Electric Vehicles: Roadmap to Decarbonisation

In 2021, 20% of Australia’s carbon emissions came from transportation alone. Transport is Australia’s third largest source of greenhouse gas emissions and cars are responsible for half of all transport emissions. Australia’s per capita transport emissions are 45% higher than the OECD (Organisation for Economic Co-operation and Development) average, ranking Australia second-worst for transport energy efficiency. Hence, electric vehicles (EVs) have attracted attention as they play a major role in achieving decarbonisation. EVs, in combination with renewable energy, are critical to reducing Australia’s carbon footprint. 

Trends in passenger car commuting patterns

An inverse relationship exists between car age and distance to major employment centres. This means that drivers in outer suburbs further from the CBD tend to prefer larger, more spacious and older cars, whereas inner city drivers tend to lean towards relatively newer cars. This suggests that rolling out EVs in the future will be challenging for postcodes with older fleet to replace their existing cars because these suburbs will require more incentives to encourage people to replace their old cars with EVs, however the benefits of rolling out EVs in outer suburbs will be greater because older cars being driven a longer distance to CBD increases carbon emissions. Hence replacing these cars with EVs will produce the greatest benefit when attempting to achieve decarbonisation. 

EV uptake in the future

EV uptake is a personal choice, hence it is difficult to understand and predict prevailing market patterns and trends. However, there are several socio-economic characteristics that are key to predicting the future EV market: the types of dwellings, incomes and education levels, EV model availability and price. 

Nevertheless, EV uptake is expected to accelerate in the next decade: In 2031, the average range for an EV is expected to be 480km (up from currently 340km on average); 55 different EV models are expected to be available (in comparison to 8 models currently available); $0 average price differential and price parity will be reached (down from currently ~$30,000 difference in price); adoption rate are predicted to be lower in outer suburbs and higher in the inner city; and Sydney is expected to uptake EVs at the fastest rate. 

Local emissions 

Car type, vehicle age and commuting distance vary significantly across urban areas and clear trends emerge for each individual postcode. Emissions usually tend to intensify further from the inner city. This implies that vehicle emission will become a local matter and subject to unique fleet features and commuting trends. 

Emissions Reduction

In order to achieve emission reduction targets, focus and attention at the local level with targeted policies is required. Emission saving policies through stimulating EVs will be most effective if they target outer suburbs because outer suburb drivers tend to prefer larger, older and hence more emission producing cars. Replacing conventional vehicles in outer suburbs will lead to higher emissions reductions than replacing cars in an inner city. Hence, future policy will need to focus on incentivising EV adoption beyond inner-city households. 

Taxing emissions – Risks

There has been talks of taxing emissions, but this involves risks. Research has shown that Emission taxes can threaten car affordability for low income households if the taxes threaten their ability to pay. This will mean that car ownership will become unaffordable and low-income households will be forced to revert to the marginal conventional vehicles (i.e. the lowest priced vehicles with maximum allowed emissions). This could slow down emissions savings rather than accelerating them.

Therefore, policy makers must balance socio-economic characteristics driving vehicle choices and creating policies addressing decarbonisation of passenger vehicles without creating unwanted adverse outcomes.

Initiatives to address the slow EV uptake in outer urban areas:

There were only 2 million EVs in the world in 2016. In 2021, 6.6 million EVs were sold in that year alone with 16 million EVs being driven worldwide. Another 8 million EVs were expected to have been sold in 2022 (Source: International Energy Agency). In Norway, 65% of all vehicles sold in 2021 were electric mainly due to aggressive government subsidies. Despite the increasing worldwide adoption of electric vehicles, EV uptake in Australia has been lagging behind significantly.

The major obstacles to EV adoption in Australia have been reported to be price, “range anxiety” and access to charging stations. In order to achieve decarbonisation, it is vital to encourage EV uptake in outer suburbs with larger, older and higher emission producing cars that tend to travel further to the CBD. 

A range of market interventions can promote EV uptake in outer suburbs and alleviate financial pressures of replacing a conventional car:

  1. Adequate supply of EVs 

New EVs can be made available in Australia through EV import campaigns, adopting Euro 6 vehicle emission standards to signal to the market to offer lower emissions vehicles to Australia and accelerated government and private fleet conversions to create a second-hand market. 

  1. Affordable vehicles and model availability 

A large proportion of the market in major cities tend to prefer larger vehicles, utility vehicles and off-roads. Hence, consumers can have more choices if more vehicles are imported that match the driving preferences of each postcode. Moreover, ongoing purchase incentives for lower priced vehicles and lower income households can promote an even uptake of EVs across metropolitan areas. 

  1. Targeting long commutes 

Subsidising EV commuting can make it more attractive than using a conventional car. For example, granting a fixed income tax exemption which increases based on the distance to the workplace. Each kilometre exceeding a commute above an initial preset distance could be made tax deductible for EVs. This could be implemented similar to how the ATO’s tax deductions for business-use vehicles work. 

Despite being ranked second-worst in the world for transport energy efficiency, Australia is lagging far behind other developed countries when it comes to encouraging EV uptake and addressing greenhouse gas emissions. Rolling out EVs in outer suburbs will be much more beneficial in attempting to achieve decarbonisation. Rising petrol prices and environmental concerns mean that EVs are about to become more prevalent worldwide. Hence, it is important for Governments to be proactive in addressing obstacles and encouraging EV uptake in outer suburbs by ensuring an adequate supply, availability and subsidising commuting to accelerate EV uptake and reduce Australia’s carbon footprint.

References

EL AZIZI, L. (2019). https://ijarcce.com/wp-content/uploads/2019/09/IJARCCE.2019.8901.pdf. IJARCCE8(9), 16–21. https://doi.org/10.17148/ijarcce.2019.8903

Taxes on EVs Cut, Incentives Added in Australia. (n.d.). CleanTechnica. https://cleantechnica.com/2022/11/22/taxes-on-evs-cut-incentives-added-in-australia/

Why it’s a bumpy road ahead for electric cars (in seven charts). (n.d.). Australian Financial Review. https://www.afr.com/companies/transport/why-it-s-a-bumpy-road-ahead-for-electric-cars-in-seven-charts-20221107-p5bw4i