Australia urged to go hard, save big, on EVs and vehicle emissions

Vehicle standards in Australia are well overdue. The lack of any standards has caused the country to become a dumping ground for inefficient vehicles that cannot be sold elsewhere, and transport costs are now making up an increasing share (around 61 per cent) of the household energy bill.

Australia is also becoming increasingly exposed to geo-politics in south east Asia, from where it imports nearly all its transport fuel needs; and its failure to act means it risks being left behind in the rapid shift to electric vehicles, and the benefits that can bring to a grid that is also transitioning to clean energy.

Opposition to the idea – apart from the reflex ideological push-back against anything that is smarter, cheaper and cleaner than what we have now (think of Treasurer Scott Morrison’s Big Banana response to the Tesla big battery) – is based around the fear that EVs and fuel-efficient vehicles are more expensive than current models.

Initially that may be the case, but experts argue that this is a bit like arguing a cheap fridge is better value than an efficient one, because it ignores the significant running costs. And like solar and wind technology, the cost of battery storage and EVs is expected to fall quickly, particularly as more models become available.

Indeed, if the government were to adopt the highest standard proposed, fuel savings would be more than $16 billion by 2030, while total “economic savings” – which include the buying price of the vehicle – would be more than $8 billion.

ClimateWorks says that a strong target is essential to drive the uptake of low emissions vehicles in the Australian market and ensure motorists have access to the latest technology.

It suggest the government could be even more ambitious and deliver greater savings. It wants the standards to be introduced in 2020 rather than 2022, and suggests a lower threshold for emissions.

Both ClimateWorks and AGL says that the strong emissions standards – 105g of CO2 per kilometre – will deliver $8 billion more in savings than the weakest standard (135kgCO2/km), and save $17 billion in fuel costs over business as usual. Including the cost of vehicles, the savings would be $8 billion.

ClimateWorks wants the new standards to start being phased in by 2020 rather than 2022, reaching the targeted 105gCO2/km by 2025. Phasing in from 2022 would result in another 2.6 million  vehicles being sold without standards.

It also suggests the government should go beyond the current standard proposals, saying that a 95 gCO2/km by 2025 would deliver greater net benefits and is technically feasible based on achievements in other markets. This would bring it in line with European standards to be imposed by 2021.

With no current standard, the average emissions per vehicle in Australia is estimated to be around 180gCO2/km, falling to around 165gCO2/km if nothing else happens. That’s a gain of just 1 per cent a year.

AGL also called for the most ambitious standard to be adopted, saying that it would increase vehicle choice, result in more money being spent in the local economy (on electricity rather than transport fuels), and add flexibility to the grid, enabling it to make a quicker transition to zero carbon energy.

“EV charging has the potential to help protect and enhance the reliability and affordability of Australia’s electricity,” it says.

“A car with a 20 kWh battery stores as much electricity as the average Australian home consumes in a day. Considered as a pooled resource, the growing number of EV batteries could provide valuable grid services, from demand response and voltage regulation to distribution-level services, without compromising driving,” it says.

AGL also notes that Australian cities, because of their high household incomes and suburban sprawl, could be among the first to adopt autonomous vehicles and measures to promote EV adoption will help this, and improve road safety and reduce transport costs.

The standard will apply to vehicle manufacturers, and applies to their whole fleet. So, if they want to sell some high emission vehicles, they will need to sell more very low emission vehicles, or EVs, to meet the quota.

An EV will count for three vehicles. Credits are given, but these are not traceable with other companies. If a manufacturer fails to meet the standard, then it will be hit with a penalty of around $50/tonne.

ClimateWorks and FCA suggest the government introduce an education program to promote the purchase of more efficient vehicles, including on total ownership costs, and encourage the uptake of low and zero emissions vehicles in its own fleet and corporate fleets.

It says this will provide the community with exposure to low or zero emissions vehicles and will provide flow on benefits for the second-hand market.

Those thoughts were echoed by AGL, which noted the initial reaction to the proposed standards that highlighted the “market failure” that sees consumers “excessively discount operating cost savings in favour of upfront costs.”

ClimateWorks and FCA also want the government to consider financial incentives to promote the uptake of low or zero emissions vehicles, through changes to the Luxury Car Tax or Fringe Benefit Tax, and to support emerging technologies, such as intelligent transport systems, which can also improve the efficiency and emissions of the vehicle fleet.