{"id":20521,"date":"2018-04-10T07:15:28","date_gmt":"2018-04-09T20:45:28","guid":{"rendered":"https:\/\/www.solarquotes.com.au\/blog\/?p=20521"},"modified":"2024-08-06T10:54:10","modified_gmt":"2024-08-06T01:24:10","slug":"electric-car-subsidies","status":"publish","type":"post","link":"https:\/\/www.solarquotes.com.au\/blog\/electric-car-subsidies\/","title":{"rendered":"Should Electric Cars Be Subsidised?"},"content":{"rendered":"

\"Electric<\/p>\n

Nope!\u00a0But We Should Make Cars Pay For Pollution.<\/strong><\/p>\n

So far this year there has been a fair bit of debate over whether electric cars should receive subsidies in Australia.\u00a0 The Greens are in favor and SA Labor were planning to make electric cars exempt from registration fees up to the point they were defeated in savage hand-to-hand voting.\u00a0 Our Federal Minister for the Environment and Energy, Josh “build me a fleet of new coal power stations” Frydenberg has come out of closet, or possibly coal bunker, as a fan of electric cars.\u00a0 Probably because they can be charged with coal power.\u00a0<\/p>\n

But he hasn’t mentioned any subsidies and our honorable1<\/a><\/sup> Member for back-to-the-19th-century-backbenching, Craig Kelly, has assured us that there will be no subsidies for electric cars and that Josh just wants to make sure there are no bureaucratic impediments to people deciding to spend their own money on electric cars.<\/p>\n

So the question is — should electric cars be subsidised?<\/p>\n

My short answer is — no.\u00a0 It makes no sense to subsidise electric cars when what we should do instead is make those who emit greenhouse gases and toxins into the air pay for the harm they cause.<\/p>\n

But I’ll give you another short answer for the same low price as my first one — yes.\u00a0 Because our current politicians are unlikely to put a price on pollution, some sort of subsidy on electric cars and potentially other low polluting vehicles could be a less efficient, second best policy.<\/p>\n

Two Reasons For Wanting More Electric Vehicles<\/h2>\n

A few days ago I wrote about how, contrary to some people’s beliefs, electric cars don’t result in greater greenhouse gas emissions<\/a> than the average petrol powered car.\u00a0 I also pointed out that, according to official fuel economy figures at least, a hybrid car or even a small, fuel efficient conventional petrol car will result in less greenhouse gas emissions than an electric car charged from Australia’s coal heavy grid.\u00a0 This is true even if you live in Tasmania or South Australia with their high levels of renewable energy generation, because charging an electric car there means less clean electricity will be available for export to dirtier states.<\/p>\n

The good news is you can drive an electric car with zero or next to zero emissions (beyond what was required to make it) if you installed rooftop solar<\/a> to charge it.\u00a0 For an electric car driven the annual average of 14,000 kilometers, around 2 kilowatts of solar panels<\/a>\u00a0is all that’s required.<\/p>\n

While electric cars<\/a> charged with today’s grid won’t reduce greenhouse gas emissions by as much as some expect, what they do excel at is reducing the amount of toxic air pollution in Australian towns and cities .\u00a0 It’s been estimated air pollution kills 3,000 Australians a year and roughly 75% of it is produced by vehicles.\u00a0 So pollution from Australian cars and trucks probably kills well over 2,000 people a year2<\/a><\/sup>.\u00a0 Last year 1,227 people were killed in road accidents<\/a> which means the total death toll from vehicle use was probably over 2.5 times higher.<\/p>\n

So, the top two reasons for wanting more electric vehicles are:<\/p>\n

1. To reduce the suffering and death around the world resulting from global warming caused by greenhouse gases emitted from burning fossil fuels such as oil.<\/p>\n

2. To reduce suffering and death in Australian towns and cities caused by air pollution.<\/p>\n

A Third Reason To Want More Electric Cars<\/h2>\n

At the start of this century Australia produced around 700,000 barrels of oil a day.\u00a0 Now it’s under 200,000.\u00a0 We\u00a0use around 1 million barrels a day.\u00a0 In addition, most of Australia’s oil is exported, which means almost all the petrol and diesel used by Australian vehicles is imported.<\/p>\n

\"Australian<\/p>\n

Because of Australia’s reliance on imported oil there is some concern about national security and what would happen if there was an interruption in supply.\u00a0 But Australian politicians are astoundingly unconcerned about this.\u00a0 We live in the only developed country in the world that has no fuel efficiency standards.\u00a0 The entirety of our national fuel economy measures consists of requiring new cars to have a sticker with their fuel consumption on it.<\/p>\n

While tax makes up a large portion of the cost of petrol and diesel, Australian fuel taxes are still low<\/a> by developed country standards3<\/a><\/sup>.\u00a0 We only have enough oil set aside to last us about 6 or 7 weeks if imports were cut off instead of the 13 weeks that is internationally recommended for an oil importer.\u00a0 The situation has me wondering if there are people hoping for a supply disruption so a government funded coal to liquids plant will be built4<\/a><\/sup>.<\/p>\n

