Move comes after Climate Commission recommended banning petrol and diesel cars by 2023.
The New Zealand government is introducing subsidies to make electric vehicles thousands of dollars cheaper and new petrol and diesel cars more expensive, as the country tries transition to an emissions-free fleet.
The changes follow New Zealand’s Climate Commission recommendations which laid out sweeping changes required to get the country closer to its emissions targets.
The subsidies for electric and some hybrid vehicles would be up to NZ$8,625 (£4,360) for new vehicles and NZ$3,450 (£1,744) for used cars. They will start next month.
Transport now makes up almost 33% of long-lived greenhouse gas emissions in Aotearoa, and last week, the Climate Commission laid out new benchmarks for the country to transform the makeup of its fleet. The commission’s recommended plan included banning imports of petrol and diesel cars by 2032, and that road transport be almost completely decarbonised by 2050. To meet its goal for transport emissions, the commission concluded electric vehicles would need to make up half of all light vehicle registrations by 2029, and 100% by 2035.
Our transport emissions are the fastest growing source of greenhouse gas emissions in New Zealand, so we need to start taking action now if we are going to meet our 2050 targets,” transport minister Michael Wood said in a written statement.
“New Zealand is actually lagging behind on the uptake of EVs, so we are playing catch up internationally,” he said. He said the policy would prevent up to an estimated 9.2m tonnes of carbon dioxide emissions.
The subsidies would be funded by introducing new charges on imports of high-emission utility vehicles and SUVs. For example, an imported Toyota Hilux – one of New Zealand’s more popular utes – could incur a fee of NZ$2,900. Those fees would kick in at the start of January 2022.
New Zealand is one of the world’s worst performers on emission increases, and hitting its climate goals will require a reversal of its current trajectory. The country’s emissions rose by 57% between 1990 and 2018 – the second greatest increase of all industrialised countries. Earlier this year, data showed that New Zealand’s emissions had increased by 2% in 2018-19.
Climate change minister James Shaw said that at present, low emissions vehicles were financially out of the reach of many New Zealanders.
“As technology develops and more manufacturers decide to stop making petrol and diesel cars, the cost of low emissions vehicles will come down. However at the moment they are still more expensive to buy. Today’s announcement helps to address that,” he said.
The policy has sparked some criticism. Centre-right opposition party National said tying the rebates to fees on higher-emissions vehicles meant it amounted to a “reverse Robin Hood” strategy – imposing fees on lower and middle-income New Zealanders while subsidising those wealthy enough to afford a new electric vehicle. The policy would “unfairly hurt farmers, tradespeople and low-income earners for whom low-emission vehicles will still be too expensive or unsuitable for their lifestyle,” said shadow transport spokesperson Michael Woodhouse.
Woodhouse said National supported incentives for people to buy EVs but disagreed with financially punishing those who didn’t.
Wood said that the policy “only applies to new and used cars arriving in New Zealand, so the existing secondhand market of cars that lower income families tend to purchase from will not be affected”.
Shaw said the policy “will also stimulate the second-hand market, so in the years to come even more people can access low carbon transport options”.
Many other nations already have subsidies for electric vehicles. Germany introduced a €4,000 (NZ$6,785) subsidy for electric vehicles back in 2016. Slightly less-generous subsidies exist in the UK, where buyers can get a grant for an electric cars of £2,500 (nearly NZ$5,000) – reduced from £3,000 in March.
Other countries have taken more radical steps. In Norway, electric cars now make up 54% of market share, after the country exempted fully electric vehicles from taxes imposed on those relying on fossil fuels. That move made new electric models cheaper than some comparable petrol cars for Norwegians.