The system of credits for Green cars and penalties for blackhearts will continue, but a review is under way.

RETENTION of clean car legislation that charges importers a fee for bringing high-emissions vehicles into the country has been welcomed by the body acting for new car involvers.

The Motor Industry Association says Government’s decision to retain the Clean Vehicle Standard is right. So too is intent to progress work to recalibrate future settings so they better reflect New Zealand market conditions.

The Wellington-based lobby group, which acts for almost all new car distributors, says it would welcome opportunity to engage in a new phase of the review, which aims to develop future targets and settings.

Government says it has not yet decided on the new limits, but whatever settings are delivered will be “realistic and achievable”.

Introduced by the previous Labour government as the Clean Car Standard, and massively diluted by the current administration, the CVS in current form charges importers a penalty for cars that exceed the target emissions level - $15 per gram of emissions over the limit for new vehicles, $7.50 per gram for used vehicles.

This can be offset by also importing cars with lower emissions; the ultimate choice there are electric cars, which earn carbon credits.

These are tradable, and historically have been bought by brands on the wrong side of the ledger in order to soften - of not completely offset - the blow of penalties, but at the moment credits are taking below the value of the emissions penalties.

Transport Minister Chris Bishop slashed the penalty by nearly 80 percent last November, saying supply constraints meant importers could not source enough low-emissions vehicles to avoid being penalised.

Earlier this year, he launched a full review of the standard, which included an option to scrap it altogether.

This threw the car industry into disarray, as distributors were left wondering if some products that were doing well under the legislation as it stood might be less useful if the rules were abandoned.

Not having any regulation would have made NZ one of just two OECD countries without a vehicle emissions standard – the other being Russia - a status that alarmed clean car advocates, in particular those pushing for EV uptake.

Further influencing is that cars for NZ are often to same standard as those going to Australia, which introduced its own limits late last year.

Being a much larger market, our neighbour often gets to call the shots on regional selections. It is increasingly selecting low to no emissions cars, with a boom in electric and electrified car uptake there.

Data from across the Tasman for the first half of this year showing overall tailpipe emissions had dropped and most importers were able to meet the standard.

Bishop claimed his measures eased pressure on importers and kept cars affordable - distributors themselves have questioned that.

Abandoning the legislation could, for example, have threatened to be massively detrimental to the influx of new brands out of China, which overwhelmingly focus on selling electric and electrified products.

In any event, the review was abandoned at end of last week, with concession the review had found the standard was “the most cost-effective way to increase the availability of lower-emissions vehicles” here.

Bishop also acknowledged most of the motor industry supported retaining some version of the standard.

“In feedback on the review, industry noted that the standard is now well established in New Zealand, with importers accumulating credits and charges over time. Removing it at this stage would be highly disruptive for the vehicle industry.”

The Government would now go ahead with the next stage of the review, which was to to calibrate the settings “so they are realistic and achievable for industry.”

“The Government has also agreed to set different targets for used vehicle imports to reflect that they have different and older technology.”

Officials would report back early in 2027, and new targets and settings are set to take effect from January 1, 2028. Current settings would stay in place until then.

Aimee Wiley, the MIA’s chief executive, says the decision is an important step towards establishing a more durable and effective vehicle emissions framework.

“MIA has consistently supported retaining a regulated Clean Vehicle Standard, while arguing strongly that its settings need to reflect the realities of the vehicles New Zealand motorists can afford, want and need.”

She said NZ is a small, fully import-dependent vehicle market. Vehicle technology and product availability are largely determined by global manufacturing, product planning and allocation decisions.

It is important future clean vehicle settings recognise both the technology available when a vehicle is manufactured and the different characteristics of vehicle supply across our market.