Officials from the Department of Industry, Science, Energy and Resources have been asked to explain the assumptions used in widely criticised modelling of the abatement costs of electric vehicles, and conceded the modelling could have underestimated the benefits of electric vehicles and overestimated their costs.
Modelling of the abatement cost of a switch to electric vehicles was included as an appendix to a Future Fuels discussion paper, issued by the Morrison government in February. The modelling was widely criticised as being an unrepresentative comparison between electric vehicles and petrol vehicles, and based on questionable assumptions.
The modelling produced estimated abatement costs for electric vehicles of as high as $747 per tonne, which were leapt upon by federal energy and emissions reduction minister Angus Taylor to justify the Morrison government’s stance not to introduce financial incentives to support electric vehicle uptake.
When queried at a senate estimates hearing on Monday, officials from the department struggled to justify the assumptions used, including one scenario where a Renault Kangoo electric minivan was compared to a much larger petrol-fuelled ‘maxi’ model.
Despite acknowledging that a comparably sized diesel model would provide a closer comparison, the head of the department’s Technology Transition Branch, Katrina Maguire, said the department decided to instead focus its assessment only on the much larger petrol model.
“We were focused exclusively on comparing petrol vehicles. And so they were comparative in that sense. The size of a comparable vehicle in the Renault is a diesel engine,” Maguire told Senate Estimates. “For the purposes of our calculations, we’re being consistent and using petrol.”
Officials faced questions about the decision to base the modelling on the costs of electric vehicles over a five year period, when most vehicles are owned and operated for substantially longer periods, with an average vehicle life in Australia of over ten years.
The use of the shorter time period to assess the costs of electric vehicles almost certainly exaggerated the costs of ownership, as while electric vehicles do generally attract a higher upfront cost, but cost substantially less to operate and maintain.
Greens transport spokesperson Janet Rice pressed the department officials on why a longer operating life wasn’t accounted for.
“Why is the average financing period more relevant than the average lifespan of a vehicle? given that the vehicle the fuel and maintenance continue savings continue over the lifespan of the vehicle? Surely that would be a more appropriate time span,” Rice queried.
Maguire said that the department settled on the five-year period as it was a standard financing period for vehicles and that the upfront cost was the most influential factor in electric vehicle purchasing decisions, suggesting it was fair to weigh it more heavily.
“I think you could change all the assumptions that we made and you would get a different outcome,” Maguire said. “I think what is important to note is the most influential factor in determining the total cost of ownership is the purchasing price. And that is still very high. And so changing those other assumptions, of course, that would change what the outcome was. But the most important factor that we found in doing the assessment was the upfront purchase price.”
The department officials also told the senate estimates committee that it did not model the emissions benefits of electric vehicles charged using supplies of renewable electricity, and instead they assumed that all-electric vehicles would be charged with grid electricity.
“We don’t have the data to be able to do that. So we only included information about charging on the grid,” Macguire told the hearing.
Department officials bristled at suggestions that the office of federal energy and emissions reduction minister Angus Taylor had directed the department to produce modelling that exaggerated the costs of electric vehicles while diminishing their benefits.
“The minister’s office basically said, find some modelling that’s going to make electric vehicles look more expensive and the emissions comparison dodgy compared?” Senator Rice suggested to the officials.
The department rejected the assertion.
“To be fair, like we have a right to respond to that. And reject that,” department secretary David Fredericks said.