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John Quiggin 
With the understanding that climate change and global warming is inflationary, it should be in the remit of central banks to spell this out clearly. It’s not just lost output that will drive up prices from this point on, it’s the added cooling costs, the need for more water supplies (this at higher costs) and the longer summers that speaks to higher costs for food security. If action is taken right now, long run inflation can be reduced.
Climate dictatorship, comment 7: Electric vehicles
The second major plank of the “net zero by 2030” plan is the electrification of land transport. Australia has a minimal rail network, stymied by lack of a standard gauge, and only 11% electrified. I have little idea whether it could be upgraded by 2030, so I will provisionally assume no significant shift to rail from roads. The challenge is then to electrify the current fleet of 21m vehicles, 99.5% powered by internal combustion. Statistics on the stock here:
https://www.bitre.gov.au/publications/2023/road-vehicles-australia-january-2023
It is now possible to buy electric production versions of almost all vehicle types. Let’s start by assuming that’s what we will do, replacing one-for-one with new vehicles.
································Fleet 2023········Unit cost······Total new fleet···············per year
············································000·············$ 000················A$bn ····················$bn
• Cars·····························15,328·············· 50··················766·····················109
• LCVs, light trucks,
camper vans···················4,233·················50··················212····················· ·30
• Heavy & articulated
trucks······························607················250··················127····················· 18
• Other··································38··················50·················· 1.9··················· 0.27
• Buses·························· ······97··············· 250·················24.4····················· 3.5
• Motorcycles····················965····················5···················4.8··················· ·0.69
• Total motor vehicles··· 21,168···································1,136·····················162
A$1.13 trn! The burden of the transition is reduced, even more than with electricity, by the scale of current spending. I estimate gross additions to the fleet in 2022 as 1.5m vehicles. Valued at the same prices, outlays came to A$82bn. Assume this would continue flat in BAU, and the net increase in outlays for t he crash programme is cut in half to a still scary A$576 bn. The yearly ratio to 2022 GDP is 7.3% gross, 3.7% net – on top of the electricity transition.
That’s just the vehicles. We have to add chargers. The slow chargers will be installed when the vehicles arrive. The highway network has to be built first, especially the nonexistent heavy truck one – a start has already been made on the car/LCV side.
The cars and LCVs need one 10-20 kw Level 2 home or depot trickle charger each, say $1000. Heavy trucks and buses will need 50 kw ones at the depot, say $5,000. These are representative current US/European prices on the web; current Australian prices are higher because the market is so thin, which we are going to revolutionise.
In addition, we need a comprehensive network of highway fast chargers, 150 KW for cars and 1 MW for heavy trucks. Tesla wins plaudits for its 17,000 superchargers in the USA at 1,700 sites, serving about 1.5m Tesla cars. Cloning that ratio for Australia, we will need 174,000 charging points at 17,400 stations. A trade estimate of Tesla’s cost per charger is $43,000, so our clone network costs A$7.5bn. Nobody anywhere has a network for 1 MW heavy truck chargers, so I’ll guess a similar total cost to the car network, with maybe one-tenth the locations and ten times the price. Adding all these up, the charger networks will cost a further A$19.3 bn, 1.7% of the total. Chargers are a hassle to organise, but financially not very significant.
Electrifying the land vehicle fleet is very likely to be much more expensive than making the electricity supply renewable. In my toy models, the gross ratio is 2.7 to 1. My numbers will be wrong, but not by that much. EVs are financially the 500-lb gorilla. What can be done to reduce this massive outlay? Quite a few things actually.
We have to question the one-for-one replacement assumption. The unit price for cars of A$50,000 used above represents the current average purchase, not the fleet. The median car on Australian roads is much closer to a 2013 Toyota Corolla, with a lower specification and worth about A$10,000. Half the fleet is older and worth even less. We don’t have to gold-plate its replacement – but the measures that can be taken to cut costs take us into uncharted territory. Suppose Australia sets up a public corporation, OzCar, with a huge budget, wide powers, and a Paretian mandate to minimise the cost of the EV transition while keeping Australians no worse off than they are now in terms of access to mobility. (Assume that welfare transfers for equity are handled by the tax system.) There are things OzCar can do.
