Government scraps scheme to penalise thirstier vehicles

The government will not proceed with its long-discussed fuel economy standard, which would have strictly limited cars to 170g C02 emissions.

The proposed scheme would have forced importers of less fuel-efficient cars - used or new - to buy credits, passing the cost on to motorists.

The industry has long argued that international standards are improving fuel economy anyway and New Zealand will benefit, provided Kiwis continue to replace their thirsty old dungers with newer cars.

Transport Minister Steven Joyce agrees.

He says the present economic climate is already seeing a buyers' trend to smaller, more fuel-efficient cars, with average emissions down from 220.6 in 2006 to 203.8 earlier this year.

As for Government intervention, for now that's confined to exempting electric vehicles from road-user charges, encouraging biodiesel production, and requiring used import diesels to meet minimum emissions standards.

The aim is to better balance responsibility for limiting harmful vehicle emissions between the used and new vehicle market. Importers of used cars had asked for a delay in the standards to reverse falling sales.