Clean Car "feebate" explained

The Clean Car Discount “feebate” will affect anyone buying a new (or newly imported) car. The idea is to encourage car buyers to choose vehicles that are more efficient and less polluting. The scheme rewards those who choose more efficient models by giving them a rebate on the purchase price – this will be funded by fees added to the price of less efficient vehicles.

From 2021, the most efficient vehicles up to three years old will cost $8000 less, while the least efficient will cost $3000 more. Older used imports (sold in New Zealand for the first time) attract a maximum rebate of $2600 or a $1500 fee.

The government estimates that, over the life of the vehicles affected, the Clean Car Discount will save motorists around $627 million in fuel (on average, $5200 over the lifetime of each vehicle) and reduce CO₂ by around 1.6 million tonnes.

The second part of the policy, the Clean Car Standard, should mean more clean vehicle options become available, because it phases in tighter standards for fuel efficiency. Dealers have to stock a range of more efficient cars or pay a penalty.

An emissions standard is long overdue. Vehicles on our roads are considerably dirtier than those in other countries, and the gap is widening.

In the standard, the bar for “clean” is lower for larger cars – so a big SUV won’t be expected to meet the same emissions standard as a small city car. That means there should be cleaner options available for all vehicle types, even if you really need an SUV or ute. However, the policy aims to move people into smaller, more efficient vehicles, so there will be bigger rebates and more options available for smaller cars, and more fees for larger ones.

Battery electric (BEV) cars will receive the highest rebate because they emit zero CO₂. Plug-in hybrid (PHEV) and mild hybrid vehicles (those that don’t plug in) will also see rebates at the higher end of the scale.

In the future, the bar for break-even emissions will lower, so by 2025 a car will need to emit less than 105 gCO₂/km to attract a rebate...

However, while encouraging the switch to electric power is one reason for the policy, its intention is to improve the overall efficiency of the vehicle fleet, regardless of fuel. That means relatively efficient petrol (or diesel) cars will also get a rebate. “Break-even” emissions (which see neither a rebate nor a fee) of 150-180 gCO₂/km are proposed for 2021, meaning some petrol and diesel models of the Toyota Corolla, Mazda CX-3, Nissan X-Trial and Suzuki Swift (for example) will cost less. For reference, our current fleet averages about 180 gCO₂/km.

In the future, the bar for break-even emissions will lower, so by 2025 a car will need to emit less than 105 gCO₂/km to attract a rebate, while anything coughing out more than 140 gCO₂/km will be penalised with a fee. The phased introduction of the feebate allows dealers to transition to importing more efficient petrol and diesel options, and reflects expectation of more efficient petrol cars, as well as more electric and hybrid cars, becoming available.

The Clean Car Discount and Standard proposed aren’t perfect, and they’re not silver bullets that’ll clean up our roads overnight. But it is a start that’s desperately needed to end decades of apathy and inaction.

The CO₂ our cars emit is a significant contributor to the climate emergency. Transport accounts for a fifth of our domestic emissions and is the fastest growing source by far. Two-thirds of transport emissions come from the cars, SUVs, vans and utes we drive.

That growth is despite newer cars being less polluting than older models – our imports are dominated by older, less efficient vehicles. Since the introduction of a requirement for imported cars to meet the JAP05 emissions standard caused a marked improvement in 2012, emissions have hardly changed. Japan, where most of our used imports come from, averages under 120 gCO₂/km. Even vehicles in the US, the land of big gas-guzzlers, emit less than ours do: under 150 gCO₂/km on average.

Lower emissions also mean less spent on fuel. In 2017 it cost the average Kiwi motorist 65% ($794) more in fuel to drive 11000km than it did the average European motorist – despite the European petrol price being 17% higher than ours.

We need to reach a tipping point for electric vehicles. Switching to an EV charged overnight from renewably-generated electricity reduces your car’s CO₂ emissions to zero. To achieve net carbon zero by 2050, we need most of our cars to be electric. Even the best-case projections for EV uptake don’t achieve that – we need a mechanism to encourage manufacturers to bring more EVs to New Zealand and consumers to buy them.

Vehicle emissions since 2007

Prior to 2012, the average car on our roads was filthy – emitting almost 200 gCO₂/km. By the end of that year they’d improved to about 185 gCO₂/km. About 45% of the light vehicle fleet comprises used imports. From January 2012, Japanese imports had to meet the Japan 05 emissions standard – hence the sudden drop. If that trend had continued, our cars would be emitting less than 140gCO₂/km on average today. Unfortunately, it didn’t – since 2013 we’ve made negligible progress.

From 2013 imported cars got considerably older (the age when they first arrived in New Zealand) year on year. In 2013 the average import was around eight years old, and less than one in ten was over 10 years old. Six years later, the average imported car was almost 11 years old, and over half were 10 years or older. That’s meant that emissions from used imports haven’t reduced.

New cars and used imports

Until 2018, the average used import emitted more CO₂ than in 2013. The declining trend in average emissions since 2017 is due to fewer very high-emission petrol vehicles (>200 gCO₂/km) being imported. Unfortunately, this trend is partially offset by buyers of larger vehicles (SUVs, vans and utes) switching from petrol to diesel vehicles – which have average emissions of almost 210 gCO₂/km, with around two-thirds emitting more than 170 gCO₂/km.