1. Since new EV cars account for 66% of the cost of the programme, the total is extremely sensitive to their average price, which climate satraps will need to spend a lot of time on. For a few years, Australia – or whichever other OECD country dives first into the cold sea – will be catapulted to the top of the EV leaderboard. As a bare minimum, OzCar should aim to secure f.o.b. prices no higher than Chinese domestic ones, but why stop there? A million-car customer has Godzilla leverage as buyer or guarantor. Subsidies can be restricted to vehicles and prices approved by OzCar. Australia’s lack of domestic manufacturers is a help here, as there will be no domestic lobby against hardball monopsony haggling.
2. Specifications can be lowered to match the whole fleet, not recent new purchases. How often do the 10-year-old Corollas go on long highway trips? A new Dacia Spring with 200km range goes for
€20,000 in Europe. The 300-km BYD Seagull mini goes for $12,000 in China. These small urban EVs are functionally equivalent to many old cars in Australia, except for lower range, which can be compensated with a few hundred A$ a year in rental vouchers for long trips.
3. We could drop the Paretian rule for the 3.4 million second cars, typically a luxury not a necessity. Nobody should be stopped from buying a second EV with their own money, but there is no reason to subsidise the practice. Subsidies for EVs can be restricted to one per household, at the risk of creating a Restoration comedy of bogus separations and divorces. Without the transition incentives, the number of second cars will drop. Other sound policies can reduce demand for them modestly: support for rideshare, though not the Uber monopoly, taxis, and car rental; investment in commuter rail, bus services, cycle paths, walkable towns; support for teleworking.
The fourth plank does not reduce total outlay, but it does reduce public expenditure: leasing. Old cars may not be worth much, but they cost as much to run as new ones. This trade source gives average weekly spending per car of A$128 on fuel and maintenance, or A$6,700 a year. https://www.budgetdirect.com.au/car-insurance/research/car-owner-cost-statistics.html With an EV, these can be cut 70% and 40% respectively, to A$52 a week (source: https://www.transport.nsw.gov.au/projects/electric-vehicles/why-buy-an-electric-vehicle ). The saving of A$4,000 a year is enough to service a 5-year car loan of A$17,000 at 7%. OzCar, borrowing at 4%, and buying in bulk, could buy out these old cars and lease small new EVs to their owners of old cars for a monthly payment at most equal to these savings. This would no rmally leave them better off, since the EVs are new and much nicer to drive.
These strategies offer very good prospects of reducing the cost of the EV crash programme considerably. However, I don’t see a way to incorporate them in the model. Cutting the net cost in half, to no more than that of the electricity programme, A$369 bn, is an aspiration not an estimate.
A few lesser points are still worth noting.
Drop-in biofuels can be produced from benign sources like food and garden waste, animal and human manure, crop stalks, etc. They don’t make sense for land vehicles, as the pathway is just as inefficient as that for gasoline, and you still get the same air pollution. We also need to reserve them for aviation and shipping, where at present there is no good alternative for long hauls. However, the availability of green biofuels for cars on a small scale, at an unsubsidised price, would buy off potentially vocal opposition from vintage car owners and other fogeys irrationally wedded to internal combustion.
We may get lucky in two long-shot technologies currently attracting a lot of venture capital. A breakthrough in self-driving cars – San Francisco already has robotaxis could open the door to ubiquitous ridesharing and much lower car ownership. Robocars have a large health cobenefit, since they will only be licensed if they are much safer than human drivers. Short-haul electric passenger aircraft could be deployed quite soon. Swedish startup Heart Aerospace are already selling a hybrid-propulsion 30-seater with 200km electric range for delivery in 2028. A little more range, as batteries improve, and you could have all-electric intercity flights in Australia, with intermediate pit stops. A battery breakthrough – uncertain, but very possible given the scale of current R&D – and 1,000 km ranges would mean not needing the pit stops.
