Barriers and incentives for transitioning to zero emission vehicles in - NSW DEPARTMENT OF PLANNING, INDUSTRY & ENVIRONMENT
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
DEPARTMENT OF PLANNING, INDUSTRY & ENVIRONMENT Barriers and incentives for transitioning to zero emission vehicles in NSW Stakeholder perspectives and literature review environment.nsw.gov.au
© 2021 State of NSW and Department of Planning, Industry and Environment This report was coordinated by the CRC for Low Carbon Living Ltd on behalf of the Energy Efficiency Decision Making Node (a node of the Department of Planning, Industry and Environment Energy Efficiency Research Hub). The Node is a research collaboration between CSIRO, University of Wollongong, and the University of New South Wales. With the exception of photographs, the State of NSW and Department of Planning, Industry and Environment are pleased to allow this material to be reproduced in whole or in part for educational and non-commercial use, provided the meaning is unchanged and its source, publisher and authorship are acknowledged. Specific permission is required for the reproduction of photographs. The Department of Planning, Industry and Environment (DPIE) has compiled this report in good faith, exercising all due care and attention. No representation is made about the accuracy, completeness or suitability of the information in this publication for any particular purpose. DPIE shall not be liable for any damage which may occur to any person or organisation taking action or not on the basis of this publication. Readers should seek appropriate advice when applying the information to their specific needs. All content in this publication is owned by DPIE and is protected by Crown Copyright, unless credited otherwise. It is licensed under the Creative Commons Attribution 4.0 International (CC BY 4.0), subject to the exemptions contained in the licence. The legal code for the licence is available at Creative Commons. DPIE asserts the right to be attributed as author of the original material in the following manner: © State of New South Wales and Department of Planning, Industry and Environment 2021. Cover photo: Traffic at the southern entrance to the Domain Tunnel in Sydney, Matt Arkell, licensed under the Creative Commons Attribution-Share Alike 2.0 Generic Published by: Environment, Energy and Science Department of Planning, Industry and Environment 4 Parramatta Square, 12 Darcy Street, Parramatta NSW 2150 Phone: +61 2 9995 5000 (switchboard) Phone: 1300 361 967 (Environment, Energy and Science enquiries) TTY users: phone 133 677, then ask for 1300 361 967 Speak and listen users: phone 1300 555 727, then ask for 1300 361 967 Email: info@environment.nsw.gov.au Website: www.environment.nsw.gov.au Report pollution and environmental incidents Environment Line: 131 555 (NSW only) or info@environment.nsw.gov.au See also www.environment.nsw.gov.au ISBN 978-1-922558-94-7 EES 2021/0227 June 2021 Find out more about your environment at: www.environment.nsw.gov.au
Contents List of figures iv List of tables v Executive summary vi List of shortened forms viii Introduction 1 Background 1 Report objectives 1 Drivers of zero emission vehicle uptake 2 Availability of vehicle models and costs 2 Infrastructure drivers 7 Disruptive business model drivers 9 Policy drivers 10 Market trends in zero emission vehicles 14 Charging infrastructure and electricity grid 17 Consumer preferences 20 Stakeholder perspectives 23 Introduction 23 Stakeholder mapping 23 Current barriers to increased adoption of ZEVs in NSW 30 Uncertainties on the adoption pathway for ZEVs in NSW 33 Priority interventions 35 Appendix A Stakeholder mapping methodology 37 References 38 iii
List of figures Figure 1 Hyundai Nexo HFCV 3 Figure 2 Projected future costs of electric vehicles 4 Figure 3 Index of motor vehicle prices in Australia 5 Figure 4 Passenger vehicle fuel consumption by year of manufacture 6 Figure 5 Standard hydrogen refuelling station configuration 8 Figure 6 Electric vehicle sales in Australia (2011–2017) 15 Figure 7 Electric vehicles sold by state and territory 15 Figure 8 EV adoption per country (2011–2017) 16 Figure 9 Electric vehicle uptake by scenario, Australia 16 Figure 10 Comparison of per-kilometre vehicle emissions in NSW in the year shown, for a new ICE, hybrid or electric vehicle 19 Figure 11 Electricity consumption from electric vehicle charging 20 Figure 12 Victorian consumer attitudes to EV prices 21 Figure 13 Sydney households’ stated likelihood of next car being an EV, online survey of 568 households in Greater Sydney, 2018 22 Figure 14 Overview of interview methodology 23 Figure 15 Stakeholder typology 24 Figure 16 Public charging stations 27 Figure 17 Research collaboration on hydrogen fuel cell vehicles 28 Figure 18 Direct and indirect influencers of ZEV adoption 29 Figure 19 Customer interaction funnel 29 Figure 20 Innovation adoption curve 30 Figure 21 Summary of barriers to increased adoption of ZEVs in NSW 32 Figure 22 Future uncertainties on the adoption pathway for ZEVs in NSW 34 Figure 23 Priority interventions to increase ZEV uptake in NSW, as identified in stakeholder interviews 36 iv
List of tables Table 1 Recent, current and expected battery electric vehicle models available in Australia 2 Table 2 Estimated home charging infrastructure costs 7 Table 3 Emerging or potential disruptive business models to support electric vehicle adoption 9 Table 4 Financial incentives for ZEVs – Commonwealth, state and territory governments 10 Table 5 Key policy levers and expected impact on adoption rates 12 Table 6 Local policies and programs to support EV uptake 12 Table 7 Overview of support policies for electric vehicles in the Nordic region 2017 13 Table 8 Overview of electric vehicle supply equipment policies in Nordic countries 13 Table 9 Overview of EV charger characteristics in different regions 18 v
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Executive summary The adoption of low or zero emission vehicles can provide a cost-effective approach to reducing greenhouse gas emissions in New South Wales, while also achieving other benefits such as improved local air quality. Manufacturers are increasingly shifting to zero emission vehicles (ZEVs) that have increased range and performance compared to earlier generations of ZEVs. There has been a marked shift in the uptake of electric vehicles globally, particularly in China and Norway, where financial and non-financial incentives have driven rapid adoption. However, in New South Wales and the rest of Australia the market share of ZEVs lags behind other developed economies. This report, based on a literature review and stakeholder interviews, identifies the factors that are likely to influence householders’ decisions on ZEVs when purchasing a new vehicle. This provides insights for policy-makers on the barriers and incentives for NSW householders when considering the purchase of a ZEV, such as an electric vehicle (battery and plug-in hybrid) or hydrogen fuel cell vehicle. Access to a wide choice of vehicle models is a strong expectation of vehicle consumers, but is a challenge for new vehicle technologies to achieve. Australia currently only has a limited number of ZEVs available for consumers at price points that are