The chart above shows Aotearoa New Zealand’s exports and imports of coal. First, note that the emphasis is on timing, not absolute amounts; Imports have a different scale to Exports. Essentially, imports have been around 10% of exports.

It’s also important to note that most Aotearoan coal is exported, while coal used to generate electricity at the Huntly power station is mainly imported. These are two different grades of coal. So it is to be not unexpected that coal imports will have been high at the same times that coal exports also have been high.

And it’s important to note that these data are for values of coal, not volumes. Values will be affected by fluctuations in world coal prices and by fluctuations in the $NZ exchange rate. (Increases in coal exports from 2000 to 2002 will have reflected the historically low exchange rate then.)

Coal exports actually increased after the November 2010 Pike River explosion; that coalfield was still in development in 2010.

Generally, from 2005 to 2012 the export expansion reflected the world market; noting dips for the 2008 global financial crisis, with a subsequent export of stockpiled coal in 2009. During that coal boom period, more than half New Zealand’s coal exports were to India. There was a resurgence of coal exports to India at the end of the 2010s’ decade.

The lull in 2020/21 reflected to Covid19 crisis. Again, we see an exporting of stockpiles after the crisis eased. In 2023 coal exports plummeted, probably a mix of falling world demand as well as falling New Zealand supply. This is a good sign for global transitioning away from coal, though China’s domestic production and consumption of coal will be rising as it transitions from petrol and diesel cars to electric cars. China will be happy to be using fewer imported fossil fuels.

On the import side, New Zealand’s demand for coal from 2003 to 2020 seems to have reflected the global trend, and it will have reflected a lack of growth in renewable energy generation during the later years of the Clark-led Labour-led government. It was under National that the big fall in coal imports took place.

Coal consumption in New Zealand stabilised in the mid-2010s, but resurged again in 2018, again under a Labour-led government; although, to be fair, 2018 and 2019 mainly reflect economic growth rather than the new government’s priorities.

Coal consumption at Huntly in recent years also reflects drought, meaning less hydro-generation of electricity. There is likely to be a lull in coal imports over the next few months, given that the hydro lakes are full, and the El Niño weather forecast is for a strong contribution from wind generation.

My sense is that increased use of electric vehicles – and increased charging capacity – will lead to another temporary resurgence in coal imports. The 2023 quasi-recession, engineered by the Reserve Bank, may however lead to some offsetting reductions in energy demand. My guess, though, is that there will be a short-lived consumption boom in Aotearoa in 2024 and 2025, as high interest rates pull in hot-money from overseas, holding up the $NZ exchange rate, and leading to a further ‘blow-out’ in New Zealand’s current account deficit; a 30.6 billion dollar annual deficit (7.6% of GDP), slightly less than the record high of nearly 9% of GDP earlier this year.

I look forward to hearing about the new government’s plans for expanded renewable electricity generation, and hope that these plans will not mean the loss of wild rivers such as the Mokihinui. Time will tell; soon, in 2024. This government needs ‘runs on the board’ – outcomes, not just proposals – if it is to survive beyond 2026.

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Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Environmental costs are a big deal, which need to be properly factored into our economic decision-making. Last week the Government announced a rebate scheme for electric and hybrid vehicles.

These days we emphasise the very important greenhouse costs arising from the burning of fossil fuels: coal, petrol, gas. But they are not the only ways that urban vehicle use contributes to global environmental degradation. Certainly it is important that New Zealanders make a contribution to the emission-reduction endeavour, at least in proportion to the influence of greenhouse gases on global environmental harm. Changing the ways we own and use private vehicles represents an important outcome, to which good policymaking can make a valuable contribution.

In cities and towns, the problem is a mix of the overuse of private motor vehicles, and the use of vehicles that are overspecified for the tasks they are required to perform. The high-tech solution just announced in New Zealand is to transition to an all-electric fleet; with 2035 being designated as the year in which the import of non-electric new urban vehicles will be prohibited, with a view to New Zealand having an all-electric fleet by around 2050. The important new policy to accelerate the promoted transition will be a subsidisation of electric and low-emission vehicles, combined with a tax on high-emission vehicles.

In my view, this represents an overreliance on a particular technology that presently contributes as a niche solution, but is untested at scale. It represents a strategy by which one technology is replaced by another, whereas a more robust outcome might involve more variety of technologies, and better incentives to use existing technologies more efficiently. Indeed, there is too little emphasis on low-tech contributions that can be implemented in 2021 or 2022.

