March sees tripling of battery EV sales despite slumping new car market | Current News

https://www.current-news.co.uk/news/march-sees-tripling-of-battery-ev-sales-despite-slumping-new-car-market

March sees tripling of battery EV sales despite slumping new car market

Image: Getty.

Sales of battery electric vehicles (BEVs) soared in March 2020 to 11,694 despite a significant drop in sales of new cars overall.

In March, registrations of BEVs almost tripled, accounting for 4.6% of the market, according to new figures released by the SMMT. Plug-in hybrid electric vehicle (PHEV) sales also saw a boost, growing 38% in the month, however they fell short of the numbers BEVs achieved, with 6,818 registrations compared to 11,694.

However, the new car market saw an overall drop in sales of -44.4%, a harsher fall than during the last financial crisis and the worst March since the late nineties, the SMMT said.

Image: SMMT.
203,370 fewer cars were registered than in March 2019, a fall larger attributed to the closure of showrooms in line with government advice to contain the spread of COVID-19.

The reason why BEVs saw a huge spike despite the overall decline is likely to be attributed to several reasons, according to Cornwall Insight’s EV specialist Katie Hickford, one of which is the changes to Benefit in Kind tax which came into effect on 1 April, providing a strong financial incentive for fleet EV purchases.

Another large contributing factor is also likely to be the Tesla Model 3, Hickford said, which is “likely the 9th best-selling car model during March 2020”.

Image: SMMT.
Whilst Tesla is not a member of the SMMT and therefore doesn’t report its data directly, “it is assumed that Tesla, and the Model 3 in particular, comprise the notable majority of the ‘Other’ category”.

“March data also reflects the larger volume of pre-order for the new March number plates. Taken together with the long lead time on many EV purchases, it is likely that April registration data may provide a clearer picture of the impact of COVID-19 on BEV sales,” Hickford continued.

March’s figures come on the back of a string of record-breaking months. January saw sales up 203.9% compared to 2019, with 4,054 BEVs registered during the month compared to 1,334 in the year previously.

The SMMT also announced it has downgraded its interim market outlook for the year to 1.73 million registrations – a -23% decline on the previous outlook made in January.

Mike Hawes, SMMT Chief Executive, said that the overall decline has come as “no surprise” due to the UK’s lockdown.

“We should not, however, draw long term conclusions from these figures other than this being a stark realisation of what happens when economies grind to a halt.”

Regards,

Rob Such

www.rsrenewables.com

@rsrenewables

Britain hits ‘significant milestone’ as renewables become main power source | Current News

https://www.current-news.co.uk/news/britain-hits-significant-milestone-as-renewables-become-main-power-source

Britain hits ‘significant milestone’ as renewables become main power source

Renewables, especially wind, generated 5.4TWh between January and March.

In Q1 2020, renewables became Britain’s main power source for the first time ever, according to new analysis by EnAppSys.

Renewables hit a new milestone, generating 35.4TWh between January and March, more than fossil fuels combined. This also represents a significant increase from Q1 2019, when they produced 27.2TWh.

During this period 44.6% of total generation was produced by renewables, with the rest generated by gas-fired plants (29.1%), nuclear plants (15.3%), power imports (7.3%) and coal plants (3.7%).

This surge in renewable generation was largely due to weather conditions, as there was consistently high winds throughout the period. Output from wind farms was more than 10GW for 63% of the quarter, and more than 5GW for 85% of it.

Storms battered Britain at the beginning of 2020, bringing record breaking winds. Storm Ciara for example set two wind generation records, with wind turbines generating 56% of the country’s electricity at 2am on Saturday 8 February, the most at any one time, and accounting for 44.26% of power produced across the whole day.

The record breaking start to 2020 was aided by a recent drop off in demand, according to EnAppSys, caused by the nationwide COVID-19 lockdown. However, as this was only brought in towards the end of the quarter, it is likely to have a larger impact on Q2.

Paul Verrill, director of EnAppSys, called Q1 a “significant milestone” for Britain’s power industry.

“With weather likely to return to more typical patterns in future quarters, the 45% of electricity generation from renewable sources in the quarter is likely to be a temporary high. However, given recent trends which show that renewables are becoming an increasingly dominant player in Britain’s power mix, the continued build of offshore wind farms and the resurgence in onshore wind should see these levels being achieved more often in the longer term.”