mostly higher than comparable internal combustion engine (ICE) vehicles. The diversity of ZEVs will increase in coming years, and appears to be associated with maturing markets in terms of sales, which helps to drive customer demand and further sales. ZEV costs are projected to decline, but price parity with ICE vehicles is likely to lag behind international markets due to a lack of fuel efficiency and emissions standards in Australia. Projections estimate that cost parity could be reached by 2025. The market for hydrogen fuel cell vehicles is less developed than battery and plug-in hybrid electric vehicles; however, they have the potential to be cost competitive with electric vehicles (EVs), particularly if the hydrogen fuel becomes more widely used in the electricity sector or as an export industry, and there is investment in refuelling infrastructure. The accessibility of infrastructure is important to support the uptake of ZEVs, with people preferring to charge primarily at home and work, but also needing the confidence that they can access fast charging infrastructure for travel outside of the metropolitan area. The shift to apartment dwelling in Sydney, where it might be more difficult to access a private charging station, highlights the need for public charging stations in these more densely populated areas where off-street parking can be limited. The review also highlighted the need to plan for electricity distribution capacity in parts of the network that are likely to experience high uptake of EVs. The impact of EVs on the daily load profile and maximum demand depends on how and when they are charged. Charging is likely to be influenced by the availability of public infrastructure, tariff structures, any energy management systems, and the driver’s routine. There is the potential for existing economic and infrastructure constraints on the increased adoption of ZEVs to be disrupted by new business models that change the conditions under which a customer might consider adopting a new technology. For example, businesses could offer daytime parking with low cost charging in areas of the network with high solar uptake. This would help to overcome the constraint that EV charging will likely be primarily at home and overnight, which is poorly matched with solar generation, limiting the value of electric vehicle charging to the grid. Experiences in overseas jurisdictions highlight the importance of financial and non-financial incentives in increasing adoption of ZEVs. In the Nordic countries, policy support has significantly influenced EV adoption. Measures that reduce the purchase price of EVs are the main driver. vi
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Currently in New South Wales only small and medium-sized EVs have a lower greenhouse gas intensity per kilometre than the equivalent ICE vehicle; however, modelling of a selected scenarios where the grid decarbonises over time demonstrated that over time the greenhouse intensity of EVs is also likely to decline below that of ICE vehicles. Consumer surveys in Australia have shown that a majority of households would be willing to consider the purchase of an EV; however, for at least half of these households this willingness is contingent on a reduction in the purchase price to closer to comparable petrol and diesel cars. The interviews with NSW stakeholders highlighted how different organisation types are enabling the transition to ZEVs. It was highlighted that many of the current barriers can be considered secondary to the primary barrier that the ZEV market in New South Wales is immature and has diseconomies of scale, which leads to uncertainties and risk aversion. Therefore, interviewees emphasised the importance of encouraging actions that enable the ZEV market to reach a minimum threshold where the process for purchasing and operating a ZEV can be normalised, and there is sufficient information to assess risks. Stakeholders were also asked to identify future uncertainties that might influence the adoption pathway for zero emission vehicles in New South Wales. It was noted that once ZEVs reach cost parity there are still uncertainties around the potential customer demand, and the willingness to give up petrol vehicles. Interviewees also noted that understanding of the characteristics and motivations of the early adopters is still developing. It was highlighted that future changes in governments’ policies and overall support for ZEVs is likely to influence the adoption trajectory. The need for a clear policy driver was highlighted, as at the moment there are a range of policy drivers for ZEVs, but a policy driver needs to reach a point where it becomes a preeminent priority that drives decisive government action. New South Wales and the rest of Australia being relatively slow adopters of ZEVs provides an opportunity to learn from implementation experiences in other countries, and also take advantage of second generation technology, such as improved batteries and charging systems. Stakeholders were also asked to identify priority actions to accelerate the adoption of ZEVs in New South Wales. A number of interviewees highlighted that the setting of a clear vision and aspirational targets can help increase adoption even without financial incentives that subsidise the market. This government leadership would send a clear signal to the market that would build the confidence of manufacturers in importing a greater number and diversity of ZEVs, and investment in charging infrastructure. Another approach put forward to enable the ZEV market in New South Wales, without direct government subsidies, was through the support of research and community education programs. Other common suggestions on priority actions for NSW Government leadership included the setting of ambitious ZEV targets for department fleets, and supporting changes in the national vehicle fuel efficiency standards and the removal of restrictions on parallel imports of second-hand vehicles. vii
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review List of shortened forms AC alternating current AEMO Australian Energy Market Operator ARENA Australian Renewable Energy Agency BEV battery electric vehicle CO2-e carbon-dioxide equivalent CSIRO Commonwealth Scientific and Industrial Research Organisation DC direct current EV electric vehicle EVC Electric Vehicle Council FCEV fuel cell electric vehicle GHG greenhouse gas GWh gigawatt hour HFCV hydrogen fuel cell vehicle HMA Hydrogen Mobility Australia ICCT International Council on Clean Transportation ICE internal combustion engine IEA International Energy Agency km kilometre kW kilowatt kWh kilowatt hour NSW New South Wales PHEV plug-in hybrid electric vehicle ZEV zero emission vehicle viii
