Low Emission Vehicles Contestable Fund

Budget 2021 provided funding to progressively increase the size and scope of the Low Emission Vehicles Contestable Fund (LEVCF) administered by the Energy Efficiency and Conservation Authority (EECA), with the LEVCF being reconfigured into the Low Emission Transport Fund (LETF).

The fund will support an expanded scope for projects to demonstrate and adopt low emission transport technologies, innovations, infrastructure and fuels to decarbonise the New Zealand transport sector.

This initiative progressively increases the size and scope of Low Emission Vehicles Contestable Fund (LEVCF) administered by EECA. It will increase from its current $6-7 million per year to $25 million per year by 2023/24, split evenly between Crown funding and levy funding.

Budget 2021 provides $41.36m of Crown funding over four years to deliver the Crown funding component of this initiative, which will be matched with levies.

This initiative delivers on the Government’s election manifesto commitment to expand the scope and funding for the Low Emission Vehicles Contestable Fund (the LEVCF).

Transport makes up 21% of the country’s greenhouse gas emissions, so is therefore a critical area to address. Low emissions infrastructure, technologies, fuels and innovative business models have a vital role to play; this initiative will further increase their uptake.

The funding will be evenly split between the Crown and the Petroleum or Engine Fuel Monitoring levy. The levy currently supports the Low Emissions Vehicles Contestable Fund (LEVCF).  In March this year, Cabinet agreed to increase the cap on levy funding to EECA to allow the collection of up to $12.5 million per year by 2023/24.

The Fund will be open to all New Zealand-based and New Zealand-registered legal entities except Public Service Departments, Non-Public Service Departments (such as the New Zealand Defence Force), and Statutory Crown Entities such as District Health Boards. 

This new initiative, the Low Emission Transport Fund (LETF), will still be administered by EECA.

It will have a different scope to the LEVCF, which was launched at a time there were just a handful of electric vehicles in New Zealand. While the LEVCF has successfully delivered projects that prove the case for electrification across the transport sector, the new fund will further support the move to a lower emissions transport sector. Its scope will include demonstration of innovative and replicable low emissions projects, however it will include support for adoption of proven technologies that require further support commercial integration and deployment.   

The LETF will be able to fund a range of project types, from demonstration of innovative technologies to the acceleration of commercially available technologies such as public charging infrastructure and vehicles. While a contestable funding approach will remain EECA’s default approach to allocating this funding, we do not want to exclude the potential to explore more appropriate and efficient ways of funding some project types. 

Yes, broadening the fund to cover transport, rather than just vehicles, enables the funding of projects such as maritime and off-road motive power applications, where these meet the criteria to be set by EECA.

Yes, the new LETF will be able to fund projects for low emission fuels such as hydrogen or biofuel from renewable energy sources. The criteria for this funding will include emissions reduction potential of any project, so transport applications for low-emissions fuels are included.

The final design and delivery of the LETF is yet to be determined.  The wider scope of the fund and the mix of funding for demonstration and acceleration projects mean that it may not continue with the current approach used by the LEVCF.