The Clean Car Standard (CCS) kicked in on January 1 this year, and represents another way the government is looking to reduce emissions from the transport industry. But it shouldn’t affect you as a consumer too badly – emphasis on ‘should’. Unfortunately, it’s not as cut and dry as that.
By design, the CCS is for the car industry, rather than buyers. It encourages importers to meet stringent carbon dioxide emissions targets, through either a “pay-as-you-go” plan (more suited to those not importing many vehicles at a time) or a “fleet average” scheme (the main importers in New Zealand).
If the carbon emissions average of an importer’s fleet ends up over the limit it will get fined, while fleets under the limit get credits that can be used as a buffer for impending fines or traded to other brands.
The difference between it and the Clean Car Discount is that the Standard is designed to encourage the industry to bring cleaner cars into the country, while the Discount aims to encourage people to buy them by offering rebates on electrified and low-emissions vehicles under $80,000.
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The Standard works on a "complex calculation of weights and targets", which ultimately means that the emissions limit comes from how much a vehicle weighs. Heavier vehicles like utes won’t be penalised as much, but the system means lightweight cars are expected to meet lower emissions to avoid fines.
Fleet milestones are currently set at 145g/km for cars and 218.3g/km for utes for 2023, reducing to 63.3g/87.2g respectively from 2027. Penalties are set at $45 per gram of carbon dioxide (half that for used cars) multiplied by the sum of emissions above the target from every vehicle sold. Considering this could apply over thousands of vehicles, those fees will ramp up fast. The Motor Industry Association estimates that in 2023 alone, the new car sector could incur tens of millions in penalties.
Most manufacturers are preparing new models for major market targets, such as the Euro7 emissions standards and Europe’s phasing out of combustion power. New Zealand importers place orders some 18 months ahead of time, meaning orders for 2023 products were placed before the Clean Car Standard was finalised and local brands haven’t had time to adjust their orders to try and avoid penalties.
Theoretically, there won’t be any price changes as a result of the CCS because the Government expects distributors to offset their higher-emitting vehicles with cleaner cars.
Toyota, for example, is in a good position for this, with a huge range of hybrids available to balance out the likes of the Hilux, Hiace, Land Cruiser and Supra. But, as CEO Neeraj Lala told Stuff, it’s not quite a simple yes-or-no question.
“It’s a real juggling act. We need to balance pricing with supply and demand, while also keeping an eye on both the Clean Car Standard and Clean Car Discount for any potential changes.”
“In any case, we have a plan A, B, C and D for what might happen.”
Ford told Stuff that its plan is to be “fully compliant.”
“We’ve introduced a number of electrified vehicles including hybrids, PHEVs. The Escape, Focus and Puma all have electrified options now. The full BEV E-Transit and Mach-E both are open for ordering and arrive this year.”
However, due to “a number of factors, there have been some price increases across our range of vehicles.” This includes the Ranger ute, which increased by between $500 and $2000 over the past three months.
On the other hand, manufacturers that import lots of lightweight but high-emitting vehicles (relatively speaking) will be penalised quite a lot under this system. It doesn’t help that New Zealand isn’t really big enough to have much say in what carmakers build, meaning these brands can’t exactly ask for more hybrids or electric vehicles.
Meanwhile, Mitsubishi said that it is confident it can avoid major price hikes, thanks to high sales of electrified models like the Outlander and Eclipse Cross plug-in hybrids.
“We’re one of the best-placed mainstream brands to hold the line on pricing of our internal combustion products – including Triton. While we’re confident that we can minimise the impacts on our customers, by our calculations there will be a number of brands who will have to significantly increase their utepricing out past 2024.”
It won’t just be utes going up in price either, the Motor Industry Association says. The entire car industry could spike.
Subaru is one vocal opponent to the CCS, with managing director Wallis Dumper saying last year that he expects “extra fees to be applied to most new petrol engine cars early next year, as part of the government’s ambition to be carbon neutral by 2050”. He added that “thousands” will likely be added to the price of petrol vehicles in 2023.
At the time of writing, Subaru’s website lists the XV, Forester and Outback models as being advertised as “CCS fee free”.
At the end of the day, it is likely that, despite what the Government wants to happen, the Clean Car Standard will raise prices for new and freshly imported used vehicles from 2023.
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