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Mixed reaction to federal Future Fuels Strategy

On a charge: The Australian federal government’s Future Fuels and Vehicle Strategy includes $178m towards electric and hydrogen vehicle infrastructure.

Lack of CO2 emissions targets and incentives in Future Fuels Strategy criticised

9 Nov 2021

THE Australian federal government's long-awaited Future Fuels and Vehicle Strategy has received a lukewarm response, with several industry groups and politicians criticising its lack of measures required to encourage the uptake of low- and zero-emission vehicles.


Although the Morrison government’s package includes $178 million in new funding to support the development of electric and hydrogen vehicle infrastructure, it stops short of applying national vehicle emissions standards or incentives to the purchase of alternative fuel vehicles. 


The Future Fuels and Vehicle Strategy is the first of its kind in Australia and, according to the Morrison government, is a technology-led strategy that will “enhance customer choice, create jobs, and reduce emissions in Australia’s transport sector”. 


It focuses on four key areas of investment including public EV charging and hydrogen refuelling infrastructure, heavy and long-distance vehicle technologies, commercial fleets, and household smart charging.


But the FCAI said that had the strategy included such national measures, it would have sent a “positive signal to automotive manufacturers” and provided “real momentum” in the push to reduce vehicle CO2 emissions.


Instead, the strategy continues to rely on state and territory energy ministers to formulate their own schemes to incentivise the uptake of electric vehicles while collaborating with energy providers to ensure Australia’s energy grid can handle the increase in demand.


EVC chief executive Bahyad Jafari joined the FCAI in criticising the government’s strategy, saying it ignores the introduction of the subsidies, tax incentives or sales targets it says would provide the most realistic chance of bringing change to Australia’s ageing vehicle fleet. 


“Future Fuels is certainly an advance on the government’s rhetoric of the last election. The strategy has identified some of the correct benefits and pathways, but does little to realise them,” said Mr Jafari. 


“I welcome the progress we've seen, but it’s far too little too late. For a strategy that has apparently taken years to write, it leaves much to be desired.”


Although FCAI chief executive Tony Weber said “governments should focus on setting targets, not trying to pick winners through specific technology”, he reiterated calls for official adoption of the organisation’s voluntary emissions standard.


He said the standard “sets a clear pathway towards lower CO2 emissions across the entire passenger and light commercial fleet through to 2030”.


“Around the world, emissions targets are a clear sign of a government’s intent to reduce emissions and sends a positive signal to automotive manufacturers to provide more electric-powered vehicles to those markets – this is exactly what is needed in Australia.”


But not all motoring bodies have criticised today’s announcement. The Australian Automotive Dealer Association (AADA) says the strategy encourages consumer choice by expanding the nation’s charging infrastructure.


“Consumers are buying hybrids, EVs, and PHEVs … in record numbers and it is good to see a strategy which responds to this phenomenon by increasing the charging network and considering the implications for the electricity grid,” said AADA CEO James Voortman.


“Australia is a huge continent and range anxiety is still a big issue for people considering the purchase of an EV.


“Bolstering the charging network will give consumers more confidence that an EV can satisfy their needs and will supercharge EV sales.”


The Victorian Automotive Chamber of Commerce (VACC) also applauded the federal government plans for the $1 billion technology fund – half of which is new capital for the Clean Energy Finance Corporation and the rest to come from the private sector – and described the move “as a positive step”.


VACC CEO Geoff Gwilym said: “This fund will help bolster the automotive industry as we transition to a lower emissions future, in particular, by supporting new, innovative automotive businesses.”


He said  the chamber applauded the government initiative on behalf of its 5000 members and praised the government’s commitment to boosting local businesses.


In announcing the plan, Prime minister Scott Morrison said Australia could become a world leader in creating affordable and scalable low-emissions technology.


He maintained that the fund will back Australian early-stage companies, making venture capital investments, rather than offering grants or loans.


“The fund will help Australians grow their businesses and it will throw support behind our innovators. Both aspects are key ingredients for a thriving economy – something VACC will always support,” Mr Gwilym said.


“This fund backs Australian businesses to find new technological solutions.”


Mr Morrison said the Future Fuels and Vehicle Strategy further delivered on its recently released Long-Term Emissions Reduction it says will provide Australia with a way to achieve net zero emissions by 2050.


“Our plan promised technology not taxes, choices not mandates, and driving down the cost of new technologies, and that’s exactly what this strategy delivers to Australians,” said Mr Morrison.


Minister for industry, energy and emissions reduction Angus Taylor claimed the strategy would help motorists embrace an increasing range of technologies moving forward and keep them “moving in an informed way”.


“The Future Fuels and Vehicles Strategy sets out the Government’s technology-led approach to reducing transport emissions while ensuring Australians can drive their preferred type of vehicle – be that petrol, diesel, hydrogen or electric powered,” Mr Taylor said.


The strategy has been outwardly criticised by the opposition, with Greens leader Adam Bandt and Labor leader Anthony Albanese taking to Twitter to vent their frustrations.


“Most of us would love to reduce our petrol dependency (in) this lifetime, but we need affordable vehicles to do that,” said Mr Brandt.


“Morrison announced today (that) he’s only aiming for 30 per cent EVs by 2030, the same year the UK will end new petrol car sales. It’s easy to ‘meet and beat’ crap targets,” he added.


