Will Aussie fleets benefit from NZ's unhappy experience with clean car standards?

NZ’s Clean Car Discount (CCD) ended in December this year, leaving sister legislation, the Clean Car Standard (CCS) to carry on with the task of reducing the country’s vehicle emissions. The CCS sets emissions standards for internal combustion engine (ICE) vehicles with vehicle importers either gaining credits for vehicles that meet or exceed the CCS standards and fines for vehicles that fall below them.

Australia hasn’t had a CCD in place and there don’t appear to be any plans to do so, but a CCS is almost certainly on the way. The detail of any CCS is still to be decided, but it is anticipated that Australia’s version will use a similar structure to New Zealand’s standards, and that’s where alarm bells are ringing.

New Zealand’s CCS is designed to raise the bar for emissions reduction each year by setting progressively higher expectations for importers. However, the NZ Government and leading figures within the auto industry have concerns about the pace of that change. On its current trajectory, NZ’s CCS standards will exceed some European and Japanese standards. This means higher standards for New Zealand importers than the markets they source cars from. As the New Zealand Automobile Association policy chief, Simon Douglas, put it:

“The industry does not oppose the clean-car standard, because we very quickly realised that if we didn’t have one in place, we would become a bit of a dumping ground for all the manufacturers of dirty cars. Where we ended up, however, was that the rate of introduction and the charges that were levied were impossible to meet.”

The feeling that unrealistic expectations are being set is also reflected in a review of Clean Car Standards in the United States, where President Joe Biden is expected to announce revised fuel standards after objections from carmakers and unions.

It’s against this backdrop that the Australian Government considers the imposition of CCS, which will be a cornerstone of efforts to cut emissions from new vehicles by 61% over five years. Energy Minister, Chris Bowen, has said: “careful collaboration with industry” will govern CCS formulation, but that hasn’t silenced concerns being raised by the Australian Automobile Association, the Motor Trades Association, and the Federal Chamber of Automotive Industries.

Will the Clean Car Standard be a hit in the pocket for Aussie fleets?

The Leader of the Opposition, Peter Dutton has suggested the cost of a large SUV could rise by $25,000 under Labour’s plan. That’s a big number for fleets to consider, and there aren’t any learnings to be gained from the NZ experience because the now defunct CCD would have muddied the water.

A positive spin on adopting the CCS would highlight the increased attractiveness of the Australian market to clean car manufacturers, hopefully expanding the range of vehicles available and generating some healthy competition among importers. Although the perception that it’s just another business cost will be hard to dispel.

Forewarned is forearmed

On the face of it, Australia’s delayed adoption of CCS is a bonus. Legislators and industry leaders will be benefitting from witnessing the NZ experience and the real-world outcomes of any new legislation. The healthy commentary currently circulating about the pros and cons of the CCS should enable a durable system that positions the Australian market for successful emissions reduction alongside avoiding the pitfalls of becoming a dumping ground for unwanted polluting vehicles.

Further reading - Toyota to the rescue!

It’s a side-bar topic to the main focus of this article, but it’s worth considering the issues being raised in NZ about CCS structure, particularly where importers of ICE vehicles are expected to demonstrate ongoing emissions reductions. Under current categorisation, Suzuki, which has no EVs or PHEV’s but specialises in small, very efficient ICE vehicles is unfairly penalised. Suzuki has already made significant gains in fuel efficiencies, to the benefit of the environment, and hasn’t got the leeway to make further big improvements. On the other hand, larger ICE vehicles that produce more emissions do have room to improve.

In these circumstances, it’s suggested by some in the industry that a vehicle’s current emissions should be considered on an individual basis, rather than applying a blanket expectation of emissions reductions across all ICE vehicles.

Toyota NZ CEO, Neeraj Lala, is one of the people voicing his concern about the fairness of the system, suggesting that Toyota would be willing to help Suzuki by using the ample credits it’s managed to accumulate under the scheme (NZ$28m). Lala said:

"When you’ve got a brand like Suzuki that is operating at the right end of the emissions profile, having a cookie-cutter approach that everybody’s got to reduce by 40 per cent is unsustainable . . . Toyota having $28m in credits and having another company potentially having to close its doors is not a good outcome – It’s about how you keep the whole ecosystem healthy.”

Sage words, indeed, from Lala.

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