What Should We Do?

Or rather:

What We Should Do…

…about the maybe imminent – but always possible – imported liquid fuels crisis.

And by “we”, I mean the New Zealand Government, whose job this is.

First, and above all: we should think and act strategically, not just reactively. Let’s assume a full-blown imported liquid fuels crisis is upon us, which will make these products either significantly more expensive, or harder to obtain at all, or both. What are the most readily available and effective tools available to the government to reduce the negative impacts of such an event?

(Let us also assume all efforts are underway to secure supplies from our friends in the region. We will no doubt rely on our trusted relationships with the suppliers and refiners we usually deal with, foremost Singapore and South Korea, our usual sources of these products. And yes, it would  be better if we hadn’t recently ripped up a major ship-building contract with one of these nations…)

Secondly, we should work rapidly to reduce demand. In a global supply crisis, the smaller the required quantities, the easier it will be to maintain sufficient supply, ensuring any shipments we can secure will last longer.

Thirdly, we should ensure an equitable path through the crisis. In times of higher fuel prices – with people already struggling with the cost of living – it will be crucial to enable as many people and businesses as possible to function effectively, on as small an amount of the product as we can manage. This means ensuring everyone has access to as many helpful alternatives as possible.

An oil shock is an everything shock

So many parts of our economy are dependent on liquid hydrocarbons – oil touches everything (agriculture, manufacturing, delivery), and so an “oil shock” is an inescapable “everything shock”. Our economy and society has a structural addiction to the polluting, inefficient, but useful stuff- but a far greater one than necessary. Let’s act.

Aviation is a particularly difficult one to shift; so let’s concentrate we we can have the most effect.

By far our largest use of liquid fuels is for road transport. And the good news is, this is the area where we can most easily get away from this vulnerability.

Chart via figure.nz, showing Consumption of oil in New Zealand, by fuel type (2024).

Yes, diesel and petrol, at the top of the chart, do have off-road uses. But road transport is the largest use case:  74% of diesel and 98% of petrol is used on-road. [2021 EECA report, see footnote]

The road to resilience

By volume, our biggest area of vulnerability is road transport – which includes private cars, trucks and vans, and other machines. As a country, we own a lot of cars and we drive a lot, not least because we have not invested well in alternatives, nor shaped land-use more smartly to make more productive less driving-dependent urban areas.

So, in the event of an oil shock, the question becomes – how can we help shift as much of this as possible, as quickly as possible, away from fossil-fuel dependency?

Every car, bus, truck, service vehicle, and train that runs on electricity is reducing that vulnerability. Kudos to councils up and down the motu who have been electrifying their bus fleets, we are doing pretty well, but need to accelerate this further. This has been a bright spot from Auckland Council (Climate Action Targeted Rate) and Auckland Transport. Both Auckland and Wellingtons trains are fully electrified, and so are significant amounts of their bus fleet, and both are beginning to work on their ferries, though Auckland has recently back-slid on this, frustratingly. How different this crisis would (will) be when we have 100% electric PT fleets!

The heavy road fleet is significantly behind on this. With so much time wasted and effort heading down the Hydrogen boondoggle. This sector needs a big hurry up, perhaps this crisis may be it? But unfortunately because of the slowness of this sector to transition we are all affected through supply chains. Sure I can ride my e-bike or drive my e-car to the supermarket, but what is there is still dependent on fossil fuel road freight having sufficient supply at a reasonable cost. China’s rapid transition to e-trucks is actually helping the global diesel shortage by significantly reducing demand, such is their scale. We are a technology taker, we have the opportunity to coattail on the pioneering efforts of other nations. If we are smart enough to change.

But here we are, so what to do?

The actions fall into two main categories:

• incentivising mode shift – i.e. encouraging alternatives for both people and freight.
• reducing wasteful use – so that any fossil fuel people do use, is used more efficiently.

Both are useful steps towards full transition from combustion of volatile molecules to electrification freedom.

We can also sort the actions into those that can be taken quickly, for immediate impact, and those that may take a few months to roll out.

Here’s the headline list, starting with the quickly achievable ones:

Short term – achievable within weeks

• reduce top speed limits [leaving aside the awkward question of allowing e-vehicles to still drive faster]
• drop fares for public transport
• improve priority for buses and road freight, in key locations
• expand public transport services, extending peak-hour timetables into the off-peak periods
• quick schemes to finance/ subsidise e-bikes
• set up incentives for sending freight by rail
• remove the perverse double-cab ute tax breaks (which have been incentivising people to buy bigger and thirstier vehicles, regardless of need)
• enable more work-from-home (can this be incentivised more than at present?)

