Policy & Regulation

06 Feb 2021

Australia Won't Subsidise Electric Vehicles

06 Feb 2021  by Reuters   

Australia expects one in four cars sold will be electric vehicles by 2030, but the government said on Friday it will not provide subsidies to spur faster growth of cleaner cars as it looks to cut carbon emissions.

Instead, the conservative government proposed to invest in electric-vehicle (EV) recharging and hydrogen refuelling stations, backing purchases by commercial fleets, and making sure battery EVs do not strain the country's power grid.

The approach is in stark contrast with Norway, which has promoted clean cars through tax breaks, resulting in battery EVs making up 54 per cent of new cars sold in 2020, a global record.

By comparison, the Australian government in December estimated that by 2030, battery EVs, including plug-in hybrids, would make up 26 per cent of new vehicle sales in the country, up from 1 per cent in 2020.

In a proposed future fuels strategy released on Friday and due to be finalised in the first half of this year, the government said it was backing its plans with nearly A$100 million ($76 million) in previously announced funding.

Cost is one of the biggest hurdles deterring people from switching from conventional vehicles to cleaner cars, but the government said it did not make sense to provide subsidies for EVs.

"Importantly, this discussion paper shows that closing this gap through subsidies for new technology vehicles is not value-for-money for taxpayers and is an expensive form of (carbon) abatement," Energy Minister Angus Taylor said in a statement.

The paper said depending on the vehicle type and use, subsidies that closed the gap between EVs and conventional cars could cost up to A$747 per tonne of carbon dioxide equivalent reduced, compared with A$16 per tonne through Australia's Emissions Reductions Fund.

Comments on the plan are due in April, but green groups said on Friday more needs to be done.

"As the sunniest and one of the windiest countries on the planet and a global leader in the uptake of rooftop solar, Australia should be harnessing this clean power to drive an EV revolution," Climate Council researcher Tim Baxter said.

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