News

$1.7 billion has been provided so far towards state highway and local road recovery from the 2022 North Island Weather Events, Waka Kotahi NZTA has told the Minister of Transport in its Briefing to the Incoming Minister, publicly released on 1 February 2024[1], with more funding needed. 

The Agency also told the Minister that one of the strains on the current transport funding system is the “increasing frequency and severity of weather events”. There is now clearly a link between roading costs and climate change. 

The new Minister, Hon. Simeon Brown, announced that from 1 April 2024 battery electric vehicles and plug-in hybrids (PHEVs) will start paying distance-based Road User Charges (RUC).  Road User Charges are payable on vehicles which use energy that doesn’t incur fuel excise duty. This includes diesel and electric vehicles.

EVs should contribute towards the costs of transport, roads and their maintenance.  But what RUC rate would meet the Minister’s aim of “fairness and equity”?

The rate for 100% electric light vehicles (up to 3.5 tonnes) will be $76 per 1,000 km, the same rate that light diesel vehicles like utes and vans currently pay. PHEVs will pay $53 per 1,000 km, recognising that they will pay both fuel excise duty and RUC. RUC needs to be purchased in advance of the distance driven and each purchase is accompanied by a transaction fee.

The predominant vehicle fuel here is petrol, so how do the different government fees stack up against petrol vehicles?  Three popular vehicle makes which come in different drive technology flavours, are compared in the following table, driving a typical annual distance of 14,000 km[2].

Petrol hybrids pay significantly less than ordinary petrol models, due to their good fuel efficiency.  The electric Kona will pay around 20% more than the petrol Kona, and double that of the hybrid Kona.  Diesel ute drivers get a good deal by paying RUC in comparison with excise duty paid by an equivalent petrol ute – about a third cheaper for the popular diesel Ford Ranger. 

A comparison with PHEVs is not included as this varies significantly with the trip driving distance and frequency of charging.  PHEV owners that do short daily distances and charge frequently so that they mainly drive using electricity will pay similar costs to 100% electric vehicles, but some PHEV owners have already been asking if they can have their electric charging port removed to avoid paying RUC[3].

And no, the EV battery weight is not a factor in the higher pricing.  Waka Kotahi NZTA states “vehicles weighing less than around 6 tonnes do almost no damage to roads and so they impose very similar costs on the road network.”[4]  Similar costs in terms of vehicle weight, but, looking at the big picture, not similar costs in terms of damage from climate change.

From 1 April, the signal from government will be to buy a hybrid, not an electric vehicle, now that the Clean Car Discount feebate scheme has gone. Hybrids are great for fuel efficiency, but New Zealand has a fantastic advantage in that 89% of our electricity generation is already from renewable sources. EVs have greater benefits for climate change here than in most countries which have more fossil fuel generation in the mix.

The RUC rates for electric vehicles need to reflect the fact that climate change is now a significant contributor to roading costs. More will need to be invested to improve roading resilience to extreme weather events, not just clean up the mess. RUC rates need to be set so that electric vehicles pay less than equivalent vehicles with higher emissions, not more. There also needs to be new ways of raising funding for transport, including congestion charges and zero emission zones for cities.

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[1] Briefing to the incoming Minister of Transport 2023 (nzta.govt.nz)

[2] Fuel consumption figures are from NZTA’s Rightcar NZ  website.  RUC transaction costs assume two online

purchases of 7,000 km of RUC each per year.  There are some taxes and levies paid on diesel fuel which do not go to the National Land Transport Fund.  Auckland regional fuel taxes are not included.

[3] Hybrid owners trying to remove plugs to avoid road user charges | RNZ News

[4] RUC-CAM.pdf (transport.govt.nz)

A new study on Electric Vehicles (EVs) shows a more rapid uptake of EVs could save New Zealanders $15 billion in vehicle, fuel, and carbon emission costs by 2050. https://www.concept.co.nz/updates.html

The study by Concept Consulting and Retyna shows there is both an economic opportunity and an environmental imperative to accelerate EV uptake:

• The opportunity is because EVs are already cost-effective for some New Zealand households and businesses who drive longer distances each year, and at the current rate of cost and performance improvements they should be economic for the vast majority of New Zealanders purchasing a new vehicle within a few years.

• The imperative is because vehicles are a major source of emissions, and without accelerated uptake, it will be substantially harder for New Zealand to meet its climate change commitments.

The study shows that accelerating the uptake of EVs could save New Zealanders $10bn in vehicle and fuel costs out to 2050, with a further $5bn reduction in carbon costs.

“Given our low-cost renewable electricity resource, the environmental and economic gains from EV uptake should be among the greatest in the world” says Concept Consulting Director, Simon Coates. However, the study finds that our current lack of policies to overcome the significant barriers facing EV uptake is resulting in New Zealand falling substantially behind overseas markets such as Europe.

