Victoria urged to drop registration fees for EVs, set end date for ICE sales

Victoria’s peak infrastructure advisory body has recommended that the state government drop annual registration fees for electric vehicles (EVs) as part of its draft 30-year strategy released on Wednesday.

The new strategy, which outlines the infastructure needs to reach net zero emissions by 2050, also suggests that – in the absence of federal government t action, the Victorian Government could set an end date for the sale and registration of internal combustion engine vehicles in Victoria and “consider …. policy levers to phase out all internal combustion engine vehicles during the next 30 years.”

In addition to dropping annual fees for EVs, the document recommends preparing the state’s electricity network for extra demand anticipated by the uptake of electric vehicles, and for all new buses and vehicles for government fleets to be electric within the next five years “where appropriate models are available”.

“Throughout 2020, Victorians have demonstrated we are adaptable, resilient and prepared to make big changes when needed,” Infrastucture Victoria CEO Masson said.

“In the decades ahead, we will need to maintain that spirit in the face of technological disruption, climate change, lower population growth and unexpected challenges.”

“The infrastructure we plan now must provide for a net zero-emissions economy by 2050, support the transition to a circular, zero-waste economy and deliver innovative solutions to drive trade and investment in agriculture, tourism, manufacturing, and other key industries.”

The strategy notes the recent announcement by the Victorian government that it would introduce road-user based charging for owners of electric vehicles, a move that drew widespread criticism from automotive and environmental sectors as premature and damaging for the fledging EV industry.

The state government plans to introduce the new EV tax while there are fewer drivers and thus less opposition, but as outlined here and here, such a tax would have the benefits of killing EV uptake in Victoria altogether.

The draft document does not condemn the introduction of road user charges for EVs, but instead recommends the removal of “annual up-front charges” and the extension of road user charges to other vehicles in return for opting out of annual charges.

Dropping registration fees would likely offset the cost of the road user charge. The Victoria governmnt currently offers only a $100 discount. But the EV tax is likely to cost at least $400 a year, depending on how far the EV travels.

A similar approach is being considered by the ACT, and it has been estimated by a UQ study that this approach could have the effect of encouraging more EV uptake.

“Removing the upfront charges may serve as an incentive for people to choose electric vehicles,” the document reads.

In addition to encouraging more private EV uptake, the document pushes for a transition to electric public and government transport within five years, and notes electric bus trials are already underway in Victoria.

The recommendation echoes the recent news that New Zealand will require all government vehicles to go electric, and must justify why this is not possible to be exempted from the plan.

The Infrastructure Victoria document does not allude to any mechanisms to keep a local transition in check, but says that purchase of electric vehicles should be made “as soon as feasible”.

“During the next five years, the Victorian Government should require public transport operators to begin purchasing new zero emissions buses and coaches as soon as feasible,” it says.

“The Victorian Government should also require all new vehicles in its substantial government fleet to be zero emissions, where appropriate models are available.”

The draft document also notes the extra demand that EV uptake could place on the grid, and that with EV prices expected to be on par with petrol and diesel by the mid-2020s, “the urgency of better managing energy demand” is magnified.

It suggests applying incentives for EV drivers to charge in off-peak periods to help reduce peak demand, thereby saving approximately $2.5 billion in extra infrastructure investment.

Masson says that combined with investing in infrastructure to encourage active transport uptake such as bicycles, and more use of public transport, the transition to electric vehicles can benefit all Victorians with cleaner air and a path to action on climate change.

“Our draft 30-year strategy shows how integrated infrastructure planning combined with strategic investment can support positive change. For example, greater uptake of zero-emissions vehicles, more cycling and walking for transport, and increased use of renewable energy will not only reduce pollution but provide many public benefits,” he said.

A community consulation period is now open until February 26, 2021.

See also: Leaked reports show governments were warned EV taxes will hurt uptake