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Introduction Background In 2016 the NSW Government released the Climate Change Fund Draft Strategic Plan 2017–2022 for public consultation. The Plan includes a number of potential actions to reduce vehicle emissions, as it is recognised that improved vehicle fuel efficiency and a shift to alternative low emission fuels are some of the lowest cost emission reduction opportunities in New South Wales. Car manufacturers are increasingly producing alternative drivetrain (e.g. hybrid or electric) and/or alternative fuel vehicles, while in overseas jurisdictions ambitious targets have been set for transitioning to low emission vehicles. However, in New South Wales and the rest of Australia, adoption of these vehicles is lagging behind other countries. The design of more effective policies and market incentives to encourage the adoption of energy efficient vehicles is impeded by a lack of understanding of the factors that influence household vehicle purchasing behaviour. To address this need, the NSW Department of Planning, Industry and Environment (DPIE; former Office for Environment and Heritage), in partnership with the CRC for Low Carbon Living, commissioned a project to improve understanding of incentives and barriers for the adoption of zero emission vehicles. This project aims to better understand NSW householder behaviour with respect to vehicle purchasing decisions to more accurately anticipate responses to government interventions for zero emission vehicles. The study will focus on vehicle purchasing decisions made by NSW households, and in particular the factors that currently impede the adoption of zero emission vehicles and potential incentives to overcome these barriers. The emphasis is on zero emission vehicles (ZEVs) 1, in particular electric vehicles (EVs), which includes battery powered vehicles and hydrogen fuel cell vehicles (HFCVs). More efficient vehicles that use conventional fuels, including hybrids, are an important component of transitioning to lower emissions in New South Wales; however, ZEVs represent a transformative change where there is greater householder uncertainty around vehicle purchasing decisions, and a need to understand effective policy incentives that could increase adoption and reduce road transport emissions in New South Wales. Report objectives This report has the following objectives: 1. Undertake a thematic analysis of incentives and barriers for increased adoption of zero emission vehicles based on a literature review. 2. Based on interviews, represent stakeholders’ perspectives on barriers and incentives for NSW householders transitioning to zero emission vehicles. 1 Zero emission vehicles are defined as vehicles that have zero pollutant emissions from the tailpipe. 1
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Drivers of zero emission vehicle uptake Availability of vehicle models and costs Model availability Access to a wide choice of vehicle models is a strong expectation of vehicle consumers but is a challenge for new vehicle technologies to achieve. Electric vehicle manufactures must attract customers to a new type of vehicle but also simultaneously achieve economies of scale in manufacturing so the unit cost of the vehicle is not too high. Finding such a balance is difficult but research shows it is necessary. In the comprehensive review by Slowik and Lutsey (2017) of electric vehicle adoption in the United States they conclude: We find a link between electric vehicle model availability and uptake. The five leading electric vehicle markets by volume, representing nearly half of all U.S. electric vehicle sales, each had at least 24 available electric vehicle models in 2016. Yet across the major U.S. markets, about half of the population has access to 10 or fewer electric models, and many dealerships have very low inventories of those models. Availability of more models across vehicle types, offered at a range of price points and passenger capacities, is an essential precursor to more substantial market development. While clearly important for electric vehicle adoption, from a policy perspective it is not clear how the NSW Government could directly target the availability of electric vehicle model diversity. It appears to be associated with maturing markets in terms of sales, which helps to drive customer demand and further sales. Current costs of available ZEVs Australia has only a limited number of electric vehicles currently available for sale. The Nissan Leaf that was previously available for sale was removed from the new vehicle market. Nissan intended to bring back a new model in around 2019 at significantly lower cost (Table 1). Tesla and Renault will also have other models available within a year or so. Of those that have been available it can be observed that longer range models were more costly; however, it is difficult to establish whether this was due to additional batteries, as the longer range models also tended to be marketed as sports vehicles, which attract a premium. Certainly, where additional range is an option it has to be paid for. Table 1 Recent, current and expected battery electric vehicle models available in Australia Model Range Approximate cost BMW i3 190 km A$75,000 Tesla Model S 480 km A$105,000–207,000 Tesla Model X 489 km A$119,000–218,000 Tesla Model 3 350–500 km NA Renault Zoe 300 km A$45,000 Renault Kangoo Maxi ZE (coming to market) 120–200 km A$46,000 Nissan Leaf (previously available) Up to 240 km A$55,000 Nissan Leaf (coming to market) 400 km NA Mitsubishi Miev Up to 150 km A$52,000 Jaguar I-PACE (late 2018) 500 km A$120,000 Hyundai EV Ioniq 280 km A$43,000 Sources: https://myelectriccar.com.au/evs-in-australia/; https://www.renault.com.au/electric; https://www.tesla.com/en_AU/model3; https://www.carsguide.com.au/tesla/model-s/price; https://www.carsguide.com.au/tesla/model-x/price 2
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review HFCVs are currently not available for purchase in Australia due to the lack of infrastructure for refuelling; however, the ACT Government has ordered a fleet of 20 HFCVs (Hyundai Nexo), along with a hydrogen refuelling station and service centre, which will provide a demonstration of the hydrogen economy. The expected range for the Hyundai Nexo is around 800 kilometres, but the pricing is uncertain at this stage. Figure 1 Hyundai Nexo HFCV Photo: Alexander Migl, CC BY-SA 4.0, via Wikimedia Commons Future costs of ZEVs Electric vehicles To form a view about the likely change in the costs of electric vehicles several global projection studies were compared. The most detailed projections available were from the International Energy Agency (IEA) and the International Council on Clean Transport (ICCT) (IEA 2017; Slowik and Lutsey 2016). They examined electric vehicles of different range capabilities and in different global markets. The ICCT data shown in Figure 2 is a global average. This source assumes the cost of internal combustion engine (ICE) vehicles will rise in the European and United States vehicle markets due to emissions standards forcing improved energy efficiency measures to be added to ICE vehicles. ICCT projects electric vehicles will reach parity with ICE vehicles in 2025 or slightly sooner for 160–240 kilometre (km) range vehicles (noting that this is only financial parity, not equivalent vehicle range). Vehicles with a 320 km range or larger will reach financial parity later. This is a view well aligned with Bloomberg New Energy Finance (BNEF 2017) who project parity between electric and ICE vehicles between 2025 and 2029. The IEA (2017) is slightly less positive with parity for 200 km range vehicles reached by 2030 but 350 km range vehicles reaching that point some years after 2030. 3