The amount of renewable generation on the system meant that not only was there more generation from renewables than gas, there was more than gas and coal-fired generation combined for a whole quarter. This is another first for the country according to EnAppSys.

In the short term, with reduced demand due to coronavirus, we can expect renewables to provide a significant amount of the country’s energy mix.

However, Verrill added that: “Whilst levels of generation from renewables have been on the rise, Britain’s other clean power source – nuclear – generated its smallest overall volume of generation since Q3 2008, producing 12.2TWh in the quarter as older reactors saw increased levels of downtime as they move towards the end of their operational life.

“Levels of nuclear generation are set to continue to decline as plants close, although this will be offset by increased levels of renewable and gas generation as well as any new nuclear builds.”

Regards,

Rob Such

www.rsrenewables.com

@rsrenewables

UK has ‘record-breaking’ year for low carbon energy | Current News

https://www.current-news.co.uk/news/uk-has-record-breaking-year-for-low-carbon-energy

UK has ‘record-breaking’ year for low carbon energy

Wind power generated a record 20% of the UK’s energy.

Last year saw renewables records broken across the board as renewables produced nearly 37% of the UK’s power, according to new data released by the Department for Business, Energy and Industrial Strategy (BEIS).

In 2019, renewables generated a record breaking 36.9% of the UK’s electricity, it announced today (26 March). Of this, wind power contributed 20%, a further record, with 9.9% from onshore wind and 9.9% from offshore wind.

This amounted to 32TWh of generation from wind in 2019, the most ever recorded. Renewable electricity capacity grew to 47.4GW by the end of the year, a 6.9% increase (3.0GW) on a year earlier.

Across the board, low carbon generation increased in 2019, ensuring that renewables and nuclear together accounted for a record 54.2%. Nuclear provided 17.4%, while natural gas provided 40.9% and coal just 2.1%.

This growth in renewables have allowed greenhouse gas emissions to fall by 3.6% from 2018, and almost 28% since 2010.

Energy minister Kwasi Kwarteng welcomed the news, in particular during a period of uncertainty in the UK caused by the COVID-19 pandemic.

“These new figures show the extraordinary progress the UK has made in tackling climate change, with emissions falling 45% since 1990. With record-breaking levels of renewable electricity on the grid we are well-placed to build on these efforts in the months and years ahead, while continuing to support the economy through the coronavirus outbreak.”

Overall, electricity production in the UK showed a small decrease in 2019 compared with 2018, with 324TWh produced across the year.

Energy efficiency measures contributed to this, but were also offset by the transition to electric vehicles and electric heating, increasing demand in an effort to decarbonise.

RenewableUK’s deputy chief executive Melanie Onn said that the figures showed how radically the energy system is changing, “with low-cost renewables at the vanguard”.

“This will continue as we build a modern energy system, moving away from fossil fuels to reach net zero emissions as fast as possible. As well as wind, we’ll use innovative new technologies like renewable hydrogen and marine power, and we’ll scale up battery storage.

“Low-cost renewables are central to the government’s energy strategy and our sector will grow rapidly in the years ahead, as our domestic supply chain expands and we continue to seize multi-billion pound export opportunities around the world”.

BEIS’s statistics today follow reports in January that renewables were on the cusp of becoming the main energy source in the country.

Research firm EnAppSys found that in 2019, 104.8TWh of Britain’s electricity came from renewables, just shy of the 115.1TWh produced by gas-fired power stations.

National Grid meanwhile celebrated low carbon power sources over taking fossil fuels in Britain in January. It found that throughout the twelve months of 2019, 48.5% of the country’s power came from zero carbon sources, including wind farms, solar and nuclear energy, alongside energy imported by subsea interconnectors.

Throughout the same period, 43% of Britain’s electricity came from fossil fuels, predominantly gas and the remaining 8.5% was generated by biomass.

www.rsrenewables.com

@rsrenewables

HuffPost UK: It’s Too Late For Us To Fight Climate Change. Instead, Here’s How We’ll Spend Our Lives.