Have a look at high-speed rail, though the main switch in usage there would be from planes not cars. This is hard to get operational in the time-frame. Inter-city distances in Australia (>700 km) are not promising for passenger rail.
I have not considered the resale of the younger and less polluting used ICEVs in LDCs. This is not cheating, as they will generally displace new ICEVs in the buying markets.
We expect a sine-wave curve for outlays on electricity because that’s investment in infrastructure, which takes time. With the minor exception of chargers, the transition to EVs is a matter of importing durables. The Commission and OzCar can within reason time the outlays as they please: equal spending each year, an inverse sine wave to equalise annual spending including electricity, or strategic timing to minimise total outlays taking account of differential technical progress. I will therefore not offer an outlay schedule for vehicles.
Remember the very large savings in health costs and non-financial health burdens from air pollution, A$11 bn to A$24 bn annually https://www.aph.gov.au/DocumentStore.ashx?id=cce3914b-82a3-433b-97f6-be0642f692f6&subId=658630 . Almost all of this comes from the ICEVs you will be dumping. The earlier you do this, the greater the saving.
As with the electricity plan, it is urgent to have this sort of modeling redone professionally.
Conclusions in the next and final comment.
Footnotes
Assumptions:
(a) Cars are uniformly scrapped after 20 years, commercial vehicles after 15. I needed
an assumption here to calculate the gross baseline annual new demand for each vehicle type (replacements for vehicles scrapped plus net increase in stock). BTW, there is something very odd about vehicle depreciation in Australia. My middle-of-the road lifetimes lead to an estimate of gross additions to the fleet in 2022 of 1,535,496. The reported actual sales were 1,081,429. That’s a very big gap I can’t explain. BITRE say that more than half the heavy trucks in Australia are over 10 years old, which I would find alarming if I drove on your roads. Link to BITRE above, Table 6.
(b)New EV cars have the same price as ICE ones, average A$50,000. This is not quite true yet, but it is pretty much CW that sticker price parity will be passed within 5 years. TCO is already lower in many cases.
https://www.whichcar.com.au/advice/electric-car-costs-australia
“In the case of some Chinese-made EV models – such as the BYD Dolphin, MG 4 and Tesla Model 3 – their price tags closely match petrol engine powered rivals, if not even cheaper.”
(c) New LCVs cost the same as cars. This is a guess, and the range is even wider than for cars. A tiny EV van with a 20kwh battery may be OK for last-mile parcel delivery, while a 3-tonne garbage truck could cost much more than a premium SUV.
(d) New EV heavy trucks cost A$250,000, close to the current US price for a Tesla Semi, 2x diesels https://www.teslarati.com/tesla-semi-production-price-revealed-pepsico/
(e) Buses cost the same as heavy trucks.
**************************************************************
Previous comments in this series:
1. https://johnquiggin.com/2023/07/18/monday-message-board-running-late/#comment-261523
2. https://johnquiggin.com/2023/07/18/monday-message-board-running-late/#comment-261551
3. https://johnquiggin.com/2023/07/24/monday-message-board-607/#comment-262100
4. https://johnquiggin.com/2023/08/07/monday-message-board-608/#comment-263121
5. https://johnquiggin.com/2023/08/14/monday-message-board-609/comment-page-1/#comment-2632315
6. https://johnquiggin.com/2023/08/21/monday-message-board-610/comment-page-1/#comment-263447
I managed to break my right arm gardening, so I will not be able to respond to comments. My conclusion is already written.
Oh no!! I’m so sorry about your arm. Good for you for carrying on, though. I am sending positive vibes at you. (I am at the tail end of a case of shingles. Shoulda got the new vaccine. D’oh!! As Homer would say. Now I have to wait 6 months.)
