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Electric cars: Major Tom to ground control?

By Geoff Carmody - posted Thursday, 8 February 2018

Seems there's political pressure for a shift from current 'gas-guzzlers' to electric cars (EVs). The smell of more 'green' subsidies is in the air, while EVs avoid fuel excise (now there's a cost quinella). Politically, EVs conjure up visions of 'green' transport, just like 'pumped hydro' evokes perceptions of 'green' renewables electricity. Perceptions aren't reality.

Nevertheless, a surprisingly wide range of interest groups might like this EVs idea. Consider the coalition.

'Greens' might love the symbolism, at least, ('tho they probably prefer transport using bikes, or walking).


Those hating noise pollution will love the silence of EVs (but keep a sharp eye and still drop the head 'phones when crossing the road).

Petrol-heads might come to love electric motors. Maximum torque from zero revs. Tesla's 'ludicrous drive' markets this. They're fast.

And, in Australia, even fossil fuel interests might be keen.

Really? Sure. 'Pumped hydro' and EVs in Australia are mainly re-charged using fossil-fuels: including, especially, brown or black coal.

Look at the numbers. Black coal dominates electricity generation in Queensland (75%+), NSW (plus the ACT) (80%+), and Western Australia (45%+). Brown coal is king in Victoria (60%+), and does yeoman service as power back-up for South Australia and Tasmania. Australia-wide, brown and black coal fuel 60%+ of our electricity generation. Adding gas (13%+ Australia-wide) plus other liquid fuels pushes fossil fuels up to 75% or so, Australia-wide.

Incidentally, based on NEM state-average wholesale prices, typically Queensland and NSW are cheapest, while SA is the most expensive, even though it still relies on Victorian brown coal when the wind doesn't blow.


Right now, coal is essential for keeping the lights on Australian-wide. Queensland does better at this (currently) than South Australia. It will be equally essential for keeping EVs on the road in Australia for decades (and more) to come.

For coal and all fossil fuels used to generate electricity via the NEM (and smaller Australian grids) EVs growth could be good. Hordes of EVs being recharged in the evening when their owners get home will boost total electricity demand. This could also smooth power demand across current peak- and off-peak periods. EVs mean more, and more base-load, fossil fuel demand.

Bad news for 'pumped hydro', however. The price arbitrage economics overcoming water recycling inefficiencies depend on sizeable gaps between peak power demand (when electricity prices are high) and off-peak demand (when they are low). Those gaps might close a lot. If you've gone to bed, but the EVs in the garage are still sucking down grid juice, 'off-peak' might still be 'on'.

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About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

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