Public Transport

We should note that countries operating at pandemic emergency levels need to emphasise both minimisation of urban travel, and other measures – vaccination, physical distancing, and mask use – that minimise opportunities for indoor airborne transmission of pathogens between people from different households. Public transport here constitutes a public indoor space; so, under these conditions, there will necessarily be a preference for private transport. However, this preference for private transport in a pandemic will be offset by significantly less overall movement of people.

It is important that, when countries are not at pandemic emergency levels – and New Zealand is not currently at a domestic emergency level (it does continue to have a pandemic emergency at its international border) – all incentives to prefer private over public transport are discontinued; even reversed.

New Zealand at present has a permanent requirement for passengers to wear facemasks when using public transport. And the consequences are obvious, at least in Auckland. While traffic congestion is noticeably worse than it was in 2019, buses and trains are noticeably more spacious, with empty buses still a common sight all over the city.

New Zealanders of all ethnicities have revealed an unsurprising preference to not wear masks (except when there is a current outbreak of Covid19), and to only use masks when required to by law. New Zealanders don’t like wearing masks. Indeed, it was quite strange visiting Middlemore Hospital last month, which has a train station outside its main entrance. The only masks I saw in the hospital were those being worn by people heading out the front door, to catch a train.

The mask mandate makes public transport consumption a more costly experience than it would otherwise be; in part because New Zealanders don’t like wearing facemasks, and in part because it signals to the public at large that buses and trains are inherently unhealthy – indeed dangerous – places. Auckland’s public transport has improved markedly this century, though buses had a taint, even before Covid19, of being ‘loser movers’. That taint has been majorly exacerbated during covid times.

When there are twenty percent more cars on urban roads than there need to be, then greenhouse emissions are likely to be raised by fifty percent; that’s because of the stop-start nature of traffic congestion. So the first thing authorities can do to reduce greenhouse emissions from car use is to discontinue the mask mandate, except as an emergency measure. Other incentives to use public transport – including temporary incentives – may also be helpful, to help redress its ‘loser mover’ taint.

(Of course any incentives for workers to take sick leave when sick, or to work from home periodically, need to be retained. Also, people should be encouraged to wear facemasks if they are experiencing conditions such as hay fever; conditions which could be construed by fellow passengers as covid or influenza. The general principle is that buses and trains and ferries should become happy, normalised, family-friendly public spaces.)

It’s also important to note that interruptions to the normal flow of low grade ‘seasonal’ viruses – infections such as ‘common colds’ – may have unanticipated consequences. These viruses may provide substantial (albeit incomplete) immunity to more serious viral infections; we do not know, in large part because our public health people are not asking this question. (We should note that vaccinations themselves can be regarded as protective low-grade infections.) Thus, by disturbing the normal flow of low grade pathogens – such as the cold viruses we have adapted to – we are participating in a social experiment. In New Zealand over the last nine months, hospitalisations have increased for what were otherwise rare respiratory disorders; and excess deaths in New Zealand have been comparable with those in European countries with active Covid19 outbreaks.

Public transport use is a critical component of greenhouse emissions’ reduction.

Subsidies and Small Cars

Subsidies (‘carrot’ incentives) are generally more effective than taxes (‘stick’ disincentives’). They work by leading more people into making those choices that have collective benefits. And they fit the wider (‘zero-sum’) principle of public finance that requires private financial surpluses to be offset by public financial deficits. (In this context, just as responsible governments understand that small countries are not excused from contributing to the global good through greenhouse emission reductions, so all countries’ governments need to contribute by running public sector financial deficits to offset unsustainable private sector financial behaviours. This means that ‘we do not have enough money’ is not a valid governmental excuse for inaction or for under-action.)

First, governments need to subsidise surgical-grade facemasks for people with conditions that make them high risk to acquiring respiratory infections in public places. This allows such compromised people to mingle in public spaces without imposing illiberal mandates on the general public.

Second, small cars emit fewer greenhouse gases than large cars. Not only should governments subsidise small safe low-emission petrol vehicles, but they should encourage households who genuinely require larger family vehicles to acquire such small vehicles as their ‘second’ car. And to default to their smaller vehicle whenever they are on runabout duty with one to four occupants; thus, the smaller vehicle should rightly be called the ‘first car’ of a household.

The vehicle I mainly drive now is a 2003 Honda Jazz, which is still fuel efficient, can act as a mini utility vehicle when circumstances require it, and, over the last summer, effortlessly ran a return trip from Auckland to Cromwell.