So … there’s no hope at all of someone inventing a drop-in electric motor? All these cars are just going to be junk?
N: – “So … there’s no hope at all of someone inventing a drop-in electric motor?”
Why?
Meanwhile, here’s the NEVS Emily GT, with four electric motors housed within each of its 18-inch wheels, coupled with torque-vectoring and a 600 mile range battery.
Here are some additional details about the Emily GT:
– The car is expected to be priced in the range of $70,000 to $80,000.
– It is scheduled to go into production in 2024.
– The new brand name has not yet been announced.
(I assume those are US dollars.)
Good engineering but the average person will never be able to afford one. Perhaps it shows the way for smaller models. Unsprung weight is a little high but they can tune the suspension for it. Drive-train savings (no drive train) make for efficiency. Range is 1,000 km claimed.
https://livingwithgravity.com/the-emily-gt-a-promising-new-electric-sedan-that-saab-fans-will-love/
Overall, we will still have to get mass transit right for the public… with hepa-filtered aircon to remove viruses. Electric private vehicles alone won’t save us.
James Wimberley: – “I have not considered the resale of the younger and less polluting used ICEVs in LDCs. This is not cheating, as they will generally displace new ICEVs in the buying markets.”
Have you considered the possibility of an increasing scarcity of fuel supplies, particularly for diesel, and increasing unaffordability of petroleum-based fuels?
At 99% EV sales by 2030, even at this pace, it’s suggested 80% of Australia’s vehicle fleet would still run on fossil fuels. What will the price of fuel be then in 2030 to operate them? $5/litre? $10? $20? Would there be enough fuel supply to meet demand, or will fuel rationing be required?
https://johnquiggin.com/2022/08/11/whos-holding-back-electric-cars-in-australia/#comment-254769
I’d suggest most people refuse to even consider the possibility of a sustained decline in petroleum fuel supplies occurring in their own lifetimes – it’s just too scary a thought to contemplate.
US shale oil basins are now at risk of rapidly depleting, particularly in the Eagle Ford & Bakken plays. The Permian basin is perhaps the only US shale oil play remaining with the promise of further production growth, at least for the next few years.
Data suggests Russian oil production has probably peaked, and Saudi Arabia has probably passed peak.
The world is rapidly running out of pre-peak oil producing countries.
At least the US SPR is starting to begin to slowly refill from a trough of 346,759,000 barrels (at week-end 28 Jul 2023), per US EIA data.
We need to leave oil before oil leaves us!
That’s a lovely car, Geoff – I expect I won’t have the cheese for something that fancy. (The other thing is, I like vintage cars.) And you make a good point about the coming transition – I sure hope we can smooth it out.
Here in California, our overlords are talking about somehow getting people to drive 12% less (or something like that). I just have a bit of a hard time seeing that occurring. Though otoh, I’ve already cut down way more than that – so, maybe it is that I am afraid the pain-free margin is already gone.
N,
If you have cut down way more than 12% in driving miles, then you should be ahead of any incoming limit. Americans in general will never want to accept anything which takes away their Freeeeedom. Except they will find, just like anyone else, that physical and biological laws are unaffected by human ideas of freedom. The fundamental laws of nature will dictate the real outcomes. The best we can do now is ride the wave of collapse as wisely and equally as possible. Any attempt to “fight nature” on this will result in even worse outcomes.
Seems to me like rail is well suited to decarbonising using battery electric supplemented by strategic electrification between sections that depend on batteries, ie the train can recharged whilst on the move as well as on sidings. And there is the potential for dedicated battery tenders that can be swapped.
I think road freight electrification probably needs something similar – overhead electrification (it has been trialed in Europe) that allows battery electric trucks to charge on the move (as well as where they stop). Approaching and leaving towns, heavily trafficked section, especially long inclines seem appropriate.
