Govt decision to delay Clean Vehicles Bill will cost $40 million

govt-decision-to-delay-clean-vehicles-bill-will-cost-$40-million

The delay of bringing in the Clean Vehicles Bill will cost the government about $40 million as it continues to fund rebates under the scheme for electric vehicles, without being able to bring in the levies from high-emitting vehicles.

Power supply for electric car charging.  Electric car charging station. Close up of the power supply plugged into an electric car being charged.

Electric car charging. Photo: 123RF

The Covid-19 outbreak prevented the bill from having its first reading in August, which would have seen the legislation passed in 2021 and regulations for the full rebates and charges scheme in force on 1 January 2022.

Rebates for electric and plug-in hybrid vehicles became available on 1 July 2021, with funding coming from the Crown on the provision it would be repaid through the charges collected from high-emitting vehicles.

But due to the lockdown it was likely the levy system would not be up and running until at least April 1 2022.

As of 19 December, the scheme had already paid out $43.6m on 6,779 electric and hybrid vehicles.

Ministry of Transport Environment, Emissions and Adaptation manager Ewan Delany said the revenue expected from high-emitting vehicles was approximately $32m -$47m for the period January to March 2022.

“If there is a further delay to the Bill, and the implementation can’t happen until mid-April 2022, the approx reduction in revenue would be between $37m and $55m,” he said.

Delany said the Clean Car Discount had so far lead to “a more than tripling of the numbers of new EVs being sold every month”.

Transport data showed the first month the scheme was in place 1,949 EVs were registered in New Zealand compared with the same month last year when 483 were registered. Apart from August, when the country was in lockdown, that trend was similar for September, October and November.

“As rebates are rolled out to a wider range of low emissions vehicles later this year, more New Zealanders will be supported to buy new and used vehicles that cost less to run and reduce emissions.

He said this was sending a strong signal to importers and manufacturers.

“To give just one example, Ford significantly dropped the price of its plug-in hybrid commercial Transit Van for the New Zealand market, following the introduction of rebates. This means we have continued to make progress towards our 2025 targets for reducing vehicle emissions, reducing emissions from new vehicles by 15 pct in just a few months.

“In fact at the current rate, we’ve already achieved our proposed 2023 target.”

In a briefing to Transport Minister Michael Wood at the beginning of September officials cautioned a delay in introducing the bill would likely lead to a higher-than-expected number of high-emitting vehicle sales.

“On the other hand, a delay on imposing charges on high emitting vehicles is likely to alleviate concerns by parts of the industry and some consumers that they did not have sufficient notice following the June policy announcement to buy and receive a high emitting vehicle before charges commence,” officials wrote.

New vehicle sales set a new record for the month of November, following strong demand for utes and sports utility vehicles (SUVs).

Officials also noted because Auckland was in alert level four, some high-emitting vehicles would not be able to be processed and sold before the levy system kicked in under the original timeframes.

“Over 75 percent of vehicles entering New Zealand are processed in Auckland, which remains in level 4 lockdown. Depending on when Auckland moves to Level 2 or 1, there is a risk that a backlog of vehicles could mean that high emitting vehicles originally due to be processed and registered in 2021 could be delayed into early 2022.

“This would subject them to charges for reasons outside of a vehicle buyer’s control. The delay in the imposition of charges would reduce the risk of complaints around this issue.”

Officials said Wood could introduce the bill during the sitting week of 7 September, which would allow for a 10-week select committee period and a report back to the House by 2 December.

“If the Bill was to pass through all remaining stages in the sitting week of 7 December, it could be possible to lodge the regulations for consideration by Cabinet Legislation Committee on 16 December. With Cabinet confirmation and Executive Council on 20 December the regulations could be in force by 20 January 2022.

“There is a risk that this could impact the final quality and workability of the legislation. We do not recommend this option.”

Officials recommended introducing the bill late September or early October, which would allow for the levy system to start mid-April 2022.

Wood introduced it slightly earlier and it passed its first reading on 22 September.

Budget 2021 allocated $295m to fund rebates under the scheme. Any deficit from the delay would be well-covered.

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