Top economists call for budget measures to speed the switch to electric cars


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Peter Martin, Crawford School of Public Policy, Australian National UniversityAustralia’s top economists overwhelmingly back government measures to speed the transition to electric cars in order to meet emission reduction targets.

An exclusive poll of 62 of Australia’s preeminent economists — selected by their peers — finds 51 back measures to boost the take-up of electric cars including subsidising public charging stations, subsidising the purchase of all-electric vehicles, and setting a date to ban the import of traditionally-powered cars.

Only 11 oppose such measures, three of them because they prefer a carbon tax.

Six of the 51 who supported special measures said they did so reluctantly, as their preferred alternative would be a carbon price or a carbon tax, rather than subsidising “one alternative out of many to reduce emissions”.

Cars account for roughly half of Australia’s transport emissions, making them about 8% of Australia’s total emissions.

Yet Australia’s take-up of electric vehicles is dwarfed by the rest of the world.

On one measure, all-electric cars accounted for just 0.7% of new car sales in Australia in 2020 compared to 5% in China and 3.5% in the European Union.

Australia has no domestic car industry to protect, meaning industry policy concerns needn’t hold back the transition.




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Norway plans to outlaw new petrol car sales from 2025; Denmark, the Netherlands, Ireland and Israel from 2030; and California and Britain from 2035.

Asked whether Australia should take action to speed the transition, eight in ten of the 62 economists selected by the Economic Society said it should.



Economic Society of Australia/The Conversation, CC BY-ND

The results represent a departure for a profession whose usual advice is to avoid interfering with markets.

One participant, University of NSW professor Gigi Foster said an important question needed to be answered in order to justify government intervention: “what is the market failure here?”

The market failure was pollution, imposing costs on the community beyond the drivers of conventionally-powered cars and on the planet by pushing up global temperatures.

Broad support: subsidies for charging points

If it wasn’t to be dealt with by a carbon price, measures that sped up the switchover to electric vehicles could achieve some of the same effect.

By far the most popular measure of six presented to the panellists who supported government action was subsidising public charging points, backed by 84%.

The next most popular was removing the luxury car tax from electric-only vehicles. At present the 35% tax applies to cars valued at more than $69,152, and $79,659 for fuel-efficient vehicles.

43% supported making charging points compulsory in new homes and new car parks. 39% supported setting a date to ban the import of petrol and diesel cars.



Matthew Butlin, who chairs South Australia’s Productivity Commission, noted that much of Australia was not urban and unlikely to be served by charging points for some time.

Without government measures to speed the installation of remote charging stations, many buyers would be reluctant to go electric, even if most of their driving was in cities.

When they were in place, there would be a good case for banning the import of petrol and diesel vehicles, but not until then.




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Others wanted to hold off on banning the import of conventionally-powered cars until Australia had a lower-emissions mix of electricity.

Macquarie University’s Lisa Magnani said that with three quarters of Australia’s electricity generated from coal, electric vehicles created considerable emissions.

The Grattan Institute’s Danielle Wood disagreed, saying “network effects” built a case for switching over early.

Network effects build on themselves

The more people switched, the more charging stations would be built and the lower electric vehicle prices would drop, driving more people to switch, and increasing the benefits of decarbonising the electricity supply.

The sooner Australia swapped over, the easier it would be to get to net zero emissions by 2050 without the need for a “cash for clunkers” style scheme to buy back polluting vehicles.

Setting 2035 as the date for banning imports of petrol-powered cars as recommended this year by the International Energy Agency would give buyers time to adjust while the charging infrastructure developed.




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Tax specialist John Freebairn said electric cars were already heavily subsidised by escaping the fuel excise used to fund roads, despite the efforts of some states to plug the gap.

Sydney University economist Stefanie Schurer argued on the other hand bulky and polluting sport utility vehicles were effectively subsidised because of the tax benefits they attracted when used for work.

Former Liberal Party leader John Hewson of the Crawford School of Public Policy said smoothing the transition had become urgent.

Smooth transition now “urgent”

It took only ten years from 1903-13 for the United States to switch from horse-drawn to petrol-driven vehicles, and technology take-up was quicker today, particularly in Australia.

