Government takes to the airwaves, promising big change on climate policy
Climate change has riven New Zealand politics for two decades or more, but the morning after the Climate Change Commission debuted the most significant set of emissions reductions policies to grace mainstream politics, there was little sign of serious political discord. Prominent breakfast TV host Duncan Garner even asked Climate Change Minister James Shaw to get on with giving Kiwis cheaper electric cars. How big will the incentives be for us to go and buy an electric car? You give us a big incentive [and] well go and do it, Garner said. Youve been telling us that for a while, Duncan its on the way, Shaw replied. READ MORE: * Government introducing car import rules aimed at lowering emissions and fuel costs, considering incentive scheme for EVs * The change that'll make Rogernomics 'look like a trial period' * Climate chief wants a road safety-style campaign to get us out of cars Shaw took to the airwaves on Monday morning, saying the biggest challenge facing the country when it comes to reducing emissions would be getting the balance right between changes asked of each industry. Debate focused on a policy the Government had tried to implement in its first term: a scheme to make electric and clean petrol cars cheaper by subsidising their upfront costs with a levy on the most polluting cars. The policy is called a feebate, the fee being the levy on polluting cars, and the bate being a rebate consumers get if they purchase cleaner alternatives . In 2019 the Government consulted on a plan that would have made clean cars up to $8000 cheaper, while polluting cars would have been $3000 more expensive. National decried the plan as a car tax, and in 2020, the Government dropped the policy after failing to get NZ First support . While the Greens took the policy to the election, Labour quietly ditched it from its manifesto. But Labours position changed after the election with Transport Minister Michael Wood just last week saying the Government will consider options for an incentive scheme to help Kiwis make the switch to clean cars. Just what that means is an open question. The Climate Change Commissions first emissions budget suggested either a feebate or a subsidy, leaving the Government to pick one or neither option. Shaw said the Government hadnt yet come down on what sort of incentive scheme it would use. I couldnt tell you right now Cabinet hasnt yet considered what those alternatives are, Shaw told RNZ on Monday. Ministry of Transport officials mulled both a feebate option and a direct subsidy back in 2019. The subsidy option would have given EV owners a more modest $1000-$2000 subsidy, which would have cost the Crown an equally modest $104 million over three years. By contrast, the Government has set aside $421m for the screen production grant, a film industry subsidy, over the same period. Ministers eventually opted for the feebate method: the subsidy on cleaner cars was higher, and because it was funded entirely by levies collected on polluting cars, it didnt come at a cost to the Crown. However it did come at huge political cost with the Government apparently blindsided by the vociferousness of the opposition to the fee on polluting cars. The Government now faces a choice of whether the cost of any incentive scheme will be borne by people who continue to purchase polluting cars or taxpayers at large. Shaw gave little away, but further suggested that the scheme would look at incentives to bring the upfront cost of purchasing EVs down rather than existing EV incentives which focus on lowering running costs. The upfront cost is prohibitively expensive for most people but the running cost is very, very low, New Zealanders typically spend more on the running costs of our cars than we need to over the lifetime of those cars because we like to spend less upfront, Shaw said. Shaw said that more broadly the challenge with reducing emissions would be ensuring that each sectors transition was managed in a fair and balanced way. The biggest challenge really is going to be getting the balance between all of the industry sectors that are going to see change over the coming years because every sector is going to be saying its too tough youre going to have to go harder on another sector, Shaw said. Rod Carr, who chairs the Climate Change Commission, also took to Monday morning media to manage the expectations of the Commissions proposals. He told RNZ that despite calling for a ban on the import of fossil fuel vehicles by 2032, 60 per cent of light vehicles in New Zealand would still use internal combustion engines by 2035, meaning consumers would still be able to get their hands on one if they wanted to. He also discussed the enormous demand this would place on our renewable electricity generation. Carr said that the power would come from existing and new sources. [The emissions budget] assumes the near 13 per cent of electricity currently used by the aluminium smelter will become available for the use of all New Zealanders and between now and 2035 we increase by about 170 per cent the renewable generation capacity in New Zealand largely but not entirely from wind and some solar, Carr said. As things currently stand, New Zealand will be able to use the additional renewable electricity generated for the Tiwai Point aluminium smelter once it closes towards the middle of this decade . This will free up about 13 per cent of the current electricity supply. But this could be a challenge if Tiwai stays open (which is unlikely although it has threatened to close before and stayed open), or if Transpower isnt able to make investment in the grid to get that power from the bottom of the South Island to other parts of the country where it will be consumed. Carr said that Transpower was already looking to bring that extra power north. Transpower are already investing in the first stage of bringing that power north and theyre developing plans to bring that power even further into the North Island, Carr said. Carr said it was time to accept Tiwai Point would close. The smelter has indicated that it is on an exit path so the time has come to accept that is going to happen, if indeed that power doesnt become available it means New Zealand will have to bring forward substantial investment sooner in the generation of additional electricity, Carr said. Politicians from the Opposition have been fairly muted in their response to the Commissions draft budget. Theyve still got some time to formulate a response. The Commission will only present its final advice to the Government in March and the Government has until the end of the year to act on it.