21.05.19

EVs –  the lower hanging fruit on the low carbon tree

By Phil Jones

Of the challenges facing us as we begin the transition to a low carbon (and circular) economy, the transport sector has long been considered the one with the best short-term opportunity.

We now have the target to be a net zero carbon economy by 2050. To achieve this, it is generally accepted that our transport system needs to be close to zero carbon. We’re currently heading in the opposite direction, with road transport emissions continuing to increase (93% since 1990).

With its plentiful supply of renewable sources, the electrification of our vehicle fleet is the
lower hanging fruit. But help is needed to help us pluck it!

Of course, success won’t be measured solely by converting our 4 million light vehicle fleet to run on electricity.

We also need to develop a truly multi-modal transport system, especially in our cities, with more of our trips by public transport, by (e-)bike, and on foot. We’ve taken positive steps, with initiatives like Auckland’s City Rail Link, light rail projects, and cycleways. More is needed so we have less need for private car use.

But, cars will continue to play a dominant role for decades to come, we have to de-carbonise them as soon as possible (and make more of them available for shared use). Electrification is our best opportunity. (With our highly renewable electricity generation, EVs driven in NZ typically have at least 80% lower emissions than conventional cars. Lifetime emissions, including from car and battery production, have been estimated at 60% lower.)

In 2016, the then government set a goal of 64,000 EVs by the end of 2021, with a doubling year on year for 5 years. (At the time the target represented 2% of the light vehicle fleet. But that figure is likely to represent nearer 1.5% of the fleet by 2021 given the growth in the vehicle fleet.)

Early progress was ahead of these targets. By the end of 2018, there were just under 11,800 registered EVs, comfortably ahead of the 8,000 target.

But the past 12 months has seen a stagnation in EV registrations. Monthly totals are averaging around 500, well below the 1,300 we need to be averaging by early next year.

The good initial progress was primarily achieved due to the popularity of second-hand Nissan LEAFs (mainly from Japan) with individuals, representing about 50% of the overall registrations.

In NZ, the majority of new vehicles are bought by companies. It is vital that the new EV market is strong so that there is a healthy second-hand market in future years.

Although there has been reasonable uptake by some of NZ’s leading companies, overall purchases of new EVs have been slow.

The reasons are obvious – limited range of models, high purchase prices, and the associated higher Fringe Benefit Tax (FBT) liability. The much lower running costs of EVs are not sufficient to make the numbers add up for most organisations.

Among the early adopters are SBN members, Yoogo Share (with over 100 full electric vehicles in its car share fleet, mainly in Christchurch), Mevo, Meridian, Westpac, and Air New Zealand. Another SBN member, ChargeNet, has played the leading role in developing a nationwide charging infrastructure.

There is no absence of innovative approaches to encouraging uptake by more businesses. Vehicle leasing specialists, Orix NZ, has recently launched a neat scheme. It provides clients with the opportunity to upgrade one of their fleet’s vehicles to a selected electric vehicle at the same lease rate as the fossil fuel equivalent. They also install a charging unit at the business premises free of charge.

Barry Nicholson from Orix NZ says “by removing the additional cost of an electric vehicle, the cost of the charging unit and by handling most of the admin, we help ease concerns. This will hopefully result in the integration of electric vehicles into a wider range of businesses.”

Orix NZ received funding from the EECA (Energy Efficiency and Conservation Authority) Low Emission Vehicle Fund. The fund has helped many businesses and organisations to introduce EVs, install charging infrastructure, and more.

Other SBN members receiving funding in the latest LEV round include:

But the reality is that this support is not enough to achieve the transition. We need a broader mix of incentives and mandates.

There is no absence of examples overseas. The ‘Feebate’ scheme has been introduced in Norway and France, among others. It is a revenue neutral scheme involving an increase in the cost of registering conventional vehicles with that money being used to reduce the cost of registering electric or low-emission vehicles. The Productivity Commission report advocated for its introduction in its low emission economy report in 2018. There isn’t unanimous support – some have raised social equity concerns, given the reliance many poorer households have on low cost second-hand vehicles.

A creative solution to the FBT issue has been proposed by Drive Electric. This involves the FBT liability for EVs being based on the price of the equivalent conventional car, rather than the more expensive EV.  Again, this is a revenue neutral solution.

Here at SBN, we’re looking forward to positive announcements on EV incentives from the government in the near future.