Other economists surveyed noted that there was much that could be done to reduce harmful emissions in addition to going electric.

Sue Richardson said Australia should impose serious limits on the tailpipe emissions of new cars. Australia is unusual among developed nations in not having such a limit, making it a favoured market for high-emission cars.




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Rana Roy said a better approach would be to limit transport itself through remote working and efforts to encourage walking and cycling. Subsidies for electric cars could send such moves backwards.

When responses to the survey were weighted by the confidence respondents had in them on a scale of 1 to 10, support of special measures to drive the transition remained about as strong, backed by eight in ten of the economists surveyed.



Economic Society of Australia/The Conversation, CC BY-ND

Detailed responses:

The Conversation

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Climate explained: does your driving speed make any difference to your car’s emissions?



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Ralph Sims, Massey University


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Climate Explained is a collaboration between The Conversation, Stuff and the New Zealand Science Media Centre to answer your questions about climate change.

If you have a question you’d like an expert to answer, please send it to climate.change@stuff.co.nz

Does reducing speed reduce emissions from the average car?

Every car has an optimal speed range that results in minimum fuel consumption, but this range differs between vehicle types, design and age.

Typically it looks like this graph below: fuel consumption rises from about 80km/h, partly because air resistance increases.


Author provided

But speed is only one factor. No matter what car you are driving, you can reduce fuel consumption (and therefore emissions) by driving more smoothly.

This includes anticipating corners and avoiding sudden braking, taking the foot off the accelerator just before reaching the peak of a hill and cruising over it, and removing roof racks or bull bars and heavier items from inside when they are not needed to make the car lighter and more streamlined.




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Driving wisely

In New Zealand, EnergyWise rallies used to be run over a 1200km course around the North Island. They were designed to demonstrate how much fuel could be saved through good driving habits.

The competing drivers had to reach each destination within a certain time period. Cruising too slowly at 60-70km/h on straight roads in a 100km/h zone just to save fuel was not an option (also because driving too slowly on open roads can contribute to accidents).

The optimum average speed (for both professional and average drivers) was typically around 80km/h. The key to saving fuel was driving smoothly.

In the first rally in 2002, the Massey University entry was a brand new diesel-fuelled Volkswagen Golf (kindly loaned by VW NZ), running on 100% biodiesel made from waste animal fat (as Z Energy has been producing).

A car running on fossil diesel emits about 2.7kg of carbon dioxide per litre and a petrol car produces 2.3kg per litre. Using biofuels to displace diesel or petrol can reduce emissions by up to 90% per kilometre if the biofuel is made from animal fat from a meat works. The amount varies depending on the source of the biofuel (sugarcane, wheat, oilseed rape). And of course it would be unacceptable if biofuel crops were replacing food crops or forests.

Regardless of the car, drivers can reduce fuel consumption by 15-20% by improving driving habits alone – reducing emissions and saving money at the same time.




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Climate explained: what each of us can do to reduce our carbon footprint


Fuel efficiency

When you are thinking of replacing your car, taking into account fuel efficiency is another important way to save on fuel costs and reduce emissions.

Many countries, including the US, Japan, China and nations within the European Union, have had fuel efficiency standards for more than a decade. This has driven car manufacturers to design ever more fuel-efficient vehicles.

Most light-duty vehicles sold globally are subject to these standards. But Australia and New Zealand have both dragged the chain in this regard, partly because most vehicles are imported.




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New Zealand also remains hesitant about introducing a “feebate” scheme, which proposes a fee on imported high-emission cars to make imported hybrids, electric cars and other efficient vehicles cheaper with a subsidy.

In New Zealand, driving an electric car results in low emissions because electricity generation is 85% renewable. In Australia, which still relies on coal-fired power, electric cars are responsible for higher emissions unless they are recharged through a local renewable electricity supply.

Fuel and electricity prices will inevitably rise. But whether we drive a petrol or electric car, we can all shield ourselves from some of those future price rises by driving more efficiently and less speedily.




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Climate explained: why switching to electric transport makes sense even if electricity is not fully renewable


The Conversation


Ralph Sims, Professor, School of Engineering and Advanced Technology, Massey University

This article is republished from The Conversation under a Creative Commons license. Read the original article.