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Figure 2 Projected future costs of electric vehicles Our understanding of these global projections is that they are in the context of a comparison to ICE vehicle costs that are increasing due to tightening vehicle fuel and emissions standards that are in place in most developed countries outside Australia 2. In contrast, Australian vehicle prices have been falling in real terms (Figure 3). The cost reductions in Australia since the mid-1990s have been largely due to reductions in tariffs that began in the mid-1980s and the subsequent greater competition as a result. For both commercial and passenger vehicles import duties are currently 5% (or zero where we have a bilateral agreement with specific countries). Luxury vehicles over a given threshold still pay 33% import duty (the threshold is $75,000 for fuel efficient vehicles and $64,000 for all others). If we assume these competitive import pressures are already at full force (particularly with domestic manufacturing winding up), a flat Australian vehicle price is most likely in the future. One driver of potentially higher prices is that the efforts to improve fuel efficiency in overseas markets spills over into the cost of similar models in Australia. When the Climate Change Authority (2014) studied the impact of international vehicle emissions standards it did not consider this likely, arguing that manufacturers have shown already that they can offer the same vehicle model but with different parts to achieve a less efficient lower cost vehicle for Australia: Australia imports 90 per cent of its new vehicles…, and almost 75 per cent of new vehicles come from countries with mandatory standards in place. Nevertheless, the efficiency of Australian light vehicles remains well behind most other markets. These differences in emissions intensity of the Australian and other fleets are explained in part by the differences in the mix of models. Australia has more large passenger vehicles than some countries… Even so, the variants of models offered in Australia are often less efficient than the same model sold in other markets. The most efficient variants of some models available in Australia consume about 20 per cent more fuel on average than the most efficient variant of the same make and model available in the UK. 2 In practice, achieving fuel efficiency improvements in ICE vehicles requires manufacturers to install additional or substitute items from a range of alternative vehicle parts that deliver higher fuel efficiency. The options for improving fuel efficiency are already known (do not require significant new research) and range from a few hundred dollars to a few thousand dollars. See, for example, Table 14 in ABMARC (2016). 4
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review If we plot a flat Australian ICE vehicle price, the timing for electric and ICE vehicle cost parity in Australia will be delayed by a number of years, compared to international markets, depending on the vehicle range type. As part of Australia’s national transport projections DoEE (2016) assumed electric and ICE vehicle cost parity in Australia 2025. The DoEE (2016) assumption for Australian parity only aligns with the international projections for the shortest range electric vehicles (160 km), which no longer appear to be popular models (see previous section), with most new Australian models adding more range. Figure 3 Index of motor vehicle prices in Australia Source: ABS (2018) Fuel cell hydrogen vehicle costs A number of sources have previously identified that FCHVs are likely to converge towards the cost of long range electric vehicles (e.g. EIA 2016). At present while long range electric vehicles are in the market, there are relatively limited fuel cell vehicles available, especially in Australia. Consequently, in order for their costs to converge, FCHVs will need a period of faster cost reduction over the next decade to catch up. They may achieve that in part because they can use the same electric drivetrain as a long range electric vehicle. Any cost reductions achieved in that part of the vehicle will automatically be available to FCHVs. Like batteries, hydrogen fuel cells have broader applications in the electricity sector, providing grid reliability services that may partly drive improvements in the cost of hydrogen (e.g. through wider application of electrolysers and fuel cell system costs). It is likely that fuel cell vehicles are able to compete with long range electric vehicles in the long run, particularly if hydrogen fuel becomes more widely used such as in the electricity sector or as an export industry 3. 3 A pilot project is underway in Victoria to explore this opportunity. 5
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Fuel costs Although the fuel efficiency of new ICE light vehicles has improved at 2–3% per annum under the current test cycle, average fleet performance data indicates that the real on-road fuel efficiency improvement has been closer to 1% per annum. Figure 4 shows the change in fuel efficiency for the Australian passenger fleet for vehicles manufactured from 1994–2000, 2001–2010 and 2011 onwards. This shows that for petrol-fuelled vehicles, which make up more than 85% of the passenger fleet, there has only been a marginal reduction in average fuel consumption. The diesel-fuelled passenger fleet, which has increased rapidly with 52% of vehicles added after 2010, has become more fuel efficient. Figure 4 Passenger vehicle fuel consumption by year of manufacture Source: ABS (2017) Survey of Motor Vehicle Use, Australia, 12 months ended 30 June 2016. Additional fuel efficiency is achieved through adoption of electric and fuel cell vehicles. Both electricity and liquid fuels have upstream energy losses. In liquid fuels it is in the transport of liquids and their conversion from crude products into refined fuels, while for electricity, it is in the conversion of fossil fuels or renewable resources into electricity and in transmission and distribution losses. In the case of liquid fuels the energy losses are far greater in-vehicle with low final conversion efficiencies of around 20%, while for electricity, the least efficient parts of the energy conversion processes occur upstream and in-vehicle energy conversion is high (e.g. electric motor efficiency is around 90%). Because of this difference in the location of the energy conversion losses, electricity displaces around three times the amount of refined liquid fuel for each joule of energy required in-vehicle. This translates to significant reductions in fuel costs compared to ICE vehicles. Compared to electric vehicles, fuel cell vehicles have additional losses in the hydrogen production and fuel cell energy conversion process compared to batteries (with significant variation depending on the hydrogen primary energy source). As a consequence, assuming electrolysis as the hydrogen source, fuel cell vehicles require around 50% more watt hours of electricity per kilometre. Other vehicle costs Besides the fuel and upfront costs of a vehicle there are a number of other ongoing costs that contribute to the whole cost of travel by light vehicle. In New South Wales, the light vehicle annual registration fee for private use is $66 with additional motor vehicle tax based 6
