Labor’s electric dreams running on empty as new car sales tank

Chris Bowen’s electric vehicle strategy is on track to fail after government department officials predicted fewer than a third of new car sales would be battery-operated by 2030.

Energy and Climate Change Minister Chris Bowen.

Chris Bowen’s electric vehicle strategy is on track to fail after government department officials predicted fewer than a third of new car sales would be battery-operated by 2030, casting doubt on Labor’s modelling underpinning its green agenda.

The latest estimates from the federal transport department are that electric cars will make up 27 per cent of new car sales by 2030, well below the 89 per cent forecast in Labor’s pre-election modelling that helped boost its 43 per cent emissions reduction target.

The 89 per cent prediction in Labor’s modelling conducted by RepuTex was based on Anthony Albanese’s pre-election policies that have been implemented since the government was elected, including exempting electric cars from import tariffs and fringe ­benefit taxes.

The department also estimates electric cars will account for 5 per cent of nation’s small vehicle fleet by 2030, a third below Labor’s pre-election modelling of 15 per cent.

Mr Bowen, the Climate Change and Energy Minister, waited until after the election to unveil plans to implement vehicle efficiency standards but this was not part of the modelling that formed the basis of Labor’s targets that are now Australia’s international commitments.

The RepuTex modelling predicted Labor’s policies would lead to 82 per cent of Australia’s electricity being powered by renewables by the end of the decade and a $275 reduction in household ­energy bills by 2025, with analysts arguing Australia is not on track to meet these forecasts halfway through the government’s term.

Energy experts cast doubt over Labor’s electric car projections ­before the election but Mr Bowen refused to release the detailed modelling that underpinned the assumption.

RepuTex head of research Bret Harper told The Australian that the government’s electric car sales forecast “seems about right”, ­despite being less than half predicted by his company ahead of the election.

Mr Harper said his modelling included plug-in hybrid sales in its figures – but federal Labor agreed to end tax breaks for all hybrid cars by 2025 under a deal struck with the Greens.

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“A few years ago plug-in ­hybrids would have been considered a green vehicle but since then it has been ruled out because it has a combustion engine and runs on fossil fuels,” Mr Harper said.

“The department figures sound perfectly plausible, anything in between the 20 to 30 per cent range seems about right.”

Ahead of the election, the Prime Minister said Labor did not make a political decision about landing on an emissions reduction target of 43 per cent by 2030, ­despite it being marginally below the uncosted 45 per cent target that hurt the party in regional areas in the 2019 election. Instead, Mr Albanese said ­RepuTex modelled the party’s policies announced in opposition and that figure came out as 43 per cent.

“What we didn’t do was adopt a target and then work back,” Mr Albanese said after announcing Labor’s 43 per cent target in 2021.

“What we did was work through what are the good policy mechanisms … and then see where that came up through the modelling.”

Mr Harper revealed Labor workshopped its policies with the modelling agency and “settled” on a suite of measures that would lead to an emissions target the party was confident of taking to an election.

He said the ALP were interested in “the outcome of each of the models individually” with some having a larger impact on emissions reductions than others.

“They gave us the policies and we gave them the outcomes, there were lots of different iterations and then we settled on one,” Mr Harper said.

“Lots of different policies were considered and they were making decisions about which ones would be worth it for them.

“In an election campaign they wanted to keep their policies ­focused and wanted to get good bang for their buck in terms of what they committed.”

In a Senate estimates hearing last month, officials from the ­Department of Infrastructure, Transport, Regional Development, Communications and the Arts revealed their latest forecasts found electric vehicles were on track to make up 27 per cent of new vehicle sales by 2030.

“In 2030, it’s forecast that electric vehicles will make up (5 per cent) of the total vehicles on roads and 27 per cent of new car sales,” Surface Transport Emissions and Policy first assistant secretary Paula Stagg told estimates.

When Greens senator Janet Rice noted this was “way short of 89”, Ms Stagg said: “Yes it is”.

A spokesman for Mr Bowen said Labor’s electric vehicle strategy was “off to a flying start” with EVs jumping from 2 per cent of new car sales in May last year to almost 9 per cent.

The spokesman said the ­department’s forecasts did not take into account “all policies under the National Electric ­Vehicle Strategy, including the government’s decision to introduce fuel-efficiency standards to improve Australians access to cleaner, cheaper-to-run cars”.

The ALP is expected to introduce fuel efficiency standards – which set obligations for car suppliers to lower the total emissions of their stock to meet a national goal — by the end of the year.

Opposition climate change and energy spokesman Ted O’Brien seized on the modelling discrepancies between RepuTex and the government, saying Labor had “failed to deliver against its own targets and promises”.

“This is what happens when you pluck arbitrary political targets out of thin air and then refuse to have Treasury or the Department assess them,” Mr O’Brien said.

“Its 43 per cent emissions reduction target, 82 per cent renewable energy target, 89 per cent electric vehicle target and the all-important $275 reduction in power bills are all set to fail.”

The opposition last year raised concern a key plank of Labor’s plan to wave import tariffs on electric cars was redundant, with more than 70 per cent of car imports being exempt from tariffs under free trade deals.

Grattan Institute energy director Tony Wood warned Labor would be unable to meet its target without stronger policy levers including fuel efficiency standards.

“Just having the target and hoping it is going to be miraculously achieved is not very helpful really. You need the policies to ­deliver on those targets,” he said.

“It doesn’t surprise me that having a target and not achieving that target when you haven’t done anything to achieve it.”

Electric Vehicle Council chief executive Behyad Jafari urged Labor to release its plans for fuel efficiency standards as soon as possible.

He said the only way any EV targets could be achieved was through the introduction of fuel efficiency standards to help drastically increase EV uptake.

“The government has been doing the work in developing the fuel efficiency standards by the end of the year but its mid-­November and we haven't seen the standards yet,” Mr Jafari said.

“These have to be in palace and while the government is ­developing them it is looking like a wasted year. Every country in the developed world except for Australia and Russia has these standard.”