A level of foresight, planning and pre-investment far beyond what we currently see seems required; the whole road freight sector seems more committed to arguing it is all too hard and throwing up Hydrogen as an “oh, too bad, until then we have to keep using FF’s” option.
Ken Fabian: – “A level of foresight, planning and pre-investment far beyond what we currently see seems required; the whole road freight sector seems more committed to arguing it is all too hard and throwing up Hydrogen as an “oh, too bad, until then we have to keep using FF’s” option.”
Yep. By the time the road freight sector wake-up to the paradigm shift of a sustained decline in global petroleum fuel supplies it will be far, far too late to avoid deep pain & disruption to entire economies.
Meanwhile, US stockpiles of crude oil inventories (excluding the US SPR) have reached their lowest levels so far this year. Where to next?
Breaking news from the Climate Council this arvo re the Climate Monster Bowenbasin and the Environment Minimiser Tania Plibersucks at it again:
A disastrous decision overnight shows just why Australia’s national environment laws are failing us.
Late yesterday, the Albanese Government approved an extension to the Gregory Crinum coal mine in Queensland’s Bowen Basin until 2073. This is the fourth lifeline granted to a highly polluting fossil fuel project since the government came to power – and it was granted under Australia’s main national environment law (1).
This decision also comes just one week after Climate Minister, Chris Bowen, toured the Pacific to promote Australia’s climate credentials. Meanwhile, warning sirens blare about a climate change-fuelled summer of extreme heat and fires ahead (2,3)…
…Earlier this week, we asked you to help spread the message that climate needs to be at the heart of our national environment law. This coal mine extension was granted under the very law we were talking about: the Environment Protection and Biodiversity Conservation (EPBC) Act, which ironically fails to deal directly with the main threat Australia’s environment now faces: climate change.
Published on 29 Aug 2023 at John Menadue’s Pearls and Irritations blog was an op-ed by David Spratt and Ian Dunlop headlined Fatal mistake: Intergenerational report misleads on climate risks. It included:
https://johnmenadue.com/fatal-mistake-intergenerational-report-misleads-on-climate-risks/
Per Leon Simons’ twitter post on Aug 1, global SATs for Jun-Aug 2023 were relatively extremely hot, exceeding last year’s record by about +0.3 °C, and yet it seems the El Niño effect is only just getting started (per NOAA & WMO).
The Australian BoM monthly SST anomalies outlook for NINO 3.4 region (as at Aug 29) is back at forecasting +3 °C (for the months Dec 2023 – Jan 2024), yet the BoM still hasn’t declared an actual El Niño event.
Governments are failing us.
Ikon, with all due respect, I can’t go along with just accepting misery as the inevitable future state. It may be irrational, but my hope is for a full rollback of the human-caused parts of CC. I think we can do it and we’d be foolish not to.
Unfortunately, I didn’t track how much I cut down. (I might be able to work up some estimates.) There are a bunch of other things I try to do – launder in cold water when I can, eat less red meat, etc. I don’t really feel great about my footprint though – it doesn’t feel aggressive enough. I would love to get solar panels. There is a lower-emissions car I can borrow, but mine is from the 90s and is probably dirty. (It has much better mileage though … that’s another thing, I don’t even want a large car and I don’t want a fancy one, where you can’t even change the channel. No no no.) It is easier to stay home now that it is too crowded here and people drive like maniacs.
I just read a fun fact yesterday. The NYT says that the US has enough geothermal energy to run the *entire country.* Say whaaaaa … ?? Giddy up!, as Kramer would say. (‘Cause I agree, you can’t really sell hairshirtism to Americans. But shiny new tech? That might work.)
Prolly has a paywall: https://www.nytimes.com/2023/08/31/climate/drill-baby-drill-the-promise-of-geothermal-power.html
“The Energy Department estimates there’s enough energy in those rocks to power the entire country five times over …” Article by Brad Plumer
Keep hope alive
N says “Keep hope alive”.
