Time for Australia to get its electric vehicle policy into gear

Print Friendly, PDF & Email

Australia has much to gain from strong and sound electric vehicle policies.

share
Print Friendly, PDF & Email

The election is over, let’s get on with policy

In this note we take a look at vehicle standards to see the framework that electric cars can play in. This is less familiar territory to me so I am proceeding cautiously. Following this we will go on to look at lithium storage and its potential role, if any, for stationary energy supply.

As far as policy towards stricter vehicle emission standards and electric vehicles go, there is a ministerial working group working on a policy and it’s due to finalize its stance by mid 2017. Because this is the year the policy is being put in place, it’s really the tie for all lobbyists big and small to get on the case.

Our view is that EVs “should” be exempt from GST, stamp duty and luxury car tax. Infrastructure for street level EV charging should be put in place by networks in major cities in the same was as it is Paris, London and parts of the USA.

ev 1

Australia has no policy about battery storage or electric vehicles. An economist might say, “that’s good, the market will decide”. However, even in pure economic terms this ignores the taxes and benefits built into the current oil and electricity supply arrangements.

Furthermore, it ignores a couple of economic forces that might well make it in Australia’s interests to do a bit to speed up the roll out of Electric Vehicles to Australia.

One such reason is the cost of imported oil and petrol, which according to the ABS oil stats totaled $34 bn in FY15 and of course is also a national security issue. The dollar value will likely be down in FY16 quite substantially due to the lower oil price. Australia’s dependency on oil and oil products is growing but has not seen much change in the past couple of years.

oil ev

Secondly, Australia is one of the world’s largest sources of lithium and as previously discussed there are a number of listed Australian companies active in either producing or exploring for lithium.

Thirdly, Australia has a geographically dispersed electricity network with high, by global standards, distribution and transmission charges as a percentage of the delivered cost of electricity. From memory, the NEM has the longest contiguous transmission distance in the world.

Fourthly getting a bit more political about it. Batteries like rooftop PV are going to be vote winners rather than a vote loser. Every house that installs a battery or has an electric car supported by some kind of policy is a potential vote won.

On the other hand taxes on petrol raise substantial revenue, but the taxes are the lowest in the OCED save for the USA, Canada and Mexico.

We turn to fuel efficiency standards for passenger vehicles in other parts of the world.

Vehicle CO2 emissions standards

co2 ev

This graph represents official policy standards for much of the world’s motor vehicle fleet, but, in the real world these standards are not being met. Cars meet the standards in the lab but testing shows significant short falls in the real world. Still that is “just” a matter of enforcement. As we understand it Australia has no standards on CO2 emissions for passenger vehicles although the ICCT put us at around 200 grams CO2 per km as of 2012.

EV sales are growing strongly, but off a small base

Partly as a result of policy push, partly as a result of demand pull EV sales globally are growing strongly. For the four months ended April 2016 global sales were up around 42% compared to PCP. Still the market share remains tiny at just 180,000 sales for the four months.

ev

In June China registered 34K new EVs up 154% on PCP and more, for the month, than the USA and Europe combined. The Kandi cylone and Kandi K17 5 seater claimed range greater than 150 km lead Kandi to top of the month EV sales in China at over 4.5 K.

Global Electric Vehicle goals and national aspirations

The ICCT published a 2015 summary of various country “goals” which we recreate below. However, once again the goals up to 2015 have not been achieved. Our point is that at least there are some goals.

ev7ev8

Australia does have one policy, and that is the exemption for fuel efficient vehicles under luxury car tax mentioned below. That is a fuel efficiency standard though, not an electric vehicle policy. In addition QLD charges stamp duty at 2% for electric vehicles whereas most four cylinder cars in NSW, QLD and Vic pay 3%. So 1% on a $50 K car is $500.

Competition can work as well as regulation

Just as for stationary energy (electricity generation), where the combination of a carbon tax and a renewable energy incentive is clearly the most effective suite of policies, and where we can add energy efficiency into the mix, so it is with cars.

