The Clean Car Standard is set to kick in on January 1, 2023. If you’re confused about what it actually means and how it differs from the Clean Car Discount that’s already in play, you’re not alone. Let’s dive into what it is and how it might affect you.
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.
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* What exactly does the Clean Car Discount mean for car buyers?
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.
The Standard works on a "complex calculation of weights and targets", according to the Government, which ultimately means that the emissions limit comes from how much a vehicle weighs. Heavier models, such as utes, won’t be hurt quite as hard, but light vehicles will need to meet an extremely low emissions figure in order not to get fined.
Fleet milestones are currently set at 145g/km for cars and 218.3g/km for utes for 2023, and 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.
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.
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.
Most manufacturers are preparing new models for major market targets, such as the Euro7 emissions standards and Europe’s phasing out of combustion, currently set for 2035.
Mark Stockdale, a principal technical adviser for the Motor Industry Association, has said the association is concerned the targets are too steep and too soon. This is partly because 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.
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.
“The only solution then, is for the importers to pass those penalties on in the price of the vehicle as an overhead. But unlike the CCD, we don’t know exactly how much those penalties will be per vehicle – it depends on what the average fleet emissions for each importer looks like at the end of the year, and also, how they choose to recover those penalties,” Stockdale said.
As a refresher, the Clean Car Discount (also called the Clean Car Programme) is the “feebate” that charges high-emitting vehicles extra on the first purchase and gives money back on low- or zero-emissions vehicles.
Back at the start of April 2022, the previous “EVs get the full rebate, PHEVs get half the rebate, and everything else gets nothing” approach was ditched in favour of a sliding scale based on emissions.
This means that low-emission vehicles – even ones without extra electricals – can qualify for a rebate, provided they cost under $80,000. All high-emissions vehicles get charged, regardless of how much they cost. The discount also opened up to used cars, but only for first registrations.
Confusingly, Waka Kotahi NZ Transport Agency alternates between figures including and excluding GST. The maximum rebate is $8625 for new vehicles and $3450 for used imports, which includes GST. In this case, GST actually seems to benefit buyers.
But how do they figure out how much to charge? That comes down to how much carbon they pump out of their exhausts.
0g/km of CO2
Fully electric vehicles get the full $8625 ($7500+GST) rebate still, because they don’t produce carbon emissions during driving.
1 to 56g/km of CO2
Any new car that emits between 1 and 56g/km of carbon will be eligible for a rebate of $5000 plus GST, while a newly registered used car in the same band will be eligible for a rebate of $2000 plus GST. This will mainly be made up of plug-in hybrids.
57 to 146g/km of CO2
Any new car that emits between 57 and 146g/km of carbon will attract a rebate calculated by taking the full amount of $7500 plus GST and deducting the result of “emissions X $50 X 130/145”. This means a car that emits 123g/km will get a rebate of $1987 plus GST.
The equation for freshly registered used imports is “emissions X $20 X 130/145” deducted from the maximum rebate of $3000 plus GST, meaning a used import emitting the same 123g/km will get a rebate of $750 plus GST.
146g/km and 192g/km
This is in the “zero” band, which means cars emitting between 146g/km and 192g/km don’t incur a fee or a rebate.
193g/km and above
Despite this category starting at 193g/km, the counting begins with 186. Every gram of carbon over 186 will attract a fee of $50, capped at a maximum of $4500 plus GST.
This means a new vehicle that emits 193g/km would attract a fee of $350 plus GST, while something that emits 250g/km will attract a fee of $3200 plus GST.
For newly imported used vehicles, the fee per gram is $37.50, up to a maximum of $2500 plus GST.
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