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review on the vehicle weight, which ranges from $211/year for small vehicles (up to 975 kilograms (kg)) to $457/year for extra-large vehicles (1505–2504 kg). The NSW motor vehicle tax is reduced by around $20–30 (depending on weight) if the vehicle meets the following criteria: Manufacturer designated petrol-electric hybrid, diesel-electric hybrid, plug-in hybrid, or electric vehicles with CO2 emissions no higher than 150 grams/kilometre (g/km) in the ‘combined’ driving cycle. Eligible lower taxed vehicles based on Green Vehicle Guide rating of 4½ or 5 stars (rating scheme now discontinued) are eligible for the lower tax. For internal combustion maintenance costs, ATAP (2016) advises 6.1c/km, 7.1c/km and 5.7c/km for small, medium and large light vehicles, respectively. These include repairs and maintenance which in modern vehicles is not high in the first five years of life and repairs may be covered under warranty. Electric vehicle maintenance costs are assumed to be half that of ICE vehicles 4. Electric vehicles will incur tyre and other minor costs but will save on some oils, brakes (due to regenerative brake) and on scheduled vehicle parts checks given the much smaller part count 5. Alternative drivetrain repairs or accident costs would be dealt with under warranty and insurance. Infrastructure drivers For electric vehicles the key infrastructure drivers are: • convenient location for a charging terminal in the home garage or a frequently used daytime parking area for passenger vehicles and at parking or loading areas for business vehicles such as light commercial vehicles, trucks and buses. Use of this location may or may not require significant electric works • whether the residence or business has ownership or other extended tenancy of the building or site and intention to stay at that location to get a longer-term payoff from the upfront costs of installing the charger • convenient access to highway recharging for owners without access to extended range capability (or other options, see below) • access to different models of electric vehicles (e.g. fully electric limited range, fully electric long range, electric drivetrain with fuel cell/hydrogen electric storage) with different driving ranges to suit diverse customer travel needs • convenient access to other means of transport such as a second car in the household, car/ride sharing, train station, airport and hire vehicles for longer range journeys. Table 2 provides indicative costs of purchasing and installing in-home charging infrastructure. Table 2 Estimated home charging infrastructure costs Charger type Purchase Installation Electricity Approx. cost cost costs charge cost per 100 km 16A (3.6kW) single phase $1,320 ~$800 ~$0.25 kWh $3.88 Type 2 $1,760 ~$1,000 ~$0.25 kWh $3.88 (3 phase, 32A, 22kWh) Source: Cost of charging your electric car; assumes 2019 Nissan Leaf 4 AEMO and Energeia (2016) assume 51%. 5 VACC (2018) reports a ratio of 17 to 2000 moving parts in electric vehicles compared to ICE vehicles. 7
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Sufficient electricity distribution network capacity to meet coincident charging requirements of parts of the network with a high share of electric vehicles could also be an infrastructure constraint if not well planned for. However, networks are obligated to expand capacity to meet load where needed, so any such constraints would only be temporary. Sydney, like other Australian cities, is generally observing a trend towards apartments rather than separate dwellings. This is expected to result in a lower share of customers with access to their own garage space (but perhaps ameliorated by older more established households being more likely to live in separate dwellings). There has also been recent evidence of a fall in home ownership, especially amongst younger age groups. For electric vehicles these trends might also work towards lower adoption as denser cities tend to encourage greater uptake of non-passenger car transport options and car/ride sharing services which result in fewer vehicles. CSIRO’s National Hydrogen Roadmap detailed the opportunities for hydrogen fuel cell electric vehicles (FCEVs) as a complementary technology to battery electric vehicles (BEVs) (Bruce et al. 2018). FCEVs may be more suited to consumers who travel longer distances as the expected range of an FCEV with a 6 kg tank is 500–800 km. Also, FCEVs may be suited to consumers who don’t have access to BEV charging infrastructure (e.g. apartment dwellers) or require shorter refuelling times. However, hydrogen refuelling infrastructure is critical for the uptake of FCEVs in Australia. In the United States investment in hydrogen fuelling infrastructure has mostly been from government agencies, with the costs of developing stations varying from $1.8 to $5.9 million.9 Figure 5 shows a standard configuration for a hydrogen refuelling station, with the key difference being the hydrogen delivery method, dispenser pressure and capacity. The high operating pressures at which hydrogen is delivered require additional equipment considerations. To enable a fast fill the hydrogen needs to be pre-cooled to –40°C prior to dispensing, which increases the electricity demand. Also, due to the precise temperature range required, control systems are needed to monitor the volume, temperature, flow rate and pressure (Bruce et al. 2018). The rollout of hydrogen refuelling stations is likely to require a high degree of coordination between vehicle manufacturers and infrastructure providers to ensure the provision and location of stations supports a developing market. The first refuelling stations are likely to be co-located with existing petrol stations, and clustered in areas where there are likely to be early adopters, to build customer confidence. Once the refuelling infrastructure is sufficient to service metropolitan areas, the next focus would be on supporting inter-city travel by investing in hydrogen fuelling stations along major highways (Bruce et al. 2018). Figure 5 Standard hydrogen refuelling station configuration Source: Bruce et al. (2018), p.40. 8
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Disruptive business model drivers New business models can disrupt economic and infrastructure constraints by changing the conditions under which a customer might consider adopting a technology. The business models that are relevant could address either the cost and availability of charging the electric vehicle, or the cost of the vehicle. Table 3 explores some emerging and potential business models that could drive higher adoption of electric vehicles and our rating of how soon we expect them to emerge. Table 3 Emerging or potential disruptive business models to support electric vehicle adoption Business model name Business model description Constraint reduced Reasonable cost public Some businesses may offer public Access to electric vehicle charging charging on-street charging facilities as an will be primarily at the home or additional amenity to encourage business owner’s premises, patronage of their core business or limiting the ability of people without as a business on its own off-street parking to adopt EVs Rating: near-term Solar matched public Businesses offer daytime parking