(“Hope is The Thing With Feathers” – Emily Dickinson (Powerful Life Poetry)
And Svante tells us 2073, FIFTY years over time. “Late yesterday, the Albanese Government approved an extension to the Gregory Crinum coal mine in Queensland’s Bowen Basin until 2073. “.
Just can’t avoid minor snark.
What are the Labor party smoking! Oh, I forgot power and money. 2073 is the new 1873.
So I thought I’d post some positive data, and waggishly suggest climate change providing the hottest year on record led to… “EU power demand fell by 5% year on year in the first half of 2023”.
Wow. By 2073 we won’t have to heat our buildings- in winter! So coal pollution will save us! From having to heat our homes in winter! Which to dinosaurs seems great. Until summer…
“EU fossil generation hits record low as demand falls
“A fall in demand drives collapse in coal and gas in the first half of 2023, as solar pushes forward clean power growth.
30 August 2023
10 min read
Highlights
-5%
EU power demand fell by 5% year on year in the first half of 2023
-17%
EU fossil fuel generation fell by nearly a fifth in the first half of 2023
17
Seventeen EU countries had record renewable generation from January to June
About
This report analyses changes in Europe’s power sector from January to June 2023 to measure the progress of its clean energy transition.
…
“EU fossil generation collapsed in the first half of 2023, falling by 17% (-86 TWh) compared to the same period in 2022. Fossil generation from January to June was the lowest since at least 2000 at 410 TWh. The drop was Europe-wide, with a fall of at least 20% in eleven countries, and more than 30% in five (Portugal, Austria, Bulgaria, Estonia, Finland).
“Fourteen countries saw their lowest total fossil generation on record for the period, with Austria, Czechia, Denmark, Finland, Italy, Poland and Slovenia at the lowest fossil output since at least 2000. Over summer, some countries went for significant periods without using the fossil fuels that have traditionally been bedrocks of their power systems. In June the Netherlands used coal for only five days, and saw a record seventeen consecutive days with no coal use, while Greece achieved more than 80 hours without lignite in July.
…
https://ember-climate.org/insights/research/eu-fossil-generation-hits-record-low-as-demand-falls/
Hope. Dashed… “If people resist or are denied enhancement” … “the same thing operationally as denying people clout, dignity, and self-determination.”
~ Jaron Lanier
Don’t read this. Trigger warning. The most dangerous idea ever according to Francis Fukiyama.
“Excerpted from The End of Reality: How Four Billionaires are Selling a Fantasy Future of the Metaverse, Mars, and Crypto by Jonathan Taplin. ”
“How Musk, Thiel, Zuckerberg, and Andreessen—Four Billionaire Techno-Oligarchs—Are Creating an Alternate, Autocratic Reality
…
“… whatever problems we currently have with social inequality will be multiplied exponentially by the kinds of biological enhancements Thiel and others are seriously contemplating. If people resist or are denied enhancement, in time, they will become subservient to the enhanced class.Jaron Lanier, the early virtual reality (VR) pioneer, makes an eloquent case for resisting technological enhancement and the Singularity. “The reason to believe in human agency over technological determinism,” he has noted, “is that you can then have an economy where people earn their own way and invent their own lives. If you structure a society on not emphasizing individual human agency, it’s the same thing operationally as denying people clout, dignity, and self-determination.”
…
https://www.vanityfair.com/news/2023/08/musk-thiel-zuckerberg-andreessen-alternate-autocratic-reality
It was Warren Buffett who reputedly said that “Only when the tide goes out do you learn who has been swimming naked.”
The tide is running out on Russia and the view is unkind, to put it mildly.
What a colossal waste of life has been the Russian revolution.
Reuters published on Sep 2 a column by John Kemp headlined Column: US oil and gas output nears peak. It included:
https://www.reuters.com/markets/commodities/us-oil-gas-output-nears-peak-2023-09-01/
Is US oil production growth close to ending?
Will global oil supplies tighten? Will global oil prices keep rising?