The New Zealand Government will retain the Clean Vehicle Standard, reversing course on plans to potentially scrap the scheme while preparing to substantially change how it works from 2028.

Transport Minister Chris Bishop announced on Friday the Government will keep the standard for both new and used vehicle imports following a first-principles review.

The Clean Vehicle Standard sets annual CO₂ targets for imported vehicles. Importers receive credits for vehicles that perform better than their target, while higher-emitting vehicles incur charges. Credits can be used to offset charges across an importer’s vehicle mix.

The Government says the review found the standard is the “most cost-effective way” to increase the availability of lower-emissions vehicles in New Zealand, while most industry stakeholders who participated supported retaining it.

However, the Government believes the current settings aren’t realistic for the New Zealand market.

“In 2025, it became clear that the Standard’s settings were not well matched to market conditions,” Bishop said.

Most importers were struggling to meet the passenger vehicle targets, with the Government concerned the resulting charges would ultimately be passed on to buyers through higher prices and reduced choice.

The Government therefore introduced temporary changes from January 1, 2026, reducing the maximum charges while the review was carried out.

For new vehicles, the maximum charge was reduced from $67.50 to $15 per gram of CO₂ over the applicable target, while used imports saw the maximum charge fall from $33.75 to $7.50/g.

Those reduced charges will remain in place through 2026 and 2027. Friday’s announcement does not increase them, meaning there should be no immediate change to vehicle prices as a direct result of the decision.

For new-car buyers, the bigger impact will come when the Government finalises the replacement settings for 2028. Depending on how ambitious the new targets are, the standard could increase costs for higher-emitting vehicles or encourage importers to offer more lower-emission models.

Importers are free to choose the mix of vehicles they sell, meaning the standard doesn’t directly impose a charge on individual buyers. However, where an importer faces net charges, those costs can ultimately be reflected in vehicle pricing.

For buyers of used imports, the Government’s decision to introduce separate targets could be particularly significant. It recognises that used vehicles generally feature older technology and that importers have less control over their emissions performance.

The separate system could therefore reduce the pressure on used-vehicle importers compared with applying the same targets as new vehicles, although the Government has yet to reveal what the new targets or charges will be.

There is also no guarantee vehicle prices will fall as a result of the changes. The Government’s stated aim is to make the system more “realistic and achievable for industry”, rather than eliminate the costs associated with bringing down vehicle emissions.

Officials will now consult with the motor industry and report back early next year.

The new targets and settings are due to take effect from January 1, 2028, but the Government has not yet confirmed how stringent they will be, what the future charge rates will be, or how the credit system will operate.

For car buyers, that means there is no immediate price shock from today's announcement – but the rules that could influence vehicle prices from 2028 are still to be decided.

Clean Car Standard survives Government review, but major changes are coming

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