Road, rail and the decarbonisation dilemma

Recently, there was media interest in a report from KiwiRail that showed how rail use in the last year avoided over a million heavy truck trips, eased road congestion, reduced road maintenance costs and saved 82 million litres of fuel.

Frankly, comparisons like this are overly simplistic and, in reality, quite meaningless.

Rail and coastal shipping are often touted as a solution to the emissions that moving freight produces. However, the previous government hiked rail investment and still saw volumes consistently decline, emphasising the importance of ensuring value for money. Our challenging geography and population distribution make artificially incentivising mode-shift to rail and coastal shipping costly and inefficient.

Road freight is here to stay, and we intend to make sure the industry remains resilient, successful and sustainable in all meanings of the word.

An initiative we support is currently in development by the Sustainable Business Council and DETA engineers: renewable freight certificates.

Renewable freight certificates would work much like the renewable gas certificate system. They are essentially carbon offsets, but for freight. When a company uses low emission transport (like electric trucks), it earns certificates based on the freight distance moved. Other businesses can buy these certificates to reduce their supply chain (Scope 3) emissions, helping fund cleaner freight options.

If New Zealand is serious about achieving its net-zero targets, we must apply the same level of ambition and support to road freight as we do to the primary industries. Our sector is essential to the economy, yet it’s expected to decarbonise with very few resources. Market-based tools, such as renewable freight certificates, can help bridge the gap by rewarding low-emission choices and providing freight operators with a viable path forward. But without fairer investment and policy backing, we risk stalling progress in a sector that keeps New Zealand moving.

Missed opportunity on congestion charging

In other news, the congestion charging policy has passed another hurdle with the Transport and Infrastructure Committee recommending only minor changes to the draft legislation.

While it’s good to see a bipartisan approach being taken to major transport reform, it’s frustrating to see there will be no ability for schemes to exempt or discount freight vehicles from congestion charges. Nor will there be a requirement for freight considerations to be accounted for during scheme design.

This will undermine the cost savings these schemes are supposed to offer families and businesses. International experience in London and New York shows the expense and inconvenience that poorly designed schemes impose on freight operators, who face inelastic demand from freight customers.

I find it frustrating that there is a lack of appreciation that trucks routinely travel at times not because it’s when they want to be moving, but it’s what they need to do to meet customer demand. Furthermore, there’s a growing disconnect between customer expectations and a willingness to pay any increased costs. I can see this leading to further pressure on rates and increased “low balling” across the industry.

This will make it more difficult for Transporting New Zealand to support the individual schemes enabled by the legislation, with Auckland being the most likely contender. However, we remain committed to assessing individual schemes on their merits while factoring in the views of our membership.

Our efforts to achieve practical changes to the legislation were derailed by the road freight industry’s divided stance on the issue. Transporting New Zealand repeatedly attempted to consult with the other two national freight associations to agree on an industry position, but was unsuccessful.

This was doubly disappointing as Transporting New Zealand had commissioned a national freight survey on the issue to help build a mandate and had clearly signalled our position for months. Our submission included a thorough review of the draft legislation and examined how overseas schemes had been implemented.

The result was two national industry bodies appearing before the select committee, back-to-back, providing conflicting recommendations. I had no idea what recommendations were going to follow ours. It was incredibly unhelpful to the MPs and their officials trying to determine an industry position; incredibly unhelpful for road freight businesses and customers.

To paraphrase our board chair, Cam Bagrie, this would have been an ideal time to leave the rugby shirts at the door and to provide unified recommendations from the road freight industry.

With universal RUC, tolling and regulatory reform all on the horizon, our three industry associations can either strengthen the voice of our sector or undermine it.