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Carbon dioxide emissions from New Zealand's transport sector have experienced rapid growth since 1990. In this paper, we investigate the scope for a targeted price signal to curb emissions growth and help deliver on the country's Paris Agreement pledges. Cost burdens on various income groups are investigated, and experts' opinions are elicited to evaluate two types of carbon price policies (i.e. a carbon tax and an increase in the current ETS price). We use two methodological approaches in this paper. Estimates of the social cost of carbon and the price elasticity of fuel demand are used to understand the mitigation potential of a higher carbon price, while a multi-criteria analysis technique is used to understand experts' preferences between an ETS and a carbon tax. The findings are that with a price elasticity of transport fuel demand of around −0.7, a carbon price between NZD 100 (USD 65) per tonne of carbon dioxide (tCO2) and NZD 235 (USD 153)/tCO2 could reduce transport emissions by between 33% and 44% in 2030, respectively, from the 2016 level. The (uncompensated) cost-burdens on lower income households due to a hypothetical price of NZD 100/tCO2 and NZD 235/tCO2 are estimated to be around NZD 531 (USD 345)/year and NZD 670 (USD 436)/year per household respectively. Experts marginally favoured a carbon tax over an ETS because the revenue collected through a carbon tax could be utilized in a more holistic way to offset the tax burden on lower income households and fund emissions reduction technologies and infrastructures. Key policy insights A carbon price of NZD 235 (USD 153)/tCO2 implying a fuel price of NZD 3/litre (USD 1.95/litre) could reduce transport emissions by 44% in 2030 from the 2016 level. A fuel price of NZD 3/litre is comparable to fuel prices in the early 1980s, when these were at a historic high. A carbon price of NZD 235 (USD 153) would increase the annual domestic transport expenditure of lower income households by NZD 670 (USD 436), a 42% increase. A carbon tax is marginally preferred by interviewed experts to an increase in prices under the current ETS. [ABSTRACT FROM AUTHOR]

The transport sector is the fastest growing greenhouse gas-emitting sector in the world and it is also a major source of emissions in New Zealand. Greenhouse gas (GHG) emissions from road transport increased by 84.3% between 1990 and 2016. This increase in GHG emissions was the highest among the different energy sub-sectors of New Zealand. Increasing energy consumption and GHG emissions are due to the gradual increase in population, car-dependent low-density development, lack of integrated public transport networks, inappropriate policy interventions and so on. These factors are making it difficult to reduce emissions from this sector. This study investigates (i) major drivers of transport sector emissions, including how drivers differ from those affecting other developed countries; (ii) a mitigation policy roadmap to achieve future emissions reduction targets; and (iii) mitigation policy initiatives by the government, and policy gaps. To identify the key drivers from a set of drivers, this study uses a vector error correction model (VECM). The Granger causality test reveals that the fuel economy of the New Zealand passenger vehicle fleet has a significant causal relationship with transport emissions. Introduction of a number of policies such as a feebate scheme and/or a high minimum fuel economy standard could effectively alter this causal relationship in the short term, along with other measures such as urban planning changes for medium-term impact. This study aims to help policy makers identify the most tractable factors driving transport emissions and alternative policy options suitable for emissions mitigation. [ABSTRACT FROM AUTHOR]

• Used electric vehicles are now the most cost competitive among all vehicle types. • New electric vehicles are the least cost competitive across all scenarios. • A decrease in electricity prices and discount rates would make EVs less costly to use. • Replacing an ICEV by an EV could in principle reduce emissions by 87–90%. In New Zealand, the average age of a light vehicle in 2018 was 14.09 years. Despite having an old light vehicle fleet, no study has been conducted so far to calculate the per-kilometre cost of ownership (PCO) for old used cars. Therefore, this study attempts to identify the PCO of a new and a used light duty EV and light duty petrol-powered car over a 12-year period. The emissions reduction potential of EVs is also investigated. Findings are that the PCO for a used EV is the lowest (25.5 NZ cents) followed by the PCO for a used petrol-powered car (31.5 NZ cents). Most importantly, replacing a light petrol-powered ICEV by a light EV can reduce GHG emissions at the user level by 90% if New Zealand could maintain its low emission grid electricity. The findings have policy implications for countries that are considering rapid emissions reduction through EVs. [ABSTRACT FROM AUTHOR]