It’s Too Late For Us To Fight Climate Change. Instead, Here’s How We’ll Spend Our Lives.
What Will Be Lost is a series of reported stories and essays exploring theways climate change is affecting our relationship to one another, to our senseof place and to ourselves.Last year was when the endless bush fires in Australia convinced me and mywife, Susan, that climate change was unstoppable. It’s also when we realizedthat we likely will avoid seeing the worst of the climate emergency.At 64 and 74 years of age, my wife and I believe there’s a good chance thatwe’ll be gone before coastal

Read in HuffPost UK: https://apple.news/AFMNCTbQmR4adTBP6M3eQPA

Shared from Apple News

RegardsRob Such
RS Renewables Ltd

Storm Ciara leads to record breaking weekend for wind generation | Current News

https://www.current-news.co.uk/news/storm-ciara-leads-to-record-breaking-weekend-for-wind-generation

Storm Ciara leads to record breaking weekend for wind generation

Gusts of up to 97mph, along with torrential rain pounded the country.

Over the weekend, Storm Ciara hit the UK causing wind power to surge, breaking two records.

Gusts of up to 97mph, along with torrential rain pounded the country, causing electricity outages, flooding and travel chaos.

During this, wind hit a new record for instantaneous generation, as well as a new record for power produced in a day, overtaking a record set on December 10 during the end of Storm Atiyah.

At just before 2am on Saturday 8 February, wind turbines generated 56% of the country’s electricity. This was nearly 15GW of power, according to Drax Electric Insights.

Throughout Saturday, wind power accounted for 44.26% of power produced, a second record beating that set on 9 December.

Wind dwarfed all other forms of generation, with nuclear providing 18.40% and gas just 17.73%.

Eoghan Quinn, global offshore wind director at Worley said that he expects wind generation records to “continue to tumble” during 2020.

“It’s only a few weeks into 2020 and we’ve already seen wind make up nearly half of our generation demand which reinforces the fundamental opportunity of the energy transition. The proposed 6GW of new capacity from the latest the CfD auction will add further diversification in the energy market.”

While the surge in wind power is a positive, the storm caused damage to nationwide network infrastructure.

Peter Kocen from the Energy Networks Association said: “The extreme weather of Storm Ciara has caused significant damage to network infrastructure across UK, and we would like to thank people for their patience as engineers work to carry out the necessary repairs.

“The network companies have been working throughout the night to restore power supplies. As of this morning, power has been restored to 720,000 customers and 25,000 remain without power. Work will continue to get people back on as quickly and safely as possible.”

The record generation caused by Storm Atiyah in December lead to power prices plunging, and subsequently negative prices for a record length of time. As the amount of wind power on the UK grid continues to grow, these instances are likely to become increasingly common.

The government has announced its plans to grow the offshore wind sector, with an aim of 40GW of offshore wind by 2030. However, this will take almost £50 billion worth of investment according to new research by Aurora Energy Research, and lead to much wider spread changes to the energy sector.

While offshore wind looks set to continue to grow however, onshore wind in the UK has been struggling in a post subsidy world. Groups such as RenewableUK has criticised the lack of governmental support for the technology, which is generally considered to be the cheapest renewable energy.

Regards,

Rob Such

Alternatively fuelled vehicle sales continue to smash records, as charge point roll-out accelerates | Current News

https://www.current-news.co.uk/news/alternatively-fuelled-vehicle-sales-continue-to-beat-records-as-charge-point-roll-out-accelerates

Alternatively fuelled vehicle sales continue to smash records, as charge point roll-out accelerates

Image: Getty.

Sales of battery electric vehicles (BEVs) have continued to soar, exceeding the 100,000 mark in January 2019.

Sales were up 203.9% compared to 2019, according to new statistics from the Society of Motor Manufacturers and Traders (SMMT), with 4,0054 BEVs registered during the month compared to 1,334 in the year previously.

However, plug-in hybrids (PHEVs) outperformed BEVs for the first time since May 2019, with 4,788 registered in the month.

Combined, alternatively fuelled vehicle registrations reached 11.9% of the market in January, which the SMMT says is the highest on record and is up from 6.8% the year prior.

The figures come in a week where it was announced the government will seek to bring the phase-out of petrol and diesel vehicles to 2035, and include hybrids within this for the first time.

Mike Hawes, chief executive SMMT, said: “While ambition is understandable, as we must address climate change and air quality concerns, blanket bans do not help short-term consumer confidence.

