ZLEVS: policy and workshop change (part one)

19 October 2022

In August this year, VACC and four equivalent motor trades associations, NSW, SA/NT, WA and Queensland, embarked on an industry delegation to better understand the changing landscape that zero and low-emission vehicles (ZLEVs) are likely to bring to Australia’s automotive industry.

While plans for the delegation began in 2019, COVID-19 meant the main engagement with offshore counterparts took place primarily via Zoom, until recently.

The delegation visited automotive industry associations, individual repair shops, dealerships, manufacturers and policy-makers across Norway, Sweden, the Netherlands, Germany, and the UK. The level of engagement was great and detailed enough to provide a basis through which the motor trade associations could take an informed position to their members and government.

The urgency of this work had become even more pressing given the new national Labor Government’s assumption 89 per cent of all vehicles sold in Australia by 2030 will be electric. Following the passing of the Climate Change Bill in September this year, the Australian Government effectively has a mandate to help them towards meeting 2030 and 2050 CO2 emissions targets.

The Climate Change (Consequential Amendments) Bill 2022, outlines Australia's greenhouse gas emissions reduction targets of a 43 per cent reduction from 2005 levels by 2030, and net zero by 2050. The Bill also requires the government to report annually on greenhouse gas emissions and reduction targets.

This position is a quantum shift from the previous Liberal/National Coalition government, which also understood the vehicle emissions challenge, but relied heavily on a longer-term technology transition program to help reduce vehicle CO2 emissions.

Adding to the importance of the work of VACC, MTAs and MTAA, is the current development, by the Australian Government, of its centrepiece white paper on the country’s transition to a zero-emission fleet, the National Electric Vehicle Strategy consultation paper.

Released on 28 September 2022, the discussion paper raises a range of questions and scenarios through which government, industry and local communities can work collectively on a series of initiatives designed to lessen, and eventually remove, around 18 per cent of Australia’s CO2 emissions, created by the car, truck and transport fleet.

For clarity, in this paper, zero and low-emission vehicles include the different combinations of hybrids that are available, including plug-in hybrids (PHEV) and pure electric vehicles (EVs).

Zero-emission vehicles (ZEVs) is a term more regularly used now to mean any vehicle that has zero tailpipe emissions. This could include fully electric vehicles, and those using pure biofuel or hydrogen to power an EV via a fuel cell. Hybrids that use any form of petrol or diesel power should not appear in ZEV figures, given they still have the capacity to generate CO2 emissions.

Getting clarity in these definitions is important in Australia as there are still examples of organisations reporting hybrids as part of Australia’s EV figures, which is potentially confusing for consumers and regulators.

While hybrids will play a very important part in the ZLEV transition in Australia, we can expect governments (state and national) to focus more on separating the reporting of internal combustion engine vehicles (ICE), hybrids and ZEVs.

Given Australia’s relatively slow start and low uptake of EVs and hybrid vehicles, it's likely our transition will include ZLEVs for some time and after that, a transition into pure ZEVs.

We should also remember that, around the world, the starting gun on transitioning to ZLEVs started in some countries, such as Norway, over a decade ago. Others, mainly in Europe and in California, are much further advanced than Australia in their ZLEV transitioning. Australia is probably around 10 years behind the leaders.

However, more than one industry commentator engaged by the delegation suggested Australia had a great opportunity to leapfrog many of the transitional challenges faced by the early adopting countries and could be a leader in the Asia-Pacific region.

Examples of this faster transition can be found in the installation of higher output charging stations, at the very beginning of the rollout. In countries more advanced than Australia, older, lower-output charging stations are already being upgraded.

Another example is for government to make longer-term, up-front announcements on incentives, as opposed to having them reduced or shortened before enough EV momentum is established in the market.

The key countries visited, Norway, Sweden, Netherlands and the UK, all understood and supported the ethos and environmental benefits of decarbonising their vehicle fleets. However, at a more granular level, in industry or in the community, the actual journey to achieve ZLEV and ZEV status was more challenging.

In Norway, for example, where 74 per cent of all new vehicles sold are electric, many viewed the journey as necessary and supported the huge investment that government made in creating subsidies and incentives to leverage people out of their ICE vehicles and into something cleaner.  

Starting over 10 years ago, the Norwegian government undertook to fund this transition through the use of tens of billions of dollars from their sovereign wealth fund to ensure this program succeeded. Norway’s huge fund, derived largely from selling fossil fuels around the globe, enabled this great leap into the world of ZLEVs. Norway’s green power generation advantage – almost all from wind and water turbines – further supported this.

So, what’s the problem?

There isn’t one, really, except policymakers around the world often look at Norway as the benchmark case without taking into consideration the huge advantages it has in terms of its topography and green energy generation. That is, lots of free waterfalls in high places, and much of it freezes. This means you have an ample supply of water, falling from high up, to turn water turbines all year round. Add to that consistent wind patterns and this is a great recipe for relatively cheap green power. So well that excess energy is often sold to adjoining countries.

Even with these great natural power assets, and with very positive incentives for new car owners, less than 20 per cent of the Norwegian fleet is zero emission. That’s still not bad given it can take a long time to transition a whole ICE vehicle fleet into a zero-emission fleet – maybe around 25 years, or longer. The average age of the Norwegian vehicle fleet is around 13.5 years. That’s older than the Australian vehicle fleet, which is around 10.6 years old. However, without adequate incentives and buyer endorsement, the Australian vehicle fleet is also likely to age if people can’t afford to transition into a ZLEV vehicle.

In Norway and in Sweden, green power advantages were achieved from wind and hydropower, hydro being driven by water catchment. There was a consistent view in these countries that Australia’s solar power opportunities could, at a minimum, replicate the advantage they had achieved from their own natural resources.

EV incentives for car buyers in Norway are slowly being removed, as they are in Sweden and Germany, and this could lead to more drivers keeping their ICE cars longer. Adversely, this could lead to global car fleets getting older and dirtier while resisting the temptation to buy a ZLEV. That’s why serious and longer-term incentives are so important.

Extract from Zero and low-emission vehicles: Insights from Europe.

Useful links
VACC: Zero and low-emission vehicles – policy and workshop change (part two)