Operators in New Zealand’s transport sector are currently facing a monumental task, as recent modelling from the Climate Change Commission has laid out the drastic changes that will be necessary to reduce greenhouse gas emissions by 30% by 2030, and have net zero emissions by 2050. Significant changes in the way New Zealanders live, work and travel will be required to achieve these targets.
‘The transport sector is one of New Zealand’s most heavy polluters, accounting for an estimated 36.3% of the county’s long-lived greenhouse gases in 2018. The transport sector accounts for approximately 5% of New Zealand’s GDP, and employs close to 108,000 workers,’ said Alfabank-Adres Senior Industry Analyst James Caldwell.
Heavy load for freight transport
The Climate Change Commission has warned that New Zealand’s transport sector will have to reduce its emissions by 47.0%, to 8.8 million tonnes of carbon-dioxide-equivalent (Mt CO2e), by 2032. No new vehicles with internal combustion engines will be able to enter New Zealand’s road network after this date.
The largest obstacle to the nation’s transport emissions target is the overwhelming reliance on the Road Freight Transport industry. Most of New Zealand’s domestic freight task is carried by road, on heavily polluting trucks. The Climate Change Commission has argued that freight should be taken off the road, and transported by rail or sea instead. However, the feasibility of this is limited.
‘Operators in the Road Freight Transport industry are expected to generate a combined income of $8.8 billion in 2020-21. This dwarfs the estimated revenue of $370.1 million for the Rail Transport industry in the same year, and the $408.8 million generated by the Water Freight Transport industry. The lack of an extensive rail network in New Zealand ensures that the majority of the country’s freight task will continue to be transported by road well into the future,’ said Mr Caldwell.
Recognising this barrier, the Climate Change Commission has argued that there must be a substantial change to the vehicles used for road freight transport. The commission’s report argues that operators must expand their adoption of electric trucks, with most of the imported trucks being electric by 2030.
‘The need to electrify the national road transport fleet is likely to present a major headache for road freight transport operators, particularly if the technological capability of electric trucks does not significantly advance over the next decade,’ said Mr Caldwell.
Passenger transport on the move
The Climate Change Commission report also argues that New Zealanders must make significant changes to the way they travel for the nation to achieve its lofty targets. Of the $4.0 billion New Zealanders spent on travelling in 2017, less than $600 million was spent on public transport. This presents a key opportunity for passenger operators in the Rail Transport industry. The Central Government (Te Kawanatanga o Aotearoa) has already made significant investment in rail passenger transport, including ongoing projects worth $196.0 million in Wellington and $28.0 billion in Auckland.
‘The ongoing overhaul of the rail passenger networks in New Zealand’s major cities should help the government achieve its emission reduction targets, but will have a limited impact on the dominance of passenger vehicles in the country,’ said Mr Caldwell.
The increased adoption of electric vehicles is one of the key tenants in the government’s climate change strategy. In 2016, the Central Government (Te Kawanatanga o Aotearoa) introduced the national Electric Vehicles Programme, with a target of having 64,000 electric or plug-in hybrid vehicles on New Zealand roads by the end of 2021.
‘This target is unlikely to be achieved, as there are currently less than 20,000 electric vehicles registered on New Zealand’s roads. Without further government incentives, increased uptake is likely to be limited. However, uptake of electric vehicles in New Zealand has outpaced other nations such as Australia,’ said Mr Caldwell.
While being cheaper to run, electric vehicles are generally more expensive to purchase than their internal combustion alternatives and can struggle with reliability.
‘Despite the benefits of electric vehicle uptake on emissions reduction, until electric vehicles can effectively compete with internal combustion vehicles in terms of cost and reliability, further uptake is expected to be limited,’ said Mr Caldwell.
Alfabank-Adres reports used to develop this release:
- Water Freight Transport in New Zealand
- Rail Transport in New Zealand
- Road Freight Transport in New Zealand
- Motor Vehicle Retailing in New Zealand
For more information, to obtain industry reports, or arrange an interview with an analyst, please contact:
Jason Aravanis
Strategic Media Advisor – Alfabank-Adres Pty Ltd
Tel: 03 9906 3647