Medium term – enduring actions

• e-truck financing scheme (all commercial vehicles and plant included here)
• “electrify the farm“: finance the farming sector to electrify their machines and vehicles, including with solar and batteries
• tighten Clean Car Standard (using real price signals to reduce fuel use on private vehicles)
• incentivise EV purchases – e.g. a return to the very successful feebate (with improved design)
• electrify the trains – fund or finance battery/overhead electric locomotives, for freight and intercity passengers (this sits with KiwiRail)

What we shouldn’t do

• discount fuel taxes – exactly when we need price signals to function best is no time to undermine them. Way better to address equity issue by decisively improving all the alternatives.
• delay road pricing – another driving reducing price signal.
• invest in further infrastructure that commits us to the global fossil fuel system.

Let’s take a look at each of these actions in turn, to see what’s required and why they’re a good plan.

Los Angeles Metro Advertising Campagin 2008

Short Term Actions

1. Drive slower. Yes, this saves energy, as well as reducing pollutants and lowering the risk of deaths and injuries. Sorry if any car-brained reckon-havers refuse to believe this, but it’s all true. Furthermore, reducing top speeds will not negatively impact economic productivity, either. In fact, in many instances, it will decrease journey times – due to steadier traffic flow, safer following distances, and fewer network disruptions from crashes. It’s just physics: due to drag, going 10 km/h faster, from 100 km/h to 110 km/h requires significantly more than a 10% rise in fuel use.

2. More affordable Public Transport. All over New Zealand, but especially in the main centres where most people live and work, public transport is already way better than you might realise, especially if you haven’t tried it for years.

Yes, of course it can keep improving – but it is already usable. It is however, relatively costly for daily use. So, reducing the cost barrier to meet this emergency is a quick and good idea.

What would that look like? Lots of options. Half-price fares across the board, as the previous government did. Or say a flat $1 fare per trip or per zone. Or even a more targeted option, like free for under 25s.

Whatever form it takes, some form of cost relief would be a quick and useful intervention – as long as it’s government-funded. This cost cannot be made to fall onto local authorities.

Of course, this will work at scale in our biggest cities. But it’s also a good option for our steadily improving provincial towns and smaller cities, which have made big strides with electrification and network redesign – e.g. Queenstown, Nelson, Whanganui, and Palmerston North:

3. Give better priority to buses and freight. Certainly in Auckland there are significant bus routes with, for whatever reason, key gaps where buses should have priority, like the Harbour Bridge, and along SH16.

Moreover, to keep deliveries running efficiently, freight lanes can be added to key routes, e.g. to ports.

4. More frequent Public Transport. Auckland’s bus network is pretty thorough for all sorts of journeys, and much more use could be made of it with the right incentives and available improvements.

We already have enough vehicles to run the peak timetable, where buses come more often. So, assuming driver availability, an easy way to increase the capacity and usefulness of our existing bus service is to extend those frequencies beyond the peak hours.

This would give people access to reliable “turn up and go” journeys as an alternative to jumping in the car, across more of the day.

It’s always surprising to reiterate, but most of the car trips we normally make aren’t traditional commuting trips anyway – they’re people running errands, visits, collecting children, and so on. Only around 20% of journeys are to and from work. So, during those “inter-peak” times of day, it’s just as important to have good, frequent public transport as an option.

Naturally, you’d extend the associated bus clearways as well, so the buses can run efficiently at all times.

Auckland rapid and frequent bus network 2018. Image credit: Auckland Transport.

5. More access to E-bikes. Electric bikes are a viable substitute for many car journeys – one I use pretty much everyday. We know bike use for transport creates net gains for society, so on every level this is one to encourage.

Everywhere in the world where incentive schemes are in place, they’ve increased uptake. Additionally because e-bikes are very affordable car substitutes, they have an important equity role too – see this NZ research.

Cities may also want to talk to e-mobility providers about expanding their options and fleets. The shared-use e-bikes (Lime/ Flamingo() seem to have vanished from Auckland’s streets in favour of stand-up and sit-down e-scooters, whereas other cities have a range of options.

6. Empower the shift to rail freight. Rail freight, while still powered by diesel in New Zealand (even where there are live electrical wires overhead), is still significantly more fuel efficient than road freight. Let’s work with the industry to use pricing mechanisms to sweat those assets.

7. End the double-cab ute incentive. No Ponsonby accountant needs to be subsidised into a Ram Bomber, or whatever the latest vast planet-eating, kid-crushing, fuel-guzzling, frailty-compensating behemoth is called.

8. Let people WFH. Some love it, some hate it, we know PT trips are in many places still lower than before the pandemic, I am not aware of NZ evidence that driving has been significantly reduced through WFH. Please link in comments if you know of any.

Medium Term Actions

This is where we move from the reactive to the strategic. This is about structurally reducing our dependence on liquid fossil fuels, for the longer term. ur economy has a structural addiction to fossil fuels which is way larger than it needs to be. Regardless of the scale and duration current crisis we should be reducing this flaw as quickly and cleverly as possible. Pricing signals and regulation work, this has been proved here. Some incumbent players will have to change, and they will, so long as we are clear they need to.