As well as better vehicle efficiency we need an incentive for EVs. Luxury car tax is paid at 33% of the cost above $75,526 for fuel efficient vehicles and $64,132 for other vehicles. The definition of fuel efficient is < 7 litres per 100 Km. That is not fuel efficient. Its not even close.

According to the ICCT the best design principles for EV’s include:

  • Move incentives up front to the vehicle purchase and make their value crystal clear to dealers and consumers;
  • Make the incentives available to the full target market.
  • Commit to durable incentives that all the industry can rely on for several years. This facilitates investment in the supply chain infrastructure.

In our view relief from GST, luxury car tax and stamp duty, are policies that best meet these objectives.

The Australian situation “she’ll be right mate”

In a 2013 report Environment Victoria noted that:

  1. Transport is the second largest source of CO2 emissions in Australia responsible for about 80 mt per year.
  2. New cars purchased in Australia are about 41% more CO2 emitting than those in the EU. Yes you read that right, 41%. Still that has to be read in the context that European cars probably aren’t meeting the standards they are supposed to.
  3. The average rate of fuel consumption in Australian vehicles has hardly changed since 1963! Engines have become more efficient but its eaten up by air conditioning, 4 wheel drive, info systems etc.

Environment Victoria recommended that the Australian Government introduce a mandatory efficiency standard of 5L per 100 km (114g/km) by 2015. Fat chance. I’d have to sell my car!

2016 Federal government discussion paper

In February 2016 the Federal Department of Infrastructure and Regional Development published a discussion paper as a result of a ministerial forum headed by Paul Fletcher, Greg Hunt and Josh Frydenberg. Comments to the discussion paper closed in April and we counted 79 submissions on the web site.

The discussion paper stated.

The working group will report by 30 June 2016 to the Ministerial Forum on measures to reduce noxious and carbon dioxide (CO2) emissions from the road transport sector. This will be followed by consultation in the second half of 2016 on draft regulation impact statements (RIS) for noxious emissions standards and fuel efficiency (CO2) measures that will present a full cost benefit analysis of options. The working group will report by 31 March 2017 to the Ministerial Forum on a draft implementation plan for new measures—aligning with the Australian Government’s commitment to announce new measures to deliver Australia’s 2030 climate change targets.”

The document states that for light vehicles Australia has adopted the “Euro 5” noxious emissions standards and these apply to all light vehicles sold from 1 November 2013.

Regarding CO2 the document stated that:

The 2014 American Council for an Energy-Efficient Economy (ACEEE) International Scorecard ranked Australia last out of 16 major OECD countries for the energy efficiency of the transport sector.21

Regarding electric vehicles, the discussion paper was, not unexpectedly, relatively unenthusiastic and based its views on work done by “Energeia”. The discussion paper states:

“Energeia considered policy options to encourage uptake of electric vehicles, and found that policies that seek to lower the cost of vehicles, such as subsidies or lower registration fees, resulted in a net economic cost. The cost of the subsidy outweighed benefits such as economic and employment growth and air quality improvements. Low cost policies such as allowing use of transit lanes and requiring manufacturers to increase model availability resulted in net economic benefits. Recharging infrastructure may be another limiting factor, but these facilities are starting to emerge”

ITK thinks that vastly, vastly underestimates the problems that EVs can solve.

David Leitch is principal of ITK. He was  formerly a Utility Analyst for leading investment banks over the past 30 years. The views expressed are his own. Please note our new section, Energy Markets, which will include analysis from Leitch on the energy markets and broader energy issues. And also note our live generation widget, and the APVI solar contribution.

Print Friendly, PDF & Email

14 Comments
  1. trackdaze 3 years ago

    Creates a real opportunity for a homegroan ev more likely a phev.