The other benefit of city residents and townspeople driving small cars like this as their default option is that the roads become safer. Collisions are more likely than at present to be between two small vehicles, and thereby less likely to cause major injury or death.

By all means we should subsidise small electric vehicles as part of this mix. But, we should note that most small vehicles will not be garaged at night – because they are owned by mainly younger people without a garage, because a bigger family vehicle is in the garage, or because of the modern trend to use garages more as storage units for household affects than as homes for cars – and that plugin electric vehicles parked on the street at night cannot easily be charged.

Family Vehicles

Larger vehicles – especially vans and people movers – do play and will continue to play an important role in our vehicle mix. The answer here would be to emphasise (and subsidise) hybrid technology, now well established. These vehicles are particularly useful for large families, and for many businesses.

What we want is to minimise the inappropriate urban use of ‘utes’ and SUVs. Indeed, in recent years four-door utility vehicles – in most cases a form of truck – have become a status symbol, to some extent displacing SUVs. These are vehicles best suited to rural use – eg by farmers. Petrol or diesel ‘utes’ should be subject to a large-car tax (indeed a large car-tax), which can be rebated to legitimate users for whom these are a valid business cost. They should continue to be available to rich city-folk who need to tow their recreational boats to Pauanui or Whangamata, so long as they pay the large car tax. And, they should be exempted the tax if they buy an electric ute or SUV instead of a ‘gas guzzler’; incentives should apply at all price points.

Electric Vehicles

All EVs, including bikes, should be eligible for transition subsidies. The aim however should not be to switch to fully electric fleets; we need diversity and efficiency, rather than vulnerability. Thus a small EV is clearly better than a big EV, for typical city runabout use.

We should note that, in New Zealand this year, more electricity has been generated by burning coal than in any of the previous ten years. This may be partially a consequence of climate change; more droughts, meaning less water available to generate hydroelectricity. Thus, a mass switch from oil-based fuels to electricity might end up being, substantially, a switch from petrol to dirtier coal; not exactly what the policy is intended to achieve.

Considering vulnerability, we need to note that modern electric vehicles require scarce raw materials, such as rare earth metals, which are substantially sourced from China; and massive amounts of other increasingly scarce metals, such as copper. (See Al Jazeera‘s The Dark Side of Green Energy.) At a time that one ‘conversation’ is leading western countries to distance themselves from China, another conversation may be leading us go become more dependent on Chinese sourced materials. And the environmental costs to these mining regions in China is comparable to the political costs being faced by some other communities in China.

Another really big issue is that of e-waste. It’s important that the cost of any vehicle – including electric vehicles – is fully inclusive of the costs of reusing, recycling, or otherwise disposing of end of life vehicles (and vehicle components such as batteries and tyres). One aspect of this is to avoid a transition process which makes many still good vehicles prematurely obsolete. Policymakers need to take a global perspective on this. Countries like New Zealand – which traditionally import many used vehicles – need to continue importing quality low emission used petrol vehicles – to ensure that a sound global vehicle ecology is maintained.

Rental Vehicles

It is common for us to rent tools (eg trailers) and power machinery; otherwise these items that we own spend most of their time idle. We can treat passenger vehicles in much the same way. So, while it is good for young people to learn to drive – and gain drivers’ licences – that does not mean they need to own a car, not even a small car. They can rent cars – preferably small cars – for weekend and longer trips. Quality rental housing within walking distance of main employment and transport nodes, combined with a reliance on rental vehicle options for irregular travel, can form the basis for an affluent but uncluttered life; an eco-life.

Likewise, ‘nuclear’ households of four or fewer people should be able to comfortably get by with one small private vehicle, renting a larger vehicle whenever irregular vehicle requirements occur.

A green society needs fewer vehicles that each do many kilometres in one year. In that way, the vehicles will wear out as the technology becomes obsolete; ie ideally a car should do 200,000 km (or more) in a fifteen-year life.

Technological Transition

Electric vehicles, used at scale, represent an unproven option with many potential unaddressed and unintended consequences. The only comparable wholesale transition is that from steam to oil, and that took eighty or so years, with the best steam engines being built in the 1950s.

