissions.

That penalty was slashed by nearly 80% ast November, with Bishop saying supply constraints meant importers could not source enough low-emissions vehicles to avoid being penalised.

That could result in thousands of extra dollars being passed on to buyers, Bishop said.

He said then that a full review of the standard would follow this year but it was unlikely the standard would be removed entirely.

RNZ has learned that a targeted consultation carried out for that review has just ended, which included asking submitters whether the standard should be "abolished".

The consultation included the motor vehicle industry, international bodies, other government agencies, some advocacy groups, and subject matter experts, but was not open to the public.

In a letter seeking submissions, the Transport Ministry said the review was being carried out in two stages.

Stage one was "a first principles review of the standard ... to enable Cabinet to decide to either retain the standard or abolish it".

Submitters were asked if they supported New Zealand retaining a fuel efficiency standard, and what the risks would be if it was abolished.

It would make New Zealand just one of two OECD countries to not have a vehicle emissions standard - the other is Russia.

Bishop said he had not received advice on the review, but would have more to say once the government had considered it and made decisions.

"If legislative change is required, I expect there would be a select committee process and public submissions."

Drive Electric was among EV advocacy groups asked to submit.

"We're really alarmed that there's the potential of removing the standard completely, because the rest of the world is going in the other direction," chairwoman Kirsten Corson said.

Australia had just reported the first six months of data since making its fuel efficiency standard mandatory, she said.

"Their overall emissions are dropping, and two-thirds of the car-makers could meet the 2025 emissions targets."

The changes in New Zealand were due to "spectacular lobbying by some high-emissions vehicle importers", Corson said.

"It's interesting that it's working perfectly well in Australia."

Drive Electric's submission warned that Australia's success made it even more likely that New Zealand would become a "dumping-ground" for less efficient cars.

"This 'gravity effect' ensures that while Australians get the latest, most efficient technology from Thailand and Japan, New Zealanders are sold the high-emitting leftovers."

The government's claim that car-buyers would be charged thousands of dollars more if the penalties had not been cut was "a false economy", Corson said.

"[Higher-emissions cars] are a cheaper price to purchase but they cost more to own and more to operate.

"You just have to look at what's happening with oil prices."

New Zealanders' tendency to keep their cars for years meant petrol cars coming into the country today would hang around for decades, she said - costing their owners more to fuel and adding to New Zealand's emissions.

A slump in demand for EVs had been driven directly by the government's decision in 2023 to also end the Clean Car Discount, Corson said.

She wanted to see a tweaked version of that re-introduced, potentially targeted at the 70 percent of new car sales that go to businesses,

"If you could have some sort of incentive for businesses ... to encourage adoption of EVs by that first-hand business fleet, because they are flipping their fleet typically within three to five years."

In a statement, Motor Industry Association (MIA) chief executive Aimee Wiley said her organisation supported retaining the standard, "with the emissions trajectory recalibrated to reflect domestic affordability and realistic product availability".

The framework needed to be "credible, stable, and workable in New Zealand's small, import dependent market".

"This is not about reducing ambition," Wiley said.

"It is about ensuring the settings work for importers and distributors as well as consumers, are durable over the long term and aligned with market realities, including affordability, supply, and demand conditions."

Stability and clarity were particularly important, she said.

The industry supported aligning with Australia if it reduced "regulatory friction" but New Zealand's rules needed to reflect the country's own market conditions.

"We remain committed to constructive engagement with the Ministry [of Transport] to ensure the CVS scheme continues to support steady, measurable emissions reduction in a way that provides certainty for industry and consumers."