The Post: EVs may get middle-class welfare – so what?
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Does New Zealand want to be like Russia? That’s the question the Government is raising as it consults on whether to abolish the clean car standard, a policy that levies fees on imports of high-polluting vehicles. This would align us with the only other OECD nation not to have a standard for vehicle emissions: the murderous kleptocracy that is Vladimir Putin’s Russia.
Even if National probably won’t scrap the standard, the mere contemplation of the act is mind-bogglingly bad. It puts us out of sync with the rest of the developed world: just look at Australia, a country we often try to align ourselves with, which is toughening its fuel standards and seeing emissions fall.
The oil crisis has also revealed the Government’s wider policies to entrench fossil fuel usage – scrapping subsidies for EVs, hiking road user charges (RUCs) for those vehicles, and making public transport more expensive – to be a colossal own-goal. New Zealanders are waking up to the brutal reality that the petrol they put in their tank – and, by extension, our $8 billion annual importation of fossils fuels – is a systemic weakness, one that leaves us vulnerable to overseas shocks.
That’s the way the fossil fuel industry likes it, of course. As the British columnist George Monbiot recently argued, oil can only be extracted in limited locations by highly capitalised companies, allowing a small number of mega-players to make mega-profits.
Solar panels, by contrast, can be placed in almost every community. Not only are renewables green, they’re democratic – and resilient. As Drive Electric’s Kirsten Corson puts it, “Sunshine, water and wind don’t get stuck on a boat in the Strait of Hormuz.”
The last major oil shocks, in the 1970s, were – ironically – the impetus for the first big global push on vehicle efficiency. We must likewise use this shock to wean ourselves off fossil fuels as rapidly as possible.
And we would be far better placed to do so if the Government hadn’t scrapped the clean car discount immediately on taking office. A logical counterpart to the clean car standard, the discount helped Kiwis buy low-emissions vehicles, putting the “(re)bate” into the clunkily titled “feebate” system.
It was hugely successful, boasting benefits two-to-three times its costs and being projected to cut 3-9 mega-tonnes of emissions by 2050. EV sales jumped to one in four.
Now, they’ve slumped back to one in 10. Our roads would plausibly boast tens of thousands more EVs – every one of them insulated from the oil crisis – if the discount had remained.
National loves to deride it as “middle-class welfare”. But such attacks are way off-target.
The feebate scheme was to be cost-neutral over its lifetime, as penalties on high-emitting vehicles – often paid by the wealthy – cancelled out payments on EVs and hybrids. And for all the talk of Tesla subsidies, the scheme’s most popular vehicle was the relatively modest Toyota Aqua hybrid, which received twice the grants made for the Tesla Model 3.
Overall, the biggest claimants were people buying vehicles worth $10,000 to $20,000. Technically “middle class”, perhaps, but hardly living the high life.
And the wider truth is that some “middle class” subsidies are unavoidable. Given the urgent need to restrain runaway climate change, we need policies that change behaviour quickly.
Because EVs create large spillover benefits to us all – lower emissions, less pollution – there’s a clear case for subsidising purchases. And when one looks at countries that have shifted away from fossil-fuel cars – Norway’s sales are now almost 100% EVs, while China has hit one-half and Britain and France one-quarter – they have all done it through subsidies.
National argues such subsidies are now irrelevant because new EVs are so cheap. But people still aren’t buying them in the same proportions as in 2023, a fact that probably has as much to do with psychology as economics.
People love a discount and a bargain. That fact, plus supportive RUC policies and general government positivity towards EVs, will have boosted feebate-era sales.
Another reality: even if brand-new $30,000 EVs are just as good as $30,000 fossil-fuel cars, most Kiwis can only afford something like $5000-7000 for a used car. And the second-hand EVs at that price often have inadequate range for busy families.
To get more second-hand EVs into the hands of ordinary households, we need a cascade effect from better-off people buying them new then on-selling them a few years later. Again, subsidies can do that.
What form that could take now is up for debate. The political will on the left is unclear.
Some experts would reinstate the fees and discounts, but leave out politically sensitive vans and utes. Others would subsidise the big corporate fleet purchases that get on-sold within a few years, creating that much-needed second-hand market.
The accusations would no doubt switch from “middle-class welfare” to “corporate welfare”. But so be it. This may just be what we have to do, for the planet and for our own security.