Electric vehicle charging will be charging with low cost-controlled charging primarily at home and overnight, and provide voltage control poorly matched with solar, limiting services to the network in high the value of electric vehicle solar uptake areas charging to the grid Rating: medium-term Electric vehicle battery Electric vehicle batteries are sold Electric vehicle batteries are costly second life as low cost home batteries as a to replace second life application Rating: medium-term Car/ride sharing and Car/ride sharing and vehicle Electric vehicles will be automation1 automation could lead to electric predominantly used for private vehicle investment being led by purposes by the vehicle owner and businesses that will achieve very the return on their investment will high vehicle utilisation and lower be governed by that user’s travel whole of life transport costs per patterns kilometre Rating: medium-term Electric vehicles as a Home energy management Using the battery capacity in your home energy service service companies supply and electric vehicle for home energy package operate integrated electric vehicle, management would be rooftop solar, battery storage, and complicated to set up and may HVAC and water heating home void equipment warranties that management packages were designed for isolated Rating: long-term operation 1While increasing the kilometres travelled via electric vehicles, this may potentially reduce the number of electric vehicles overall since this business model involves fewer cars but with each car delivering more kilometres. It should be noted that even the best business model innovations still require that the cost of the service can be fully recovered through direct price or indirectly through sale of a co- product (e.g. the parking space itself or other services available at the location). For example, highway electric vehicle fast charging that may have a cost of over $100,000 to install will struggle to pay back that investment without charging a premium for electricity if there are too few customers on that highway route 6. As such it would be reasonable to expect that nearly 6 The premium per fuelling increases from $8 per fill for a charger with five customers a day to $40 for a charger receiving only one customer per day on average throughout the year. Assumptions: 10-year financing period at 7% per annum. 9
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review all charging infrastructure is initially uneconomic before electric vehicles increase their fleet share (existing private sector charging infrastructure should be considered examples of advertising rather than of future business models). However, even once electric vehicles reach higher market shares, there may remain parts of the road transport system where businesses cannot deliver economically viable charging infrastructure. Policy drivers Current incentives for ZEVs in NSW As noted previously, New South Wales provides a minor reduction (~$20–30) in annual motor vehicle tax if the vehicle has CO2 emissions of less than 150 g/km in the combined driving cycle. The City of Sydney offers a discount for residential parking permits based on the Green Vehicle Rating based on tailpipe CO2 g/km for the combined driving cycle. For vehicles with emissions less than 112 CO2 g/km the annual parking permit cost is $41, which goes up to $159 for vehicles that emit 260 CO2 g/km. Incentives for ZEVs in other Australian jurisdictions Victoria and the Australian Capital Territory provide incentives for ZEVs. Victoria provides a $100 discount on annual registration fees for electric vehicles. This represents an ongoing subsidy of electric vehicles relative to other vehicle types. Other states offer similar policies including stamp duty discounts (Parliament of Victoria 2018, p.51). The Australian Capital Territory’s policy offers the greatest financial incentive. Average environmental performance vehicles 7 at or below $45,000 are normally subject to a 3% stamp duty. A 5% stamp duty is applicable for each dollar above $45,000. Electric vehicles registered for the first time are exempt from this stamp duty. This application of different stamp duty rates to new vehicles is an approach unique to the Australian Capital Territory. It amounts to an upfront subsidy of $1350 on a $45,000 electric vehicle or $2110 on a $60,000 electric vehicle. Table 4 provides an overview of financial incentives for ZEVs across Australian jurisdictions, which highlights that reductions in stamp duty and registration are the most commonly applied incentives. Table 4 Financial incentives for ZEVs – Commonwealth, state and territory governments ACT NSW NT QLD SA TAS VIC WA Cwth EV sales per 10,000 21 10 1 6 22 3 10 8 7 vehicles (2017) Stamp duty, registration & tax discounts Financial incentives Direct vehicle subsidy Fleet incentive Charging infrastructure incentive Toll and parking discounts Key: – policy in place; – policy under consideration. Source: ClimateWorks Australia (2018). 7The corresponding rates for below and above average performance vehicles (but not fully electric) are 4% with a step up to 6% and 1% with a step up to 2% for every dollar above $45,000; see Duty payable upon registration or transfer of a motor vehicle. See also Australian Capital Territory (2018). 10
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Development of a national vehicle emissions intensity standard Since 2015 the Ministerial Forum on Vehicle Emissions has been established to work on the goal of addressing emissions from vehicles. The process has so far concluded, through a draft regulatory impact statement, that standards to improve fuel efficiency and reduce greenhouse gas (GHG) emissions would likely lead to lower costs of travel for consumers. The work of the forum continues and is focusing on policy design issues. This process could eventually result in a legislated vehicle emissions standard. Depending on the exact policy mechanism and the stringency of the standard that is set, such a policy could provide incentives for vehicle suppliers to produce more electric vehicles to meet the regulated standard. In other countries, and being considered in Australia, a multiplier is applied to electric vehicles such that sale of one electric vehicle counts as more than one vehicle for compliance calculation purposes. This encourages suppliers to cross-subsidise electric vehicles over other ways of meeting the targets. The precise impact of any emissions standards depends on the reduction target and the relative costs of different vehicle types in meeting the standard. A weak standard could potentially be met by low cost improvements in ICE vehicles alone for a significant period, particularly given our ICE fleet is starting from a position of relatively poor fuel efficiency. However, as the global costs of electric vehicles approach that of ICEs, thus discouraging manufacturers from pursuing further improvements in ICEs, electric vehicles might become the main means of meeting any emissions standard and their sales might exceed that required by the standard. Policy incentives in international jurisdictions The following describes some examples of policy incentives from overseas that have been used to influence the uptake of ZEVs. The successful adoption