So if you don’t trust world leaders to play together nicely you might think it’s a good idea for Australia to cut its reliance on imported oil.\u00a0 Personally, I’m not too worried.\u00a0 I’m convinced Trump is too lazy to start a war5<\/a><\/sup>.\u00a0 At least intentionally.<\/p>\n

Australia Already Has A Large Electric Car Incentive<\/h2>\n

Australia already has a hefty incentive for people to go electric and that’s the 40 cent per litre fuel excise on petrol and diesel.\u00a0 Of this about 10 cents goes to pay for roads with 30 cents going into general revenue.\u00a0 So is this extra 30 cents enough to make petroleum fuels pay for the environmental and health harm they cause?<\/p>\n

No, it’s not.<\/p>\n

It’s not too difficult to show this is the case by roughly estimating the cost of the environmental damage from CO2 emissions and health effects from burning petrol and diesel.<\/p>\n

Greenhouse Gas Costs<\/h2>\n

Attempting to put a dollar figure on the amount of harm caused by a tonne of CO2 emissions from burning oil products is extremely complex and estimates vary.\u00a0 Fortunately we don’t need to worry about that.\u00a0 My approach is very simple.\u00a0 The amount of additional CO2 we can safely add to the atmosphere is zero, so the cost to our society of emitting one tonne of CO2 is equal to the cost of removing it from the atmosphere and sequestering it long term.<\/p>\n

There are a variety of methods to do this.\u00a0 Reforestation, afforestation6<\/a><\/sup>, creating and burying biochar, grinding up large amounts of olivine rock<\/a> that slowly absorbs CO2, dumping agricultural waste in deep ocean waters, and so on.\u00a0 If one or more of these methods can be used for $100 a tonne on a reasonable scale7<\/a><\/sup> then since burning one litre of petrol results in the emission of around 3.15 kilograms of CO2, the cost of cleaning that up would be 31.5 cents.<\/p>\n

Unfortunately we don’t actually know how much it will cost to remove and sequester CO2 from the atmosphere, but the lowest estimate I’ll accept is $70 a tonne.\u00a0 If we use this as a minimum, then burning one litre of petrol will result in a clean up bill of 22 cents.\u00a0 So maybe the 30 cents per liter of the fuel excise that goes into general revenue could cover it if they renamed it the Petroleum Fuel Carbon Price.<\/p>\n

But the fuel excise is not also going to be able to cover the health costs, because they’re a doozy.<\/p>\n

Health Costs<\/h2>\n

In 2007 it was estimated air pollution killed around 3,000 Australians a year and the cost was $11 to $24 billion<\/a>.\u00a0 While cars have hopefully gotten cleaner in that time, the value we put on our lives will have increased.\u00a0 If we take the mid-point of that range, adjust it for the fact that roughly 75% of air pollution comes from vehicles, adjust for inflation, and then increase it by 16% to allow for population growth, it comes to $20 billion.\u00a0 With around 32 billion litres of petrol and diesel burned in built up areas per year, the health costs would come to 62 cents per liter.<\/p>\n

Security Costs<\/h2>\n

I have no idea how to work out the cost to national security of being almost completely dependent on imported oil and I am not even going to try.\u00a0 But it definitely costs something, so if you like, please feel free to add your own estimate to the total below.<\/p>\n

\"Oil

Unfortunately, accidents do happen. And sometimes people decide to blow up oil tankers on purpose. (Image Credit: Bloomberg)<\/p><\/div>\n

Other Costs<\/h2>\n

Air pollution affects agriculture<\/a> and makes our cities grimier.\u00a0 While I won’t attempt to estimate agricultural losses or the cost of extra cleaning required, these losses are real and should be included in a full and detailed account of the costs of air pollution.<\/p>\n

Total Health And Greenhouse Gas Costs<\/h2>\n

If the health costs come to 62 cents and the cost of greenhouse gas emissions are at least 22 cents, then we are looking at 84 cents or more per litre from just those two effects.\u00a0 That’s not that far off $1 but I’ll just go with 84 cents for now.\u00a0 So the 30 cents of the fuel excise that goes into general revenue doesn’t nearly cover it.<\/p>\n

Making Cars Pay The Full Cost<\/h2>\n

Rather than subsidies for electric cars, in my opinion we should make all vehicles pay the full cost of their emissions.\u00a0 This will encourage the uptake of electric cars, but it will do it in the most economically efficient way, since it makes sense to directly attack the causes of global warming and air pollution and not come at them in a round about way by subsidising things we think will help.<\/p>\n

The cost of greenhouse gas emissions can be added directly to fuel prices.\u00a0 This makes sense because we can be certain all the fuel is going to be burned.\u00a0 No one is likely to be injecting petrol back into an oil field.<\/p>\n

The cost of air pollution could also be added onto fuel prices, but it would also be good to give people an incentive to buy vehicles that pollute less per litre of fuel burned.\u00a0 It could also be helpful to have some of the cost front loaded into the purchase price of vehicles, as humans often pay more attention to that than running costs.\u00a0 But this could be problematic as car manufacturers have become very good at gaming pollution and fuel economy<\/a> measurement tests.<\/p>\n

Electric Car Subsidies<\/h2>\n

Rather than making vehicles pay the full cost of their pollution we could instead subsidise electric vehicles.\u00a0 But this raises some problems:<\/p>\n