As Shamubeel Eaqub puts it [here]:

Electrification is energy security

And of course there are endless co-benefits of reducing oil dependency and vulnerability. Reducing carbon emissions, fewer local pollutants and brake-pad particulates, noise reduction in neighbourhoods, fewer deaths and injuries on our roads, fewer deaths from transport pollution (remembering that the latter causes ten times as many deaths per year as road crashes do).

In as much as we achieve this through mode-shift in urban areas, then driving will be more efficient for those that choose to continue to do that, whatever the drive train of their vehicle.

We’d make more efficient use of existing resources by home-shoring our energy sector. Every substitution of locally generated electricity for imported stinky fuel helps support local jobs, and shores up the supply chain in the electricity sector.

A far healthier alternative to sending billions and billions of hard-won foreign exchange dollars offshore, year after year, to keep Middle Eastern princes in gold taps and bone-saws. We can and must do better with our common wealth.

To the list:

1. Electrify the truck fleet. E-trucks of all sizes are available, and deliver whole-of-life-savings to their operators, as well as all those social co-benefits listed above. But they are expensive. So the government can and should launch a low-interest long-run financing scheme to enable our trucking and service delivery operators to transition to home-grown fuel. Here is but one example

2. Electrify the farm. The same applies to the agriculture sector, which can and should electrify. We will all be richer when this key sector is running on its own source of power. Finance this transition! See Rewirering Aotearoa for all the math.

3. Accelerate the Clean Car Standard! We need a sector-level incentive for everyone to clean up their fleets. As it is, we risk becoming the dumping ground for poisonous, fossil-fuel-hungry vehicles as the rest of the world cleans up. Notably, Australia has just copied our original clean car scheme – sadly, one that’s already been weakened by the current government, which is even rumoured to be thinking of abandoning it altogether. Very very short-sighted, and we should expect better from our political leaders.

4. Incentivise EVs. Here’s where we need to get “back on track” to evidence-based policy. We have run a full-size test of a feebate scheme, and it worked:

Every electrified vehicle in the country takes stress off the liquid fuel supply for all the remaining un-electrified ones. Any government that can’t see the vast economic opportunity here to lean in and accelerate this transition is simply not looking widely enough.

I am open to whatever model of incentive is preferred, but what I like about the feebate, or Clean Car Scheme, is that it included sticks as well as carrots, and was thus self-funding. Or certainly can be – the fees and rebates do need to be set to balance.

We’ll need some mature political conversation around this one, including a disavowal of the silly “ute tax” campaign lines from the last election, which as everyone can see (in very short hindsight!) served none of us well.

5. Electrify the trains. KiwiRail runs a lot of diesel freighters under wires in Auckland, Wellington, and on the North Island Main Trunk. There are a couple of ~80km gaps on the NIMT, and no wires at all on the busy East Coast Main. But also a lack of electric loco to use these assets. Very poor asset utilisation.

KiwiRail has a good plan to electrify their freight services with a combination of judicious new overhead lines and dual mode-battery electric locos. But even before this is in place, as noted above, rail freight is more fuel-efficient, so let’s maximise that benefit, as we further electro this important system.

Lastly.

Let’s treat this event as the wake-up it surely is.

Energy is life, it is the entire basis of our prosperity and well being. New Zealand is a net fossil fuel importer, and will remain so. This is not only a huge and recurring cost on everything we do, it is also a dangerous vulnerability. As well as causing many associated negative effects, particularly local and global pollution as a result of burning the stuff. It is clearly in our national interest to reduce this structural vulnerability as much as we possibly can. Up until this century, there were fewer opportunities to do so, especially in road transport. New and constantly improving and cheaper electrification technology now offers an affordable, scaleable and phase-able way out of this increasingly fraught bind. These facts hold whatever your politics.

Electrification is surely the ultimate cross-party strategy. With so many benefits. Here is Nick Smith, former National Party minister, now mayor of Nelson, urging people to make choices to avoid the fossil fuel use. We will all be better off when more New Zealanders have that choice as the best option in more of their daily life:

Onward, powered by lovely locally generated electrons. Combustion is so last century.

Footnotes

On the dominance of road transport as a use-case for diesel and petrol, see this 2021 report from EECA (Energy Efficiency and Conservation Authority):

In 2019, New Zealand used just over 6.9 billion litres of petrol and diesel (3.2 billion litres and 3.7 billion litres respectively). Although most of this fossil fuel is used on New Zealand roads, it is estimated that about 26% of diesel and 2% of petrol are used for off-road applications across various sectors. These off-road uses of liquid fossil fuels accounted for 6.6% of New Zealand’s Total Consumer Energy in 2019, and 9% of New Zealand’s energy sector greenhouse gas emissions in 2018. This represents 3.89 million tonnes of CO2-e per year.

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