Stronger policies to drive the uptake of electric vehicles in Australia could deliver huge savings for Australian drivers, reaching almost $500 billion out to 2035.
The Australian Conservation Foundation commissioned Deloitte Access Economics to assess expected expenditure on road transport, comparing different levels of electric vehicle uptake.
The report found that in a high adoption scenario – where there is a complete transition to electric vehicles and increased use of public transport – savings of as much as $492 billion could be achieved by 2035.
The main driver of road transport costs – assessed as the negative externalities imposed on the community as a whole, rather than those directly faced by drivers (car and fuel costs, for example), were found to be air pollution and greenhouse gas emissions.
Also assessed were the costs of noise and water pollution.
“Transport is a significant contributor to Australia’s greenhouse gas emissions, and we’re now at a real inflection point where we can realistically look at the benefits from a fast and complete transition to EVs in this country,” principal author of the report, and Partner at Deloitte Access Economics, Dr Eamon McGinn, said.
“The potential benefits for our economy of the market-led EV solution, in terms of less greenhouse gas emissions, less air and water pollution, and less vehicle noise are truly staggering – almost $500 billion over the next 30 years.”
Deloitte Access Economics assessed the expected cost impacts of road transport through its contribution to air pollution, noise pollution, water pollution and greenhouse gas emissions.
The report estimated that, based on current policy settings, Australians are expected to face social costs of $865 billion caused by road transport through to 2050.
Most of these costs were generated by pollution and emissions generated by heavy transport, including commercial vehicles and trucks, amounting to $505 billion in costs. The remaining $320 billion was attributable to pollution from passenger vehicles.
A complete transition to electric vehicles would cut these costs to just $373.3 billion (saving $492 billion), thanks to substantial reductions in air pollution and greenhouse gas emissions.
Even under an intermediate scenario, where targets are introduced to achieve zero net transport emissions by 2045, cumulative savings of $335.4 billion could be generated by 2035.
“Scenario two assumes that Australia reaches net zero road transport emissions by 2045. This essentially ‘front-loads’ the benefits to Australians – pushing forward the avoided costs to the community,” the report says.
The report recommends key policy mechanisms that could be used to drive accelerated adoption of electric vehicles, including electric vehicle sales mandates where sales requirements are imposed on vehicle manufacturers to ensure a minimum proportion of new sales are electric models.
Such policies, the report says, have been shown to encourage vehicle manufacturers to bring a wider range of vehicle models to the market, helping to reduce the barriers for those looking to switch to an electric vehicle.
“ZEV mandates provide for an effective policy to achieve game-changing greenhouse gas reductions from transport and play an important role in overcoming a critical barrier to large-scale electrification,” the report says.
“Insufficient model options – particularly affordable models – can deter consumers from purchasing ZEVs even after adequate emphasis on consumer incentives and charging infrastructure, illustrated by the case study.”
Additional benefits could be achieved by electrification of public transport networks and providing incentives for more travel to be taken via buses and trains.
The Australian Conservation Foundation said that the increased use of electric vehicles could serve as an effective way to achieve significant environmental benefits.
“If Australian leaders are looking for ways to cut emissions this decade and are serious about reaching net zero by 2050, then setting strong policy on electric vehicles is a vital and practical solution,” ACF’s economy and democracy program manager Matt Rose said.
“Australia is getting left behind when it comes to electric vehicles, and it makes no sense when there are obvious savings to be made.”
“Electric vehicles have proven technology to reduce emissions and makes the air we all breathe cleaner. They should be an integral part of every government and business plan to reduce emissions and also be made affordable to all Australians,” he said.
The Australian Conservation Foundation also suggested that federal government fuel excise revenue should be hypothecated towards building new electric vehicle infrastructure, including charging infrastructure and investments in the electricity grid to meet higher demand.