One of the most interesting transitions in transport technology was that of sailing ships giving way to powered ships. The transition lasted over 100 years, with Norway in particular improving the technology of commercial sailing ships into the twentieth century. New Zealand is particularly well-adapted to sailing ships, because it represents the half-way point of the great circle circumnavigation route. There is a reason why the westerly winds in the Southern Ocean are called ‘trade winds’. The last of the commercial windjammers was the Pamir, which last sailed out of Wellington in 1948. Sailing ships, in their context, are much more eco than electric cars. May we see a reintroduction of sailing ships into the mix?

We can learn from this last episode, by using multiple technologies simultaneously, and letting markets (which properly cost what they supply) determine the outcomes; and focussing on the bigger ecological picture, that less is more.

We need to remove disincentives to the use of public transport. And we need to promote the intensive use of small private vehicles wherever and whenever they are sufficient to the tasks people require of them.

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Keith Rankin, trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

contact: keith at rankin.nz

The solution has been relatively well-received, because it has an elegance in its “cost-neutral” approach of putting a penalty tax of up to $3000 on the purchase of new higher-emitting vehicles, and using the proceeds of that revenue to offer up to $8000 in subsidies for those buying new energy-efficient cars such as electric vehicles (EVs).

But is it enough? Does it really match the scale of the problem? And what negative consequences will it have for those who can’t afford, or aren’t able to use, electric and low-emissions cars?

A well-received policy

Newspaper editorials have been especially positive towards the Government initiative. Yesterday, the New Zealand Herald argued that the policy is a “clever” way to encourage greener car purchases, and that the public is likely to be highly supportive in the same way that the plastic-bag ban has been accepted – see: Clean cars the right road forward.

Similarly, the Otago Daily Times labelled it a “smart policy” because of its “moderate” and light-handed approach to changing consumer behaviour. The newspaper editorial emphasised that this meant the policy was likely to be enduring: “It is also sufficiently restrained to likely survive any change in government” – see: Nudging car fleet changes.

The paper praised the “nudge” component of the approach: “It is a variation of the ‘nudge’ theory, recognised in marketing circles and human psychology. Rather than use education, enforcement and over-the-top rules, it adjusts the costs of new and imported used vehicles. While how much impact that will have can only be estimated, the plan would lower one of the high hurdles to electric and hybrid ownership, the relatively steep purchase price.”

The Dominion Post has also praised the policy as “practical, maybe even elegant”, and has defended the scheme from critics who “lamented the Government’s lack of boldness” – see: Better late than never for a plan to lower vehicle emissions.

A number of other voices have been very positive about the proposal, including the motor industry. And even National is generally supportive of the subsidies for greener cars.

But attention has also been focused on those sectors of society that might be negatively affected by the cost of many cars going up – especially the poor, but also farmers and tradespeople – see Jason Walls’ National says the Government’s plan to get greener cars on the road could hurt NZ’s poorest.

National’s Brett Hudson says: “There is a risk that a feebate system could turn out to be regressive in its nature; that lower-income workers and working families might see themselves worse off compared to some people on better incomes”.

Similarly, the Taxpayers’ Union says “this is a tax on Otara vehicles to subsidies Teslas in Remuera” – see Rebecca Moore’s Government’s proposed vehicle tax taking from the poor to benefit the rich, Taxpayers’ Union says. Executive Director of the lobby group, Jordan Williams, says “Just because something is shrouded in environmental branding doesn’t make it any less nasty to the poor”.

Lacking boldness and ambition?

Is the new policy ambitious enough? After all, given the climate change emergency we face, is this policy sufficiently bold and radical to meet the challenge?

So far, environmentalists have been less than impressed. Greenpeace energy campaigner Amanda Larsson has welcomed the policy in general but questioned the penalties being imposed on the less-efficient petrol and diesel vehicles, saying that the upper level fee of $3000 is disappointing. She points out that the French equivalent is about $10,000 – see Jason Walls’ Greenpeace wants the fee charged on higher emitting vehicles to be a lot higher than $3000. Greenpeace is also calling “on the Government to set a timeline for banning the sale of new petrol and diesel vehicles.”

This is a point also made by blogger No Right Turn: “As the Cabinet paper points out, a dirty car imported today stays on our roads for 19 years on average. So the quicker we turn off that tap, the better. But more importantly, we need to turn it off permanently. Other countries have announced phase-out dates for fossil-fuel vehicles, typically aiming to ban new sales in 2030 (and non-museum-piece registrations 5-10 years after). Such a date sets market expectations and helps drive the push for people to make their next car electric. But there’s no mention of one at all in the Cabinet paper – the necessary action seems like too much for the government to take” – see: Climate Change: Timid and unambitious.