of a policy often relies upon the confluence of technology breakthrough, policy imperative and political will. The 2015 United Nations Climate Change Conference in Paris led to a number of countries announcing more ambitious goals to reduce vehicle emissions. Norway, the Netherlands, France, Germany, the United Kingdom, China and India have all made announcements indicating an ambition to eventually phase out the production and sale of fossil fuel vehicles (World Economic Forum 2018). Greene et al. (2014) highlighted the difficulty of developing policies to support the transition to ZEVs while there are still considerable market and technological uncertainties. They argued for an adaptive approach to policy-making with regular policy reviews to ensure they incorporate improving knowledge on both the market and technology. ClimateWorks (2018) highlighted that policy makers should consider availability of ZEVs for both the new and second-hand car markets. The second-hand car market will emerge as ZEV uptake increases, which will offer a broader range of price points for potential purchasers, but a current impediment for consumers to adopt ZEVs is uncertainty around residual values. Energeia (2018) undertook a benchmarking of international markets to identify the influence of financial and non-financial incentives in encouraging the adoption of plug-in hybrid electric vehicles (PHEVs). While this analysis of incentives focused on PHEVs, the findings are relevant for considering more broadly, policy levers that might drive increased adoption of ZEVs in New South Wales. Table 5 highlights the outcomes of this international benchmarking study. 11
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Table 5 Key policy levers and expected impact on adoption rates Policy lever Description Estimated impacts Vehicle efficiency regulations Implementation of 105 g/km 200–300% increase based on CO2-e fuel efficiency standard US experience Parallel import regulations Allowing third party imports of 200% increase in model EVs to increase model availability, 800% increase in availability uptake based on New Zealand experience Purchase incentives Direct financial incentives to ~$4000 incentive increases reduce purchase price model availability by 20%, and increases uptake Government fleet targets Fleet targets to provide initial 1 new vehicle introduced to the economies of scale to bring market per 500 EVs added to vehicles to market fleets Public charging infrastructure Investment in public charging Investment in public charging is availability infrastructure (DC fast correlated with high levels of chargers) EV market share Source: Energeia (2018) The ICCT noted that EV uptake is disproportionally concentrated in a relatively small number of cities, with 14 metropolitan areas accounting for almost a third of global EV sales. This highlights the importance of local policies and programs for supporting the transition to ZEV, which are targeted to the local context. Table 6 provides some examples of programs implemented in cities with high uptake of EVs. It was highlighted that in these cities there were often supporting actions across a range of areas (e.g. fleet targets, financial incentives, charging infrastructure, etc.) that helped to drive adoption. Table 6 Local policies and programs to support EV uptake Local policies or programs Example city Details City fleet goal Los Angeles Half of city fleet electric as of 2017 Electric car share program Paris Share car program had 4000 vehicles and 6000 charging points Free public charging Oslo Free charging with renewable energy EV friendly building and London 20% of new parking spots have parking codes EV charging Priority lane access San Francisco EVs can use carpool lanes and reduced bridge tolls Parking benefits Amsterdam EVs access to free public parking and priority for permits Public bus electrification Shenzhen All buses zero emission by 2017 Source: ICCT (2017)15 In the Nordic countries, policy support has significantly influenced electric car adoption. Measures that reduce the purchase price of electric vehicles are the main driver. Other important measures are reduced circulation taxes and local incentives, including waivers or 12
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review partial exemptions on road use charges, free parking or access to bus lanes. Table 7 and Table 8 summarise various support policies in place in Denmark, Finland, Iceland, Norway and Sweden. Table 7 Overview of support policies for electric vehicles in the Nordic region 2017 Waivers on EV use and circulation access EV purchase incentives incentives restrictions (e.g. tolls, parking, Registration tax/ Waivers on fees Registration tax (company cars) VAT exemption Free/dedicated Circulation tax Circulation tax Access to bus sale rebates Tax credits Tax credits (excl. VAT) exemption exemption parking rebates ferries) lanes Country Denmark Finland Iceland Norway Sweden Legend: ■ No policy ■ Local council policy ■ National policy Table 8 Overview of electric vehicle supply equipment policies in Nordic countries Regulations Direct investment Fiscal advantages development Deployment Research & regulations accessible accessible chargers chargers chargers chargers Building Publicly Publicly Private Private target Country Denmark Finland Iceland Norway Sweden Legend: ■ No policy ■ Local council policy ■ National policy There have been three main policy developments in China that are expected to have a positive impact on the uptake of EVs. First, in late 2017 China’s government issued a new energy vehicle (NEV) credit mandate that commenced in 2018. The mandate sets a minimum requirement for the car industry for the production of ‘new energy vehicles’ (PHEVs, BEVs and FCEVs), with some flexibility offered through a credit trading mechanism. Annual mandatory minimum requirements on the number of NEV credits that need to be earned are set for car manufacturers, and these credits can be traded (i.e. 13
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review manufacturers with excess credits can sell to manufacturers in deficit). NEV credits can only be earned if the vehicle meets minimum range requirements, and depend on the vehicle’s range and energy efficiency level. The number of credits allocated is also capped at a maximum for each vehicle type. Second, the National Electric Vehicle Subsidy Program grants subsidies for the purchase of electric cars. The level of subsidy allocated depends on three characteristics: the vehicle range in kilometres; energy efficiency in kilowatt hours per 100 km (kWh/100 km); and battery pack energy density in watt hours per kilogram (Wh/kg). Third, in late 2017 China also reportedly considered a national ban on the production and sales of ICE cars running on gasoline and diesel, although the announcement did not specify details on the timeline of such a ban (IEA 2018). Closer to Australia, the New Zealand Government announced its Electric Vehicles Programme in late 2016. This included measures to increase the number of electric vehicles in New Zealand and has a goal of reaching approximately 64,000 electric vehicles by the end of 2021. The Electric Vehicles Programme includes a number of initiatives: • extending the road user charges (RUC) exemption