Cash for clunkers: Expert warns second-hand electric car prices could 'start to creep up as a consequence'

Climate Change Minister James Shaw has revealed low-income whānau could receive between $6000 and $10,000 to trade in their gas-guzzlers for more eco-friendly alternatives. 

It's part of the Government's first Emissions Reduction Plan unveiled on Monday: $2.9 billion over four years for climate change policies, paid for with funds from the Emissions Trading Scheme. 

But there are many unanswered questions about the scheme - not least of all New Zealand's reliance on dirty coal for electricity, and the impact on second-hand electric car prices.

The Emissions Reduction Plan includes the new $569 million Clean Car Upgrade programme, which has been colloquially dubbed 'cash for clunkers'.

It will begin as a trial that will initially support up to 2500 vehicles to be traded in. The scheme will complement the Government's clean car rebate scheme, where high-emissions vehicles attract a fee of up to $5175, to pay for discounts of up to $8625 for electric and plug-in hybrid vehicles.

Shaw, speaking to AM on Tuesday, said while the cash for clunkers scheme is yet to be finalised, it will work out to be around $6000 to $10,000 per vehicle.

"In some cases people might be able to use that to subsidise public transport or to buy e-bikes."

The problem is, electric options don't come cheap. Secondhand options start at around $13,000 on some websites. The cheapest new vehicles begin at around $40,000. 

Dr Richard Meade is a senior research fellow at Auckland University of Technology who specialises in transport and climate change technology. 

"Is that enough to shift the dial for a low-income household to buy what is a relatively expensive sort of car? I suspect it's not terribly effective," he told Newshub. 

"They're trying to retire used vehicles... and that of course puts pressure on the used vehicle market so we can expect prices to start to creep up as a consequence."

Something else to consider is New Zealand's reliance on coal. While the number jumps around a bit, New Zealand's energy mix is about 70 percent renewables.

Electricity generation accounts for the largest amount of domestic coal use in Aotearoa, according to the Ministry of Business, Innovation and Employment (MBIE). 

It means coal could be powering electric vehicle charging stations. 

"It has to be phased out and we can phase it out. If we're serious about this climate emergency, we have to start looking at that," Rosemary Penwarden from Coal Action Network Aotearoa told Newshub. 

More than a million tonnes of dirty coal was imported in 2020. But the Government doesn't plan to phase it out completely until 2037.

"That is at least 10 years too late," said Penwarden.

The Government hopes banning new coal-fired boilers, plans for pumped hydro to store water in dry spells to reduce reliance on coal, and green hydrogen as an alternative fuel option, will help us tackle the climate change crisis

Shaw said the next decision period for climate policy is 2024 and New Zealand's targets could be sharpened up.