Turning around transport emissions growth

By Paul Graham, Chief Economist, Energy CSIRO June 26th, 2019

When economists think of the electric vehicle market and how it might turn back emissions they think in terms of fleet share. What will trigger the wholesale switch to electric vehicles in Australia - price, choice, vehicle standards?

Image: Flickr / StephenMitchell

THE transport sector – road, rail, aviation and shipping – is a strong source of increasing greenhouse gas emissions and it will be a slow process to turn that around.

The reason for the continued increase is primarily growth in transport demand with passenger demand growing at roughly the rate of population (a little over 1 per cent) and freight demand in line with the growth of the economy (around 2.5 per cent on average).

Road transport is 84 per cent of transport emissions and, reflecting the fact that Australia is one of the few developed countries without vehicle fuel efficiency or emissions standards, average road fleet fuel efficiency is improving at less than 1 per cent per annum. Slow improvement in fuel efficiency and rising demand means emissions can only rise. However, we are expecting a shift in direction by 2030.

The expected peak in emissions around 2030 is because electric vehicles are expected to become a mainstream vehicle choice in Australia during the late 2020s. This is expected to occur without any major new policy interventions, although most states already have modest registration or stamp duty rebates for electric vehicles. Mainstream adoption of electric vehicles would represent a very big change because, at present, electric vehicles are an extremely small part of the market, with around 8000 vehicle sales per year (out of roughly a million total new vehicle sales).

It comes down to cost – and choice

The reason we can be confident that Australia will be able to shift up electric vehicle sales shares from less than 1 per cent to tens of percentage points per year over the next decade reflects the fact that the underlying cost structure of electric vehicles is expected to improve substantially. Battery cost reductions plus a scale up of electric vehicle manufacturing means that short-to-medium range (<300km) electric vehicles are expected to be able to be supplied at similar upfront costs to conventional internal combustion engine vehicles. Longer range vehicles (>500km) are expected to remain higher cost than conventional vehicles due to the extra batteries they will need to include but may still be competitive on a whole of vehicle cost basis. Electric vehicle fuel costs are around one third of petroleum-fuelled vehicles and are expected to have lower maintenance costs due to fewer engine parts.

There have been similar rapid cost reductions with global scale up of manufacturing of rooftop solar and consumer goods such as flat screen televisions. The rooftop solar manufacturing scale up and subsequent rapid cost reductions was facilitated by a global convergence of government policies to encourage their adoption. We are seeing the same convergence of electric vehicle incentives across Europe, the United States and China.

CSIRO introduced 100 per cent electric cars to its national fleet in 2016.

Comparable ownership costs are necessary but not sufficient to ensure adoption of electric vehicles. Consumers also require a much larger range of electric vehicle models to suit their varied needs.

Vehicle manufacturers do offer much wider model ranges in regions where sales are higher (Norway has more than 40) and they have been promoting their plans to electrify an increasing share of their model range over time. That includes choice for those who like speed. From a performance perspective, electric drive-trains provide more torque than internal combustion engines and can be configured with enough batteries to match very long ranges.

Stimulating fleet turnover

While there is good reason to be positive about road transport emissions eventually being reduced by electric vehicle adoption it will still take time. Given Australia’s relatively slow vehicle turnover rate, it takes a long time for sales to translate into fleet share. For example, if electric vehicle sales could be quickly shifted to 50 per cent of new vehicle sales it would take another 25 years on average for electric vehicles to achieve 50 per cent fleet share. As such, electric vehicles cannot deliver substantial emission reductions by 2030, which is the year in which our Paris Nationally Determined Commitment of a 26 per cent reduction on 2005 emissions are to be met. However we will likely lean heavily on electric vehicles to assist in achieving any later targets such as by 2050.

Several major Australia states have zero net emissions targets by 2050 and will be considering how to ensure electric or other low emissions vehicles can be in a position to make a major contribution to those targets.

And what of emissions from EV’s energy source?

Of course, relying on electric vehicles as a road transport emissions reduction strategy must go hand in hand with decarbonising the electricity sector so that emissions are not simply pushed into another sector of the economy. Unlike transport, the electricity sector has already begun reducing emissions (peaking in 2009) and is among the lowest cost sectors to decarbonise due to the cost reductions that have occurred in generation technology such as wind and solar photovoltaics.

Image: Flickr / David Clarke

However, there is no national emissions target or specific electricity policy beyond 2030. South Australia has already achieved 50 per cent renewable generation. Tasmania is majority zero emissions (hydro and wind) and both Queensland and Victoria have 50 per cent renewable targets for 2030. Post-2030 electricity targets will likely become clearer over time.

As the share of variable renewable electricity increases, either due to their cost competitiveness or government targets, electric vehicles may have some role to play as they are a potentially very large source of storage capacity. For example, a long range electric vehicle has around ten times the storage capacity of standalone storage currently installed in concert with rooftop solar.

While there was previously some doubt, with the historical and future planned reductions in emissions intensity of electricity, electric vehicles are now unambiguously lower in emissions than the equivalent sized internal combustion vehicle over their lifetime. This is because the emission intensity of an internal combustion vehicle is static from the day of purchase or in fact worsens as the vehicle engine ages. However, the full fuel cycle emissions from an electric vehicle improve every year over its life as the emissions intensity of electricity continues to fall. There is also the option for some, where it is convenient, to charge electric vehicles from home rooftop solar or contracted renewable supply. 

Emissions and the non-road transport sector

In the non-road transport sector, the options to electrify are more limited. It is likely possible that smaller aircraft conducting regional flights can be electrified but not larger passenger jets. Bio-derived jet fuel can be manufactured to be compatible with current aircraft engine needs at up to 50 per cent petroleum blend.

CSIRO created a metal membrane that filters out pure hydrogen gas from ammonia. It can then be dispensed into fuel cell cars, buses and even trucks.

In addition to biofuel, hydrogen is an option for decarbonising transport fuel and is applicable across all transport modes. The current renewed interest in hydrogen as a low emissions fuel option reflects a number of developments. The arrival of low cost renewable generation can potentially be used as the primary energy source for hydrogen production. Hydrogen applications or end-uses have widened with the likely increased need for balancing services to support variable renewables in the electricity sector and trials exploring use of low blend hydrogen for use in local gas distribution and appliances. Also, there has been a widening of interest from countries in Australia’s part of the world (e.g. Japan, South Korea) in developing hydrogen supply chains to help them meet their own Paris climate policy goals.

Dominant new vehicle choice

While rising transport emissions will be with us for at least the next few years, Australia is set to be a beneficiary of the massive scale up of battery and electric vehicle manufacturing worldwide. Electric vehicles and a decarbonising electricity sector based on low cost renewables will likely be our greatest tools in reducing transport emissions. However, electric vehicles are also likely to reduce the cost of travel once they are delivered at more reasonable costs and across a wide range of vehicle models.

Reduced local air pollution which has significant consequences for public health is another potential driver of this transition. Given the benefits and the long term aspirations for a zero net emission economy of governments here and overseas we can expect to see an increased focus of attention on how to ensure electric vehicles become the dominant new vehicle choice as soon as possible.

 

 

1 comments

  1. Probably building regulations (commercial and residential) need to have vehicle-charging infrastructure as mandatory for new builds at least. And carparks and street parking?

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