on light vehicles until they make up 2% of the light vehicles fleet (saves the average electric vehicle driver approximately $600 per vehicle each year) • RUC exemption for heavy electric vehicles until they make up 2% of the heavy vehicle fleet (saving is significant but dependent on the type of vehicle and the distance it travels in a year) • government and the private sector to investigate the bulk purchase of electric vehicles (New Zealand Government Procurement (NZGP) added 15 new electric vehicle models to the government vehicles contract to support the uptake of electric vehicles) • New Zealand Transport Agency (NZTA) to work closely with local and central government agencies, power companies, technology providers and the motor industry to produce guidance on public charging infrastructure for electric vehicles • $1 million annually for a nationwide electric vehicle information and promotion campaign over five years • contestable fund of up to $6 million per year to encourage and support innovative ZEV projects • allow electric vehicles into special vehicle lanes on the state highway network and local roads • review of tax depreciation rates and the method for calculating fringe benefits tax for electric vehicles, to ensure electric vehicles are not being unfairly disadvantaged • review levies for plug-in hybrid electric and electric vehicles • established the Electric Vehicles Programme Leadership Group to champion the program and proactively promote the initiatives within it. It will share information between central and local government and industry, and provide feedback to test ideas and decisions before they are put into practice. Market trends in zero emission vehicles Market share of zero emission vehicles in NSW and Australia Figure 6 shows the sale of PHEVs and EVs in Australia over the period 2011 to 2017 (ClimateWorks Australia 2018). This shows there was a marked increase in PHEV and EV sales in Australia from 2016 to 2017; however, Figure 7 shows the market share of EVs in overall vehicle sales is still very low. In New South Wales only 10 cars in every 10,000 sold (2011–2017) were EVs. 14
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Figure 6 Electric vehicle sales in Australia (2011–2017) Source: ClimateWorks Australia (2018) Figure 7 Electric vehicles sold by state and territory Source: ClimateWorks Australia (2018) Global trends in the zero emission market In 2017, global sales of electric cars crossed the threshold of 1 million units (1.1 million). The rate of growth of sales picked up in 2017, registering a year-on-year increase of 54%, compared with 38% in 2016 (IEA 2018). Figure 8 shows trends in EV adoption by country, showing there has been a significant shift in two markets – China and Norway. Norway has the highest per capita share of EVs with 40% of new vehicle sales now being EVs (see previous summary). China now accounts for around half of the global EV stock, which is being driven through a range of incentives and mandated policies. 15
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Figure 8 EV adoption per country (2011–2017) Source: International Energy Agency (2018) Zero emission vehicle outlook The most recent zero emission vehicle outlook for Australia was work completed by CSIRO (Graham et al. 2018) for the Australian Energy Market Operator (AEMO) as part of the recent Electricity Statement of Opportunities. This work focused on EVs and PHEVs and modelled slow, moderate and fast scenarios that differ based on assumptions about future costs of electric vehicles, saturation rates of EVs as a proportion of sales, adoption of car/ride sharing, and other assumptions about economic, household income and population growth. Under these scenarios (Figure 9), the uptake of EVs accelerates between 2025 and 2030 with the timing dependent on the scenario. Figure 9 Electric vehicle uptake by scenario, Australia Source: Graham et al. (2018) 16
Barriers and incentives for transitioning to zero emission vehicles in NSW: Stakeholder perspectives & literature review Charging infrastructure and electricity grid Charging infrastructure Charging technology for EVs has evolved over time. The three main characteristics that differentiate chargers from one another include: • level – the power output range of the electric vehicle supply equipment (EVSE) outlet • type – the socket and connector used for charging • mode – the communication protocol between the vehicle and the charger. Table 9 provides an overview of the most prevalent charging standards (with details on level, current, power rating and types, i.e. sockets and connectors) for various global regions. In general, Level 3 public charging infrastructure has been moving towards direct current (DC) to reduce the amount of charging time for an EV. For example, the NRMA network being rolled out in New South Wales (more discussion below) has 50 kW chargers that can charge an EV to 80% of its capacity in 30 minutes. The current focus for Tritium is high powered charging in the 350–500 kW range to charge an EV to 80% of its capacity in 7–8 minutes. These power ranges are likely to result in higher grid connection costs for infrastructure providers that may vary significantly depending on location. In New South Wales, the NRMA is currently establishing a regional network of 40 fast charging stations. This network will double the number of fast chargers in the state and when completed will be able to cover more than 95% of NRMA member road trips. This fast charging network is designed to support the transition to ZEVs by helping to address the barrier around range anxiety, where people are concerned they will not be able to complete their normal trips in a fully electric vehicle, especially outside of the metropolitan area. Zero vehicles and the electricity grid Comparing the GHG emissions of new light vehicles offered for sale in Australia (e.g. the Green Vehicle Guide) is usually done on the combined test results from the ADR 81/02 test cycle. This comparison is usually made on tailpipe CO2 emissions. Accordingly, EVs and HFCVs are zero emission vehicles using this approach. For a better understanding of the broader GHG emission implications of ZEVs 8 relative to ICEs, we can amend electric vehicle emission intensity to include indirect emissions from electricity generation. The calculation of per-kilometre new vehicle emissions for ICEs and EVs over the projection period requires a number of assumptions: • selection of comparable models for ICE, hybrids and electric vehicles • the fuel efficiency of new ICE, hybrids and electric vehicles and how that will change over time • the emission intensity of grid electricity and how that will change over time. The grid intensity of electricity in New South Wales is calculated from the neutral scenario from the Integrated System Plan (AEMO 2018b). It only includes direct combustion emissions from electricity, not those associated with extraction of fuels for electricity supply. Fugitive emissions from coal and gas extraction are one example of indirect emissions; however, these are small and declining over time as the generation mix changes. 8For this comparison we use an EV as the ZEV example due to a lack of current HFCV models in New South Wales. 17
You can also read