Minister Simeon Brown has pushed through lower exhaust standards to meet a deadline set by the car industry

Importers import hundreds of thousands of new and used vehicles each year.

According to the Productivity Commission, New Zealand and Australia were the last developed countries to introduce tailpipe emissions standards on imports, with the exception of Russia.

The rules were designed to prevent New Zealand from becoming a dumping ground for high-emission, high-gas vehicles that other countries no longer wanted, by forcing importers to bring in a mix of high-emission utility and heavy-duty cars as well as smaller electric and hybrid models.

A 2019 cost-benefit analysis estimated the standards would save New Zealanders between $1.2 billion and $4.7 billion over 20 years, including about $7,000 per year per vehicle in fuel savings.

The rules were designed to become stricter over time, eventually catching up with those of major jurisdictions in Europe and elsewhere.

A concerted lobbying effort by major car industry groups failed to prevent the standards from being introduced, but the industry managed to have them relaxed this year after National promised to “recalibrate” them.

New Zealand’s standards will now lag behind Europe by about five years and the United States by about two years. They will align with Australia, where the new rules have also been relaxed after resistance from the car industry.

Change made in time to meet the deadline imposed by the automotive industry

Documents released by the department show officials advised Brown to give the cabinet until July 31 to make a decision on the recommendation to change the rules. They said that would give more time to consider options other than what they called a “brutal” cut.

But the auto industry wanted a decision by June, and Brown insisted it be made sooner.

The change in standards was announced to the public in early July, after the necessary legal amendments were urgently adopted by parliament.

Brown told RNZ he made the move to give consumers and industry some certainty and ease cost-of-living pressures. Importers told him they would pass on penalties to customers if standards were not met, he said.

Advice to consult EV groups ignored

The department carried out extensive consultation before introducing the initial standards, including commissioning independent overseas analysis.

The procurement of electric commercial vehicles has moved more slowly than expected when the rules were written, the documents show.

But imports of electric vehicles have exceeded expectations due to subsidies from the previous government.

The standards are accompanied by an integrated revision, planned for this year.

The documents show that Brown instructed his officials to engage with only three groups about the timing and scope of the review: the Motor Industry Association, the Imported Motor Vehicle Industry Association and the Motor Trade Association.

These groups included the most vocal opponents of the standards introduced.

Brown ignored a suggestion from his managers that “you might also want to ask us to contact organizations that would have a high level of interest in the review, such as Drive Electric.”

Asked why groups with different perspectives were excluded, Brown said: “A targeted consultation with automotive industry stakeholders was considered appropriate due to the technical nature of the proposals and because vehicle importers are most affected by any policy change. Stakeholders consulted include electric vehicle manufacturers.”

After consulting with these groups, transportation officials concluded that the targets were unachievable.

The Motor Industry Association told them that unless standards were weakened, three-quarters of imports would attract penalties by 2027 and importers would pass on costs of $5,000 per vehicle to new buyers, for a total of $800 million in penalties.

The Imported Motor Vehicle Industry Association said that between 2025 and 2027, importers could source between 4,000 and 6,000 battery electric vehicles from Japan at best, and it would be virtually impossible to source used hybrid vehicles to make up for the decline in EV imports.

One reason is that the national government has removed subsidies for electric vehicles.

The groups said that with electric vehicle sales collapsing after the end of the clean car discount program, they were running out of excess credits they had accumulated from importing electric cars.

The influx of electric vehicles had more than offset the fossil-fueled vans and heavy-duty cars they wanted to import, but that was the change, they said.

Brown’s press release announcing the loosening of the rules said officials had informed him of the $800 million in penalties that loomed if the rules did not change.

“The advice provided to me by the Department of Transport has indicated that, based on the current targets set by the previous government… penalties are expected to amount to approximately $800.6 million for consumers purchasing a new car in 2027, or approximately $5,549 per vehicle,” he said.

In fact, these figures come from the Motor Industry Association.

There was no independent analysis of the cost figures because it was “not possible”, Brown told RNZ.

“There is no independent organisation – including the Department of Transport – that is aware of the supply agreements that vehicle distributors enter into with their overseas suppliers.”

Late plea from the Ministry of the Environment

Transportation officials estimate that weakening the standards could lead to up to two million tons of carbon dioxide emissions entering the atmosphere by 2050.

They considered the level of emissions over 20 years to be irrelevant to the country’s climate goals, especially since they still projected that the remaining standards would save more than nine million tonnes of carbon dioxide.

They told Brown that it was unlikely that the original standards would have achieved all the estimated climate benefits anyway, because the auto industry would not have been able to meet them.

But their counterparts at the Environment Ministry believe that climate modelling “misses important nuances”.

After seeing the modelling, the department tried unsuccessfully to change its advice to Cabinet, warning that the changes could make it “materially” harder to meet the country’s climate targets.

“With the updated modeling, our agency’s commentary is no longer accurate and needs to be updated,” an environmental adviser told a transportation counterpart via email.

The updated advice to the Cabinet should have read in full:

“The Department for the Environment believes that this document could have benefited from additional options to better balance the impact on consumers with the ambition to reduce emissions. These could include options to help industry meet existing targets, options to adjust the level of charges if targets are exceeded, and options to reduce targets more moderately.

“Significantly reducing the ambition of short-term targets should not be the only option considered in response to failure to meet these targets.

“(The Ministry) also considers that the analysis of the impacts of the proposed changes on the composition of vehicle imports and associated emissions misses an important nuance… (the Ministry) considers that the proposed changes will make the achievement of emissions budgets two and three significantly more difficult, in a context where compliance with these budgets is already difficult.”

However, officials were told the Cabinet paper had already been tabled and their only option was to contact their minister, Simon Watts, so he could take their concerns to Cabinet if he wished.

Before writing this article, RNZ asked the government for copies of all lobbying letters it had received from the car industry about exhaust standards, under the Official Information Act.

A letter from a pro-EV group has been published.

However, another letter was deemed so sensitive that even the title and sender were withheld, on the grounds that making it public would prejudice the future provision of similar information to the government.

RNZ appealed to the ombudsman, asking for the letter to be published.

– RNZ

Subscribe to the Daily Ha free newsletter curated by our editors and delivered straight to your inbox every weekday.