Drawing upon overseas experiences, complemented with NZ-specific modelling, the study identifies three ‘core’ policy measures to deliver optimal rates of EV uptake. Two of them were proposed, but not implemented, by the last coalition government:

• A Fleet Emissions Standard (referred to as a ‘clean car standard’ in the 2019 proposal) which requires vehicle importers to supply vehicles whose average emissions across the fleet are below a target, backed up by a financial penalty for falling short.
• A Feebate scheme (referred to as a ‘clean car discount’ in the 2019 proposal) which offers discounts for low-emissions vehicles funded from increases in the purchase price of high emissions vehicles.
  
  

The third policy measure is an ‘ICE ban’ which would prohibit the sale of new petrol and diesel Internal Combustion Engine (ICE) vehicles. The study indicates an appropriate date for such a ban for passenger vehicles should be no later than 2035, and probably earlier subject to further analysis. Such bans are increasingly being put in place by overseas countries on the grounds that not to do so would compromise their ability to meet their climate commitments. In this vein, the key right-hand-drive market of the UK recently brought forward its ban to 2030, and Japan has introduced a 2035 ban. Without such a policy, New Zealand risks missing its own targets, and being a petrol and diesel vehicle ‘dumping ground’ for manufacturers wishing to sell their remaining stock, thereby locking-in higher emissions for New Zealand over the 20-year average lifetime of a vehicle in New Zealand.

The study identifies that implementing these complementary policies together will maximise their collective effectiveness and deliver the greatest benefit to New Zealand.

While greatest attention has been on light vehicles, the study finds that a similar suite of policies are required for trucks – the fastest growing source of our vehicle emissions, and a contributor to the $15bn modelled benefit from faster EV uptake.

The study reflects the views and analysis of Concept and Retyna, and was funded by 15 companies and organisations from across the electricity and motor vehicle industries.

In March 2019 in Hong Kong, Retyna delivered an international one-day workshop on developing vehicle fuel economy regulations for Asia Pacific Economic Cooperation (APEC). The workshop was attended by representatives from nine APEC economies.
The workshop report, including an appendix with all the presentations from the workshop, is available on APEC’s website here: APEC Energy Efficiency Policy Workshop Report
Topics covered include:
– Transport contribution to GHG emissions in APEC economies
– Suite of policy measures to improve vehicle fuel economy
– Vehicle fuel economy policies in APEC economies
– Chile’s proposed fuel economy standards: the process of developing new legislation and features of the standard
– Test protocols underpinning fuel economy regulations: the transition to Worldwide Harmonised Light Vehicle Test Procedure (WLTP) and its inclusion in CO2 policies

Retyna is delighted to announce that Andrew Campbell has joined the team as an Associate.
Andrew has over three decades of expertise in vehicle power trains, specification and production of engine fuels, engine and system adaption for the use of non-traditional fuels. He has international project experience in the adoption of electric vehicles including the development of supporting infrastructure and electric vehicle related standards. He has undertaken techno-economic assessments and due diligence for energy projects at a national scale in a variety of countries. He has a particular interest and experience in engineering-based start-ups and personally holds several patents.
Andrew has a Masters of Engineering (Mechanical) degree.

Round 6 of the EECA Low Emission Vehicles Contestable Fund is currently open for applications and closes at 9 am on Thursday 21 March.  This time EECA have produced some great tips and hints to help you with your application.  See https://www.eeca.govt.nz/funding-and-support/low-emission-vehicles-contestable-fund/apply-for-co-funding/

You can read this together with my tips for Round 5 in a previous post.

I have been working with clients on developing some great projects for applications in Round 6, starting well before Round 6 opened.  If you have a project idea you would like to develop for Round 7 later in 2019, please get in touch from April 2019.

EECA has just opened Round 5 of the Low Emission Vehicles Contestable Fund.  Applications are due by 8 am on 19 September 2018.  If you have been developing your electric vehicle project idea, here are five tips to help improve your application:

Tip 1: Only ask for the level of funding you actually need

Applicants can request up to 50% co-funding from the Fund, but remember it’s a competitive fund.  The previous four rounds have all been heavily oversubscribed, so the Fund Panel (which makes recommendations on which projects EECA should fund) are looking to where they can get best value for EECA’s investment.   For example, if you only need 35% funding from EECA to get your project to fly, then only ask for this and not the maximum of 50% allowable.  This should improve the value for money rating (one of the four assessment criteria) for your project and make it more competitive.

Tip 2: Your project should be ready to go

The whole point of the Fund is to bring forward the uptake of EVs.   If a project could be delayed because there are still project development steps to go through, then this risks tying up funding which could be used for other good projects able to be implemented more quickly.   The Panel will be looking for solid projects which are ready to go once they have the co-funding they need. If you still need approval from your Board, or haven’t identified all your suppliers, then it may be worth waiting for the next round when your project is more developed.

