This is an HTML version of an attachment to the Official Information request 'Procurement advice'.

Promoting the uptake of electric and other low emissions vehicles 
Economic Growth and Infrastructure 
EGI is expected to consider this Cabinet paper at its meeting of 13 
April 2016. The paper seeks agreement to an electric vehicle 
contestable fund. It provides a report back agreed by the Committee 
on 16 March 2016 when it considered a package of measures to 
encourage the uptake of electric vehicles. 
Talking points 

In March 2016 Cabinet invited me (as Minister of Transport and the Minister of
Energy and Resources) to report back on how a contestable fund could best be
utilised to help promote the uptake of low emission technologies. Cabinet also
asked for further advice on the costs of an agreed demonstration of electric
vehicles (EVs) across government fleets.

Low emission vehicle (LEV) technologies, especially EVs, provide New Zealand
with the opportunity to reduce transport greenhouse gas emissions, without
compromising individual mobility or economic growth.  However, there are some
market failures that mean uptake may not happen as fast as it could.

For this reason, I proposed a package of measures to Cabinet last month to
encourage the uptake of EVs.  Parts of that package were agreed, and I was asked
to report back on the contestable fund that I had proposed and provide advice on
the EVs demonstration.
Contestable fund 
Rational for fund 

In addition to the information and coordination problems in the EV market,
stakeholders have identified the following immediate barriers to greater uptake of
EVs and other LEVs:
lack of supply of suitable vehicles into the New Zealand market
price differences with conventional vehicles
concerns over residual values and maintenance.

A contestable fund would help fund innovative projects to overcome these barriers.

Principles for fund 
The overarching principle of the contestable fund is that it should encourage 
innovation and investment to promote, enable and accelerate the uptake of electric 
and other LEVs into New Zealand, that might otherwise not occur. 
The fund will not be used to subsidise the purchase price of EVs, or to compete 
directly with the private sector. 
I propose the guiding principles of the contestable fund to promote the uptake of 
LEVs, including EVs, are to: 
support innovative activities to promote the supply of LEVs that would not 
otherwise occur 
implement measures that will enable rapid uptake of EVs, and other LEVs as 
they become available 
remove barriers to uptake, including the reduction of financial risk and 
provision of charging infrastructure 
provide value for money (within the context of the EV programme) 
be co-funded, by businesses, industry bodies, local communities, and 
Types of initiatives that could be funded 
The March 2016 Cabinet paper proposed the following examples of initiatives that 
could be funded: 
the creation and promotion of branded tourism routes using EVs 
demonstrations of vehicle types currently not used in New Zealand, such as 
electric buses and electric vans in commercial fleets (e.g. Greater Wellington 
Regional Council is already investigating demonstrations of electric buses) 
EV car sharing schemes that promote EVs and new ways of addressing 
transport demand (e.g. both Auckland and Christchurch City councils are 
investigating EV car sharing). 
Funding sources 
As proposed in the March 2016 Cabinet paper, the fund will initially be established 
through a mixture of reserves and reprioritised existing baseline funds from the 
Energy Efficiency and Conservation Authority.  Funding of $4.0 million is already 
available for this first year (2016/17), but not for out years.  

For initiatives (such as those outlined above) to have an impact, I propose a 
contestable fund of up to $6 million per year will be required in out years. 
For out years (2017/18 onward), I am considering options to re purpose an existing 
energy or transport levy. Further work, including public consultation, is needed to 
determine the most appropriate existing levy for the contestable fund. I will soon be 
seeking Cabinet approval to release a consultation document with options for re-
purposing an existing levy before reporting back by August 2016 with my preferred 
funding option. 
Governance of the fund 
I propose that the contestable fund will be governed by a group of senior officials 
from the Ministry of Transport, the Energy Efficiency and Conservation Authority, 
and the Ministry of Business, Innovation and Employment. They will work with the 
leadership group established by the March 2016 Cabinet paper. 
I also propose that the Energy Efficiency and Conservation Authority administer the 
fund with oversight from the Ministry of Business, Innovation and Employment and 
Ministry of Transport. 
EV demonstration 
The March 2016 Cabinet paper invited me, as the Minister of Transport and the 
Minister of Energy and Resources, to report back on the costs of the proposed EV 
demonstration across the government fleets, initially involving approximately 24 
vehicles, with the potential for the demonstration to be expanded. 
Given the more significant procurement work proposed in my earlier Cabinet paper, 
I do not intend to progress the demonstration at this time. 
Next steps 
Should the committee agree to establish the fund, a public announcement will be 
made about the EVs package, potentially at a launch event.  
I will also publicly consult on a range of options to expand an existing levy so that 
one may be used to fund transport energy initiatives such as the EV package. I will 
soon seek Cabinet approval to release a consultation document with options for re-
purposing an existing levy before reporting back by August 2016 with my preferred 
funding option.