Mr Albanese echoed Mr Brandt’s sentiment, saying today’s announcement placed Australian motorists at the back of the queue for electric vehicles.


“He’ll say anything before an election and go back on it afterwards. Last election, Scott Morrison said electric vehicles would ‘end the weekend’. Today he’s saying electric vehicles are the future. You cannot trust what Scott Morrison says,” said Mr Albanese.


Mr Jafari said the strategy failed to deliver minimum fuel efficiency standard which have been used to great effect in other countries for decades. Fuel efficiency standards require car manufacturers to sell vehicles with a combined level of emissions below a defined benchmark, encouraging the sale of zero-emission vehicles.


“If it contained fuel efficiency standards and rebates it would give Australians more choice,” Mr Jafari said.


“The best and most affordable EVs manufacturers are producing would make their way swiftly onto our market. Fuel efficiency standards are the absolute bare minimum of what you would expect in any 21st century plan.


“If Australia continues to be one of the only developed nations without fuel efficiency standards, then we will continue to be a dumping ground for the world's dirtiest vehicles. It's sadly that simple.”


Mr Voortman backed the FCAI and Electric Vehicle Council is calling for a streamlined approach to renewing tax structures that currently penalise some fuel efficient cars, saying taxes such as the luxury car tax and passenger vehicle tariff continue to drive up the cost of many EVs on the Australian market.


“It is time we reviewed and modernised the tax and duties that apply to all vehicles so that in future we have strategies that work together, are less complex, and will deliver the consumer and environmental benefits that we all know lie ahead,” he said.


The federal government says it will take the lead on reforms through energy ministers to ensure Australia’s electricity grid is ready for an increase in electric vehicles.


It claims the reforms will help to keep the grid reliable and affordable, along with avoiding the estimated $224 million in electricity network upgrades needed by 2030.


In addition, the government has vowed to work more closely with the states and territories to address barriers to low emission vehicle uptake in their jurisdictions to ensure consumers have access to reliable, easy-to-understand information on low emission vehicles to enable informed choices.  


Mr Jafari said the strategy outlines less than five per cent of what he believes is required to bring Australia in line with ‘leading’ policies introduced in Europe and the US and places Australian motorists at considerable disadvantage.


“The sector will continue to urge the government to take appropriate actions that get more vehicles to Australia and on our roads. It’s a shame this government doesn’t have the same ambition for Australians that the electric vehicle industry does,” Mr Jafari said.


“Electric vehicles present a monumental opportunity for Australia not only in reducing pollution, but creating an innovative industry in manufacturing, technology, and services.”


But Mr Vootman agrees that greater collaboration between the federal government and the states and territories was required to incentivise potential buyers.


“It is vital that the federal government takes a leadership role on EVs,” Mr Voortman said.


“Currently, we have state and territory governments across the country developing their own unique EV policies. It is in the interest of motorist, the industry, and the country for us to have a consistent approach.”


The federal government will provide $250 million in funding which is expected to grow to more than $500 million when combined with additional contributions from the public and private sectors.


It expects 30 per cent of all new car sales will be electric or plug-in electric by the year 2030.


Describing the federal government’s target for EVs to be 30 per cent of new vehicle sales by 2030 as “extremely optimistic,” Mr Weber said there was a long way to go from their existing market penetration of less than one per cent.


Last month, the Morrison government outlined its Long-Term Emissions Reduction plan which counterintuitively failed to commit to the phasing out of combustion powered cars or set minimum emissions standards, instead “preserving Australian jobs and generating new opportunities”, albeit without legislative assistance.


The plan relied in part on $15 billion in government funding to reduce the costs of technologies including as clean hydrogen but refused to introduce what it called a “legislated mechanism” saying such “regressive approaches would impose costs on households, businesses and regions least able to afford them”.


The Electric Vehicle Council says that while it is disappointed by both announcements, it will continue lobbying the federal government for clear and decisive change.


“Australians love their family sedan, farmers rely on their trusted ute, and our economy counts on trucks and trains to deliver goods from coast to coast. We will not be forcing Australians out of the car they want to drive or penalising those who can least afford it through bans or taxes,” said Mr Morrison.


“Instead, the strategy will work to drive down the cost of low and zero-emission vehicles and enhance consumer choice. We will do this by creating the right environment for industry co-investment in technology development.


“Just as Australians have taken their own decision to embrace roof-top solar at the highest rate in the world, when new vehicle technologies are cost competitive, Australians will embrace them too.”


Mr Gwylm said the prime minister’s pledge was in line with the government’s electric vehicle stance thus far – insisting motorists have freedom of choice regarding uptake – and ruling out the banning of petrol and diesel cars or using big subsidies to encourage them to make the switch.


 Mr Taylor said the government’s “technology-led approach” was “already helping to enhance consumer and industry confidence”.


“In the last eight months there has been a 20 per cent increase in the number of low-emissions vehicle models available in Australia,” he added.


“We are continuing to invest in the right infrastructure, while ensuring both those in the cities and regions can access this $250 million fund…we know that when new technologies reach price parity, Australians rapidly adopt them.


“Voluntary adoption of electric vehicles is the right pathway for reducing transport emissions over the long term. Stringent standards, bans or regressive taxes will limit choice and increase the upfront costs of cars for Australians,” he added.

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