Australia is lagging behind other nations, spending billions on fossil-fuel industry subsidies that would be better spent on clean energy solutions such as electric vehicles (EVs), experts say.
Fossil fuel subsidies cost Australia $11.6 billion over the past financial year, money that could help fast-forward the country’s transition to clean energy.
Before the federal budget this month, the Climate Council has released a paper outlining five clean energy solutions that could be funded with the $22,000 per minute the government would save in fossil fuel subsidies.
Electric vehicle (EV) industry investment scored two places on the Climate Council’s recommendation list.
The council found the money saved could pay for one EV charging station for every 12 kilometres of the country’s entire road network, and could help replace Sydney, Melbourne and Brisbane’s entire public bus fleet with electric versions, with 2300 buses to spare.
This finding comes as hiking fuel prices and international emissions agreements are making the need for a national transition to EVs greater than ever.
But Ajaya Haikerwal, clean transport campaigner at Solar Citizens, told The New Daily a lack in federal government incentives has left Australia lagging behind New Zealand, the US, and countries throughout Europe and Asia.
“The state of the EV industry in Australia right now is quite dire, in comparison to a lot of other countries,” he said.
“There’s not really many incentives here for an electric vehicle industry to exist.
“It’s similar to the vaccine game, where you have global supply of electric vehicles, not enough to share around all the countries, and so the manufacturers are sending those to places where they can get the most benefit … and that’s not Australia.”
Electric vehicle costs scaring off drivers
Cost is a major factor in Australia’s hesitant EV uptake.
Canstar Blue data shows Australians spend an average of $40,729 on new cars, but the average cost of an EV in Australia is more than $60,000.
Getting the less pricey EV options into the market could help generate more public interest, but Climate Council economist Nicki Hutley said the situation is similar to the classic chicken and egg scenario.
For car manufacturers to release a wider range of EV models in Australia, they need to see a strong potential customer base.
But the country recorded just 20,665 EV sales in 2021, meaning electric cars only make up 1.95 per cent of the new car market.
States and territories take the lead
Ms Hutley said the federal government needs to take charge of the situation by improving charging infrastructure across the country and providing more subsidies and rebates to aid affordability.
Currently, states and territories have been left to pick up the slack.
“There’s probably more work being done on this at the state government than the federal government level,” she said.
“Talking up the market, talking to international suppliers, making sure they know that Australia wants these vehicles and we would like as many as possible so that people don’t have to wait a year, is important.
“But also for a lot of people there is that upfront cost differential.”
Ms Hutley pointed to the ACT government as the best example of state and territory governments taking matters into their own hands.
The territory government has committed to expanding its EV charging network to at least 180 public chargers by 2025, and its incentives for residents to buy EVs include no stamp duty, free vehicle registration, and zero interest loans of up to $15,000.
Used EVs to meet low-income needs
Mr Haikerwal said these incentives are an important piece of the puzzle, but more work needs to be done to entice low-income Australians into the electric vehicle market.
“My concern with subsidies in general is that people who have the capital to buy an electric vehicle already might not be the ones who need the subsidies,” he said.
“We need to really make sure that we can bring everyone along with this EV transition as fast as possible, and that’ll mean targeting subsidies based on income.”
But getting enough EVs into Australia for them to trickle down faster into the second-hand market is also important.
Disrupted supply chains meant Australians struggled to get their hands on new cars over the past three years. This in turn sent increased demand for used cars.
“Ensuring we have secure flow of [new] electric vehicles in the country means that in a few years time, they’ll have this big offering to the second-hand vehicle market,” Mr Haikerwal said.
He said ‘grey imports’, which are when new or used motor vehicles are legally imported through channels other than the manufacturer’s official distribution system, are an important opportunity for the second-hand EV market.
Mr Haikerwal pointed to Tasmania-based Good Car Company, the largest importer of second-hand EVs in Australia, as a prime example.
Prices for vehicles sold by the company start from $22,000, compared to almost $50,000 for the cheapest new EV currently available in the country.
The Australian government has plenty of opportunities to bring in more EVs at affordable prices – it just needs to take action, Mr Haikerwal said.
“We’re at a crossroads,” he said.
“It’s been really promising to see … the National Electric Vehicle Strategy that they’ve opened up a consultation for recently.
“It’d be great to see something come out of that within the first year of government.”
A spokesperson for Minister for Climate Change and Energy Chris Bowen told TND the government will work collaboratively with states and territories, industry, unions and consumer groups to deliver Australia’s first National Electric Vehicle Strategy.
As part of the ‘Driving the Nation’ plan, the government plans to establish EV charging stations every 150 kilometres on major roads, a national hydrogen refuelling network, and a Low Emissions Vehicle target for 75 per cent of the Commonwealth’s new leases and purchases by 2025 to encourage EV growth in the second-hand market.
