Costs and contradictions of electrification

Dear ,

We've just posted our latest Fact Bite to our website, and you can read it by clicking here.

Bill Shorten's promise that by 2030 50% of new cars will be electric vehicles, is more ambitious than most countries in the world. Indeed, the most ambitious world-wide target is called EV30@30, which sees 30 per cent of new car sales being EVs by 2030.

We've put together some statistics based on the ultimate cost of electrification, Labor's policy, and the situation around the world.

Just to provide the generation for an all electric transport sector will require us to double the amount of electricity that we generate each year, and cost 12 times as much as the NBN. This is a significant diversion of national resources to give us something that we already have - mobility.

The major points from the study are:

1. The cost of electrifying the transport sector will be somewhere in the range between $436 Billion (100% wind) and $791 Billion (100% solar), without counting network upgrades which will be substantial, but more difficult to quantify. With a 50/50 mix of wind and solar the cost would be $614 Billion
2. The electrification cost will be borne by the whole of the community via increased electricity prices, irrespective of whether they own an EV or not, because network and generation charges will be spread across the whole of the network, not just that part being built specifically to meet the increased demand caused by the transport sector.
3. The Opposition doesn’t spell-out how it will meet the 50% target, but it could be done by paying a subsidy to purchasers to encourage them to purchase a new EV, or it could be done via quotas imposed on car manufacturers or by raising emissions standards on new cars. This should at the least be modelled and explained.
4. The policy will wreck the market for used cars, making it expensive for users to change over, and increasing the likelihood they will keep petrol and diesel driven cars operating even longer. So 50% of new cars might be EV, but the overall car fleet may change much more slowly as a result.
5. $0.41 per litre is taken in Federal excise to fund road construction. There is no explanation as to whether this will be compensated for with an EV user charge. On average fuel consumption the average motorist pays $548 per annum towards roads. Across the entire transport sector the federal government earns $17 Bn plus each year.
6. There is a shortage of key materials required for the manufacture of key components for electric vehicles, such as rare earths. As other countries electrify their transport sector these materials will be in shorter supply and increase in cost, working against any projected decrease in the cost for EVs.
7. Many of the critical components for EVs come from China, including rare earths. Australia’s transport system therefore depends on a country that is a strategic geo-political competitor, with an authoritarian and oppressive government.
8. If electric vehicles are introduced to Australia’s current electricity generating network they will actually increase CO2 emissions, because they will be fuelled substantially by black and brown coal. Lower emission forms of generation need to become more widespread before it makes any sense to introduce EVs. Mining and refining of rare earths involves environmental issues, including radioactive waste. This could stop treatment in some countries, including Australia.

This was supposed to be a well-thought out policy, but when it came to it, PM-in-waiting Bill Shorten didn't even know how long it would take to fully charge an electric vehicle.

It promises to be an interesting campaign.

Regards,

GRAHAM YOUNG

EXECUTIVE DIRECTOR