Tip 3: Only ask for funding towards additional costs of electrification

EECA co-funding goes towards the additional costs of electrification, but not other aspects of your project.  For example, a freight company wants to demonstrate an electric truck in a new application.  It can apply for co-funding towards the extra cost of the electric truck above what it would have paid for a similar diesel truck, and the costs of charging infrastructure.  EECA will not contribute towards the full costs of the truck as this would subsidise the underlying freight business.  EECA asks you to provide an assessment of the additional costs of electrification.  It will also make its own assessment of what this is.  Accurately providing additional cost information shows you understand how the fund operates and avoids a low value for money score.

Tip 4: Show how others will learn from your project

EECA funds demonstration and other types of EV projects to overcome first mover risk and influence others to follow.  Projects should clearly show how they will help other companies and organisations learn from their demonstration experience or influence individuals and companies to buy, lease or experience EVs.  Provide examples of how you will do this, for example giving presentations at an annual industry conference on the project and what you learned to make it easier for others to follow you.

Tip 5: Don’t leave it to the last minute                                                 

It really shows when applications are completed in a rush and doesn’t leave a good impression with the Panel.  Having a well-researched application with solid supporting documentation gives the Panel greater confidence in the applicant’s ability to deliver the project (one of the four assessment criteria). The Fund has a very strict closing deadline.  If the application is not submitted by the deadline it will not be considered.  There will be plenty of other good projects that have got their applications in on time.

Retyna’s Managing Director, Liz Yeaman, was previously the General Manager, Transport at EECA and led the set up and management of the Low Emission Vehicles Contestable Fund.  She has insights into how the Fund panel has assessed applications in all four previous rounds and how to craft an application to the Fund for the highest chance of success.  If you would like help with your project’s application to the Fund please get in contact.  liz@retyna.co.nz

 

Information and application forms for the Fund are on EECA’s website here: https://www.

eeca.govt.nz/funding-and-support/low-emission-vehicles-contestable-fund/low-emission-vehicles-contestable-fund/

EECA has just published on its website a new investment focus for Round 5 of the Low Emission Vehicles Contestable Fund, ahead of opening for applications on 15 August 2018.

So far, EECA has updated the investment focus every second round to reflect the changing status of EV uptake and technology development.  The Round 5 investment focus is to:

• Support the development of the charging network by identifying and filling the key gaps in the network, and by supporting EV charging stations in priority locations where further facilities are needed
• Facilitate the scale-up of LEV technology, especially in shared fleets and public transport
• Enable the demonstration and uptake of light and heavy LEVs and associated technologies through high visibility projects in sectors of the economy where LEVs remain relatively unproven
• Encourage electric vehicle technology innovation, particularly Vehicle-to-Grid and Smart Charging technologies potentially resulting in reductions to peak electricity demand
• Support the development of electric vehicle maintenance, repair and other support services.

For Round 5 EECA has called out some specific projects that it considers would fit the new investment focus.  New examples of projects EECA considers fitting the Round 5 investment focus include:

• Vehicle-to-grid trials and smart charging technology which lead to peak electricity demand ‘shaving’ and corresponding benefits to EV owners
• Addressing consumer confidence about EV servicing through industry accreditation
• Expanding EV car share projects
• Scale-up of EV charging infrastructure in key locations

With these new examples, it appears that EECA is seeking to replicate some of the early successes of the Fund, such as EV car share schemes, rather than just facilitate EVs into new sectors as it has done previously.  It’s easy to see why when EV car share delivers opportunities for more individuals and companies to experience the benefits of driving an EV without the need for vehicle purchase themselves.  Battery electric buses are another area of success ripe for replication.

The new investment focus also suggests that EECA is wanting to see some projects which address specific gaps in how the EV “ecosystem” in New Zealand is developing.  Some electricity lines companies have been getting a bit twitchy about the potential for local network demand peaks from EV charging, hence the specific encouragement of and smart charging and vehicle-to-grid projects.

EECA’s consumer surveys have shown that a weak point in consumer confidence about EVs is not knowing where you can get your EV serviced, so industry accreditation schemes will help there.

New Zealand now has DC fast chargers located so that you can drive to most places around the country in a used Gen 1 Nissan Leaf.  But there are still gaps, particularly in the South Island down the West coast, across Arthur’s Pass and into Milford Sound.   EECA wants to see these gaps filled.   It is also recognising that as the EV fleet continues to double in size every year, one DC fast charger in some key locations is not going to be enough to meet growing demand.  Bigger charging stations come with infrastructure challenges like transformer upgrades, so funding assistance might be possible for a project with a well-articulated application justifying EECA’s co-investment.

Retyna’s Managing Director, Liz Yeaman, was previously the General Manager, Transport at EECA and led the set up and management of the Low Emission Vehicles Contestable Fund.  She has insights into how the Fund works and how to best write an application to the Fund for the highest chance of success.  If you would like help with your project’s application to the Fund please get in contact.

liz@retyna.co.nz

www.linkedin.com/in/liz-yeaman