The blogger also takes issue with the timeframe of the Government’s initiative, saying “the government needs to do more than this, and it needs to do it faster. They should be pushing this through the legislative process as quickly as possible, and implementing it immediately, rather than with a 5-year phase-in.” He points out that “the government is planning to apply a vehicle fuel efficiency standard Japan and Europe had five years ago in 2025”.

Drawing attention to Jacinda Ardern’s promise of a “nuclear-free moment” in combating climate change, No Right Turn says “contrary to the Prime Minister’s rhetoric, we’re not seeking to lead on climate change, we’re not even being a ‘fast follower’. Instead, our government is dragging its feet, just like its always done.”

On this issue of whether the Government is intervening enough, business journalist Liam Dann discusses why strong intervention is required: “Left to market forces alone, the widespread adoption of electric vehicles looks a long way off – too late for the world based on current predictions of a climate crisis. So if New Zealanders collectively want to hit current climate targets and reduce fuel emissions – it seems we need further government intervention. And that means big calls about the politics of who pays” – see: Kiwis are still too addicted to petrol, Govt had to act (paywalled).

In the end, the Government’s proposed scheme isn’t likely to make a huge difference in the take-up rates of EVs. David Linklater makes the case that current EVs simply aren’t yet very economical, even once discounted. For his “reality check” on the costs of buying an EV, and the costs of running them, see: Let’s not be fundamentalist about feebates and EV ownership.

He argues that to have a truly beneficial impact on the environment, car buyers need to be buying new EVs rather than second-hand ones, but at a cost of about $60,000 it’s hard to make the case that they are more cost-efficient over the long-term than the equivalent petrol-fuelled versions. For example, he argues that “it will take you 150,000km to recover the extra cost of a Leaf over a top-line Corolla”. Nonetheless, he says the new feebate policy isn’t designed to get everyone into an EV immediately, but just to nudge everyone into more efficient cars generally.

What is missing from the Government’s green vehicle policy?

The Dominion Post editorial, cited above, makes a recommendation for improving the Government’s green vehicle policy, suggesting that a serious investment in the infrastructure of public charging stations is required: “Charging stations remain an urban novelty, and are even rarer between some of the country’s cities and towns. That is an important next step, especially if the Government hopes to have its feebate running by 2021. We can’t afford another long wait for progress.”

Similarly, the Herald says: “There is also the issue of whether there will be an adequate network of charging stations to serve an increase in electric vehicles.

The Government also considered and rejected an array of other policies before announcing the latest green vehicle initiative. For example, a more generous subsidy for EVs could have been on offer, with the consideration of an extra $2000 being possible to reduce the costs – see Jason Walls’ article, Cabinet paper reveals the Government scrapped plans for a direct $2000 subsidy for EV buyers. The Government also decided against taking GST off electric vehicles.

Reporting on a Cabinet paper on the issues, Walls says the Government “is also exploring the possibility of a second-hand EV leasing scheme aimed at reducing transport costs for low-income households and supporting EV uptake”.

But why didn’t the Government decide to put some of their own money into subsidising EVs? In another article by Henry Cooke, the Associate Minister of Transport, Julie Anne Genter explains: “We just decided it wasn’t tenable to take away $100m from schools or hospitals or hip operations to subsidise new cars that wouldn’t work for a large amount of New Zealanders” – see: Government considered $2000 subsidy and age limit on imported vehicles instead of feebate.

According to this article, the Government also rejected a “variable annual licensing fee”, which would make registration more expensive for high-emissions cars.

Will New Zealanders really care about this EV subsidy? Talkback host Ryan Bridge suggests otherwise, arguing that “Kiwis don’t care about climate change. They say they do, but then they go buy a new SUV and have another child. They have choices already and they’ve voted big, loud, and gassy” – see: Climate change tax proposed for driving utes, SUVs.

He’s rather cynical about the policy, saying “Farmer Bob from central Otago with his Ford Ranger will be hit with a $3000 tax, while latte-sipping, lentil-eating Fabio from Ponsonby with his VW Golf Electric will get an $8000 discount.” And today’s Listener editorial on the topic adds to this, saying “there is in this policy a whiff of pandering to urban liberals at the expense of workers in the provinces.”

Finally, Judith Collins took to Twitter this week to ask: “Given that EV cars have a wee electric motor, why do the manufacturers charge so much for them?” And to explain that, see David Linklater’s article, Silly car question #53: if EVs have ‘wee’ electric motors, why are they so expensive?