Technological advances aimed at responding to climate change are happening at a dazzling pace around the world. We are seeing this most dramatically in the energy sector, with renewable sources having so quickly become the most cost-effective solutions to so much of our future energy needs, including in Australia.
One area of technological potential where change is coming more slowly in Australia, though, is the uptake of electric vehicles (EVs). While EV sales had significant growth before the pandemic, the market share remains just 0.75% of new car sales.
Nineteen per cent of Australia’s greenhouse gases come from the transport sector. If we are to achieve net zero emissions by 2050, which surely must become our goal, this sector must be a focus of our work.
To achieve this we need to adopt the goal of reaching close to 100% electric or other low-emission vehicles in the new car market by the mid-2030s. Adopting such an ambitious target would provide an important signal to the car industry and would give it the certainty it needs to invest in the Australian market.
Many car manufacturers have announced their plans to phase out conventionally fuelled vehicles over the coming 15 years. Costs are coming down, and price parity should be reached in the second half of the decade.
This is, however, not a case for relying solely on those market trends. The worst outcome for Australia would be for us to become the dumping ground for old technology as other markets expand in electric vehicles.
Earlier this year the minister for energy and emissions reduction released the Future Fuel Strategy discussion paper. The paper points to the key priorities of expanding charging infrastructure, improving information to motorists, integrating EVs with the grid and supporting Australian innovation.
The paper also highlights the value of targeting the commercial car market, which accounts for 40 to 50% of new car sales. Commercial fleets can be early adopters of new technology and critically, because of more frequent turnover, can become an early source of EVs for the secondhand car market.
If, however, we are to ensure the transport sector reaches net zero, there is much more that can and should be done. For example, many nations have provided some form of tax or direct subsidies to deliver lower-cost vehicles to consumers, with strong results. Early and short-term subsidies can provide a kickstart to more rapid growth while market prices trend down through technological innovations and market growth. We should be open to these approaches in Australia.
At the federal level, it is time we removed the luxury car tax entirely from low-emission vehicles. At the state level, state and territory governments must look towards measures such as lower rego and stamp duty and even toll relief for electric vehicles.
What they should not do is follow the lead of the Victorian and South Australian governments in implementing new road charges on EVs while the market is so thin.
In the corporate fleet sector, we can improve the attractiveness of electric vehicles even further through tax changes. For example, fringe benefit tax (FBT) reform is required to address the current disadvantage EVs face compared with petrol and diesel vehicles in the FBT system.
The rollout of the public charging network is improving every year, but this addresses only half the challenge. Most potential EV owners want to be able to charge their cars at home or work. Planning laws should be updated to ensure new homes, apartments and commercial buildings are EV-ready with the necessary infrastructure. This will be far less costly than a retrofit in five or 10 years’ time.
Finally, there is a clear intersection and overlap between state and federal governments on these issues. Coordination of a national approach is vital in this regard. Governments, through national cabinet, should therefore consider whether a new national taskforce that brings jurisdictions and industry together can assist in delivering a zero net emissions transport future.
With the right support, Australia can be a leader in the rollout of low-emissions vehicles, be they electric or using other technologies such as hydrogen. It’s time we put the foot on the accelerator to make it so.