New cars don’t fare much better. While average emissions at the start of 2019 were lower than that of used imports (about 167 gCO₂/km), emissions have fallen by less than 5 gCO₂/km since 2014. That’s despite improvements in car emissions made by manufacturers. Our stagnation is partly due to us choosing larger, less efficient vehicles, and partly because cleaner models available overseas aren’t sold here (because, unlike most other countries, we don’t have any incentives or regulation to encourage or necessitate cleaner cars).

Overseas comparison

Our vehicle emissions were higher than those of other OECD countries back in 2005, and the gap has grown wider since. In 2005, we were at least within touching distance (10 gCO₂/km) of US, Canadian and South Korean emissions. But since then, the gap has more than doubled. If we stay on our current unregulated emissions path, by 2025 our cars will be emitting over 160 gCO₂/km – twice that of EU vehicles.

The difference is partly down to the vehicles our dealers choose to import. Cleaner variants of popular cars are available, just not in New Zealand. A comparison of the lowest-emission variants of the best-selling passenger vehicles available new in New Zealand in 2017 to the best comparable variant sold in the UK showed that, of 17 models from 10 manufacturers, just two of the NZ variants (Suzuki Swift and Mitsubishi Outlander) emitted lower CO₂. Of the other 15, the UK had cleaner versions of the same car on sale. The most extreme case was the Toyota Yaris. Updating the figures to models on sale now, the best New Zealand Yaris emits more than the worst UK version (134 gCO₂/km vs 118 gCO₂/km).

Yaris models listed on Toyota NZ website, 9 August 2019

1.3L petrol, manual gearbox: 134 gCO₂/km
1.5L petrol, automatic gearbox: 147 gCO₂/km

2021 rebate $600-800

Yaris models listed on Toyota UK website, 9 August 2019

1.5L petrol hybrid, automatic gearbox: 84-91 gCO₂/km
1.0L petrol, manual gearbox: 104-107 gCO₂/km
1.5L petrol, automatic gearbox: 112-113 gCO₂/km
1.5L petrol, manual gearbox: 116-118 gCO₂/km

2021 rebate $2800-4800

Data is from the Ministry of Transport's Quarterly Fleet Statistics - April to June 2019 update: https://www.transport.govt.nz/mot-resources/vehicle-fleet-statistics/

Mr X wants a Mazda3 – a small, practical, hatchback. He could buy a new Mazda3 GLX with a 2.0 litre engine (136 gCO₂/km) and get a modest $800 rebate bring its price down to $32000. If Mazda New Zealand sold the UK version of that car, the 2.0L SkyActiv-G emitting 117 gCO₂/km, he would get an extra $2000 rebate.

Mr X is happy to save a few dollars and look at a used car. If he can find an example of that new Mazda3 less than three years old, it’d still attract the same $800 rebate (as the Clean Car Discount scheme considers cars up to three years old to be “new”). If he considers an import, he could buy a five-year-old Axela (the Mazda3 in Japan) 2.0L hybrid. Even with lower rebates available for used-cars, the hybrid’s 74 gCO₂/km means he would save $1700 and pay around $20000 for a sub-60000km example.

The closest all-electric car to the Mazda is the latest 40kWh Nissan Leaf. Buying new is out of reach for him – even with the full $8000 zero-emission rebate he’d be looking at $52000. An imported nearly-new 2018 model would cost about $44000 and would attract the same new-car rebate – closer, but still $4000 more than the new Mazda3. To get close to the used Axela hybrid, he’d need to shop for an older 30kW Leaf – some of which will only attract the “used car” rebate of $6800, as they were first registered in Japan over three years ago.

Though the Leaf and Mazda3 are comparable in size, he’d need to accept less practicality in the Leaf for longer trips – an older 30kW example will only cover about 150km between charges, while the newer 40kW model will get 250km or more. However, in return for switching to an EV, he’d save several thousand dollars in running costs every year.

Susie Q needs a medium-sized SUV to suit her active urban lifestyle. She’s set on owning a new car and is rather taken by the latest Toyota RAV4. All-wheel-drive is a priority, which means the 2.5 GXL AWD model fits the bill. Emitting 156 gCO₂/km, she won’t get a rebate on its $41990 price, but at least it won’t attract a fee. However, for $2000 more, she could choose the GXL Hybrid AWD. That model emits just 110 gCO₂/km, meaning its price is discounted by $2800 – making it cheaper than the non-hybrid version. As the hybrid car is more efficient, Susie will also save on fuel costs.

Susie doesn’t have any EV options, unless she compromises and accepts a front-wheel-drive car. Then, the Kia Niro is worth a look. The all-electric version is too expensive for Susie’s pocket, even with the $8000 rebate she’d still need to find $62000 for the smaller-battery version. Even the plug-in hybrid Niro is out of reach – emitting just 29 gCO₂/km, it gets a healthy $6800 new-car rebate, but that still leaves it costing over $49000. However, if Susie does a lot of shorter trips she might recover the cost difference to the mild-hybrid RAV4 in fuel savings over a couple of years – the Niro PHEV will cover 55km on battery power alone.

What Feebate would you get?