COP26, the 2021 United Nations Climate Change Conference, was awkward for Australian Prime Minister Scott Morrison. Despite pressure both domestically and internationally, he was not prepared to update the country’s emissions reduction target for 2030 or to commit to phasing out coal-generated power.
Why the hesitancy?
Part of the lucky country’s luck is its abundance of natural resources, including coal, gas, and oil. That means Australia has more to lose from the end of the carbon era than many other developed countries that are less blessed in the fossil fuels department.
A more immediate concern for the PM is an impending election in which he can’t afford to lose key coal-mining seats in New South Wales and Queensland. On Monday he was asked about UK PM Boris Johnson’s statement that COP26 “sounded the death knell for coal power”. Morrison was quick to disagree, assuring “all those who are working in that industry in Australia, they’ll continue to be working in that industry for decades to come”.
Of course, that message doesn’t go down well with the increasing number of Australians who are growing frustrated by the federal government’s intransigence on climate change. They vote too.
Given the electoral tension, you would expect the federal government to at least pursue those policies that would reduce emissions without threatening the coal lobby. One obvious one is encouraging electric motor vehicles.
19% of Australia’s carbon emissions are from the transport sector, of which about half are attributable to light vehicles. Currently, just 0.12% of those vehicles are electric. Therefore, the potential for emissions reductions via electric vehicles is enormous, subject to the source of the electricity used to power them.
That is why the government’s new electric vehicle strategy released last week came as a surprise to many. It does much less to encourage the use of electric vehicles in Australia than many were expecting. Behyad Jafari, the CEO of the Electric Vehicle Council, describes the strategy as “too little, too late”.
There are two major constraints on the uptake of electric cars in Australia. The main one is the availability and affordability of the cars. The other is the capacity to charge them, whether at home, work, or public charging stations. The government’s new strategy provides some assistance on the latter but does nothing to address the former.
According to an August report from the Electric Vehicle Council, electric vehicles constituted just 0.78% of new light vehicle sales in Australia in 2020. That compares with 10.7% in the UK, 13.5% in Germany, and a remarkable 74.8% in Norway. The figure for the US was 2.3%. [For New Zealand it is 6.45%.]
For the first six months of this year, electric vehicle sales in Australia rose to 1.57% of total sales.
Australia’s poor uptake of electric vehicles relative to Europe is due primarily to a combination of the restricted choice of available vehicles and relatively high prices. This is partly the result of an absence of subsidies or tax incentives and partly the result of Australia’s poor fuel efficiency and environmental standards.
According to the ABC, “Australia is the only country in the OECD without fuel efficiency or vehicle emissions standards for CO2”. Michael Bartsch, the Managing Director of Volkswagen in Australia, describes Australia as a “third world dumping ground in terms of automotive technology”.
It is difficult for high-tech electric vehicles to compete on price in that environment.
Furthermore, carmakers in many jurisdictions are subject to average vehicle emissions requirements across their range of cars. They need to balance high emitting cars that they sell with energy efficient electric vehicles. That encourages them to keep down the prices on electric vehicles in those jurisdictions. Australia has no equivalent regime, so carmakers are not incentivised to sell electric vehicles into the Australian market or to keep prices down.
The federal government’s new electric vehicle strategy includes neither financial incentives for the purchase of electric vehicles nor higher fuel efficiency and environmental standards. Therefore, it will do little to address problems with the availability and affordability of electric cars in Australia.
Instead, the government’s focus is on the second but much less significant constraint on the uptake of electric cars, namely charging capacity. The government is providing an additional A$178 million “to support co-investment with the private sector and other governments” in the nation’s charging infrastructure. The elimination of removing “charging blackspots” in the regions is a priority.
Public charging infrastructure is currently not a problem in most metropolitan centres and on most main road routes, particularly on the eastern seaboard. According to the Electric Vehicle Council, there are currently more than 3,000 public chargers around Australia at over 1,650 locations. The number of fast and ultra-fast chargers has increased by a quarter just in the last year.
Tesla is perhaps the best-known provider through its supercharger network, but there are many other players in this rapidly expanding space including Chargefox, Evie, and Jolt. Jolt recently announced the rollout of a A$500 million network of 5,000 free charging stations funded in part by a A$100 million injection from US investment giant BlackRock.
The state and territory governments have their own electric vehicle strategies. The standout is the NSW state government which, by its own account, “is investing almost half a billion dollars in tax cuts and incentives to drive uptake and reduce barriers for electric vehicle purchases over the next four years”. Incentives include co-funding charging infrastructure, delaying road user charges, and removing stamp duty on, and providing rebates for, electric car purchases. The latter are significant in that they reduce the cost of buying an electric car, the biggest obstacle for many would-be purchasers.
Other states and territories offer a mixed bag of incentives including subsidised charging infrastructure, purchase rebates, stamp duty exemptions, free registration, and interest-free loans.
Why has Prime Minister Scott Morrison decided to subsidise charging infrastructure but to steer clear of the issues of availability and affordability of electric cars? He claims that his policy is “all about putting this technology in the hands of Australians to make the choices they want to make. We're not going to tell them what to buy.”
That sounds consistent with the free market ideology you’d expect from a centre-right government. However, this is the same government that is prepared to subsidise new coal and gas-fired power stations. Perhaps the government thinks the latter is a bigger vote winner.
Ross Stitt is a freelance writer and tax lawyer with a PhD in political science. He is a New Zealander based in Sydney. His articles are part of our 'Understanding Australia' series.
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