    If the national accounts and trade balances are important less fuel use is a big one. then electrified vehicles will help

    • Viv 3 years ago

      We would have to start making suitable batteries here, otherwise locally made EVs would impact even more unfavorably on our balance of trade than oil/petrol/diesel imports.

      • David leitch 3 years ago

        That is an interesting point Viv. I will get round to doing some arithmetic on that.

        • Charles 3 years ago

          You should be comparing petrol with electricity – not petrol with batteries. The batteries are a part of the car.

      • trackdaze 3 years ago

        Agreedbetter built here though at At 150dollars a kwhr a nissan leaf sized battery pays for itself in fuel in a relatively short amount of time.

    • Doug 3 years ago

      AS an EV owner for 3 years (an Imiev), we really love it!
      Our car charges at night on Off-peak, then sits all day at my Wife’s work in the sun uncharged! Such is life…
      If EVs were to be encouraged, even if only 10% of vehicles were EVs, our balance of trade would improve (due to the reduced fossil fuel import).
      I think there are some relatively low cost incentives that could be used:
      -refund the Vehicle GST over 4 years: 50% after 12 months, then 25%/yr for next 2 years, but only for the first owner.
      -Charging infrastructure will require incentives.
      -Phase down the Fossil fuel subsidies over 5-10 years.

      Personally, I think the revolution will come from agriculture, where the farmer could have a small turn-key power station & storage, then small(er) electric tractors that are computer controlled, run 24H/day (relatively) silently, can dock & charge themselves, as well as change implements. Any extra power generated by the farm can be grid-fed. The Government really needs to get Unis & CSIRO etc to start developing the technology: we would be early adopters, much as we developed many solar cell improvements.

      Vive la revolution!

  2. Chris Fraser 3 years ago

    Precisely. If they can harp on about jobs and growth, can they not imagine the potential employment created by home grown PHEVs and their upstream industries ? We have quite a bit of capacity right now …

  3. Nige 3 years ago

    The insane irony of this policy failure is that for those who have dived in head first to get an EV (I’m on my second one), there is no turning back despite the lack of support because they are brilliant. They are more fun to drive (or ride in my case), cost almost nothing to run and frankly, go like stink, without the stink. Putting aside the wider benefits for a moment, there are a swag of benefits for the energy sector associated with this new, potentially large load. Other countries are just getting on with it while we are crippled with FrydenburgHansonPokeman sydndrome.

    • JeffJL 3 years ago

      On your second one? Doesn’t say much for their durability. (I’m on my first still).

  4. ElectrikLeo 3 years ago

    Failed to mention the $3-4billion on externalised health costs associated with vehicle emissions (another subsidy for the oil industry):
    http://myelectriccar.com.au/health-issues/

  5. Chris B 3 years ago

    Stop The Volts!

  6. Mark Melocco 3 years ago

    Not only is there little government interest in supporting the uptake of electric vehicles, what incentives that exist are being allowed to fade. Not many people are aware that the LCT threshold is adjusted for CPI each year but the threshold for ‘fuel efficient’ vehicles is fixed meaning any discount will eventually be erased.

  7. BeyondZeroEmissions 3 years ago

    Great article thanks David. Readers might be interested in August 12 and 13th events where the EV component of the Zero Carbon Australia series is being released: Lake Macquarie https://www.eventbrite.com.au/e/electric-vehicle-symposium-dinner-tickets-26461468966 and Brisbane https://www.eventbrite.com.au/e/brisbane-launch-of-electric-vehicle-report-zero-carbon-australia-tickets-26632781366

  8. Les Johnston 3 years ago

    The lack of awareness of electric vehicles in the political arena is symptomatic of the inaction on carbon emissions. Motor vehicle air emission standards are a decade behind the developed world. Innovation has gone out the door driven by political ideology. EVs have a big future. If Australia wants to capture innovation, the opportunity is being lost.

Comments are closed.

Get up to 3 quotes from pre-vetted solar (and battery) installers.