Treasury officials have rubbished the government's "feebate" scheme, warning it will have an infinitesimal effect on carbon emissions over two decades.
Associate Transport Minister Julie Anne Genter says the policies would make a "substantial positive difference". Photo: RNZ / Rebekah Parsons-King
But Associate Transport Minister Julie Anne Genter says Treasury is "wrong" and its approach is "totally untenable".
The proposal, unveiled in July, would slap an import fee on heavy-polluting gas guzzlers with the revenue used to subsidise clean, green vehicles.
The plan would run alongside new fuel efficiency standards, requiring importers to reduce the average emissions of the vehicles they bring in.
But a Treasury report, released to RNZ under the Official Information Act, advised the government that the evidence for both proposals was "mixed".
"Neither measure would have a significant impact on emissions," the document says.
The report points to Transport Ministry projections which predict the "feebate" scheme would reduce emissions by just 1.6 million tonnes over 20 years.
For comparison, New Zealand's gross emissions are estimated at 80.9 million tonnes per year.
The Treasury report includes a recommendation to ditch the feebate scheme and consult on only the fuel standards.
Speaking to RNZ, Ms Genter insisted the policies would make a "substantial positive difference".
She said Treasury's advice was "out of line" with the Productivity Commission, the OECD, and many other developed countries.
"Treasury is wrong," Ms Genter said. "It looks like they're just ... sceptical of whatever we propose."
The officials appeared to be suggesting the government take no action, she said, which was "totally untenable".
Ms Genter - who's a Green MP - said the Ministry projections did not take into account that the fuel efficiency standards would be gradually increased over time.
The projections also assumed there would be a reduction in pollution under the status quo, which Ms Genter said was "far too optimistic".
"The evidence from overseas says these are the policies that make the biggest difference to actually reducing emissions and transport.
"There's no alternative, there are not other policies that are going to make a bigger difference."
The Opposition unleashed a barrage of attacks on the feebate scheme after its announcement, labelling it a "car tax" which would "penalise" New Zealanders.
National Party's transport spokesperson Chris Bishop told RNZ the Treasury report showed the policy would have a "negligible effect" on pollution and would cost tens of millions of dollars to run.
"Over 20 years, the [Ministry's] estimates are a 0.1 percent reduction in carbon emissions," Mr Bishop said.
"You've really got to ask yourself: is it really worth doing? We don't think it is."
Researcher and professor Barry Barton - from the University of Waikato - declined to "second-guess" Treasury's advice, but said a lot of research showed "feebate" schemes were effective at improving the quality of vehicle fleets.
Mr Barton has produced several research papers into electric vehicle policy and is a long-time proponent of a "feebate" scheme.
"We have one of the poorest performing vehicle fleets in the OECD. We don't have any fuel efficiency standards, when pretty well everyone else does.
"We need to do something."
Mr Barton suggested the policy may actually need to be "more vigorous" to increase its benefits.
"We Kiwis hold on to our cars for a good long time ... it will take time for policies of this kind to make an effect on the overall fleet.
"So the sooner we get onto it, the better."