“To be successful, government must lead the transition with an extensive and appropriately funded package of fiscal incentives, policies and investment to drive demand. We want to deliver air quality and environmental improvements now but need a strong market to do so.”

As sales of electric vehicles increase, the amount of charging infrastructure across the UK also does. By the end of 2019, there were 17,000 public charge points recorded on Zap-Map and over 10,500 charging locations.

Cornwall Insight pointed to research that shows a 52% increase in the number of charging devices in 2019 compared to 2018.

The number of ultra-rapid charge points has grown from 300 to 800, Cornwall Insight said, and contactless bank card accessible charge points have risen from 300 to approximately 1,000 during 2019.

“The rollout of devices that enable contactless payment is particularly positive as it is providing EV drivers with a version of network interoperability via ad-hoc payments that allow e-mobility to increase,” Tom Lusher, analyst at Cornwall Insight said.

“The scale of the network at present highlights the need to further advance the rollout of contactless payment systems, thereby giving more businesses confidence that their fleet can operate as normal when running on electricity.”

Lusher also pointed to new entrants in 2019, including IONITY and Fastned, which whilst relatively small, “have room to grow”.

Flexible energy supply companies hampered by lack of policy – pv magazine International

https://www.pv-magazine.com/2019/11/13/flexible-energy-supply-companies-hampered-by-lack-of-policy/

Flexible energy supply companies hampered by lack of policy

Britain’s renewable energy trade body has published a report examining the state of flexibility market readiness in nine European markets. The result makes for sobering reading for Germany, France and the U.K.


With grid operators increasingly aware of the need for flexibility services to accommodate the rising volume of renewable energy generation, British power management company Eaton and utility Drax commissioned a study of how prepared nine European countries are to adopt flexible technology.

The resulting report by the Association for Renewable Energy & Clean Technology (REA) ranked the Netherlands top for the robustness of its regulatory environment and investor attractiveness. Finland was second, followed by Sweden, Denmark, Norway and Ireland with Germany, Britain and France bringing up the rear.

The study included contributions from utilities, industry associations, grid operators, energy technology companies and academics in northern Europe as well as publicly available data, with the countries selected as they are assumed to have similar energy transition ambitions.

The REA scored electricity market readiness for flexibility in the nine markets according to the progress of “open-market access for flexibility services”, “socio-political support for the energy transition” and “ability to exploit new technologies and business models”. Countries that performed well demonstrated a fair, transparent and easily accessible market which had addressed conflicts of interest and eliminated other barriers, the report stated.

The verdict of the report’s authors is that regulators in Germany, Britain and France have failed to provide the necessary legislation to drive the high volume of renewables the three nations claim to want, and have clouded investor sentiment as a result. The Netherlands and Scandinavia, by comparison, boasted regulatory environments which enabled fair and transparent access for flexible supply companies.

Many faces of flexibility

U.K. network operator National Grid showed itself aware of the importance of flexibility in July by publishing a report calling for 13 GW of flexibility systems such as industrial demand-side response and smart EV charging, to achieve decarbonization.

“Decarbonizing power means delivering flexibility,” said REA chief executive Nina Skorupska. “In a world of very low-cost variable renewable electricity generation, grids need to be organized differently and some services which were once taken for granted need to be actively procured.”

With renewable energy prices falling worldwide, and generation capacity rising, Britain had an opportunity to develop world first flexible energy supply solutions which could be exported, said Skorupska.

With technological trials already under way the world over, the REA report states it is politicians, not engineers, which are dragging their heels.

Technical solutions are there

In Cornwall, in southwest England, utility Centrica has just started a trial which involves homeowners and small businesses with solar-plus-storage systems offering their aggregated flexibility services on the same market as big energy companies.

German renewable energy agency the Deutsche Energieagentur in September published a report examining how load shifting in the Chinese aluminum smelting industry alone could move 2.3% of the nation’s average daily energy consumption to time periods better aligned with renewable energy generation.

Solar on track to become No. 1 energy resource by 2035, IEA finds – pv magazine International

https://www.pv-magazine.com/2019/11/13/solar-on-track-to-become-no-1-energy-resource-by-2035-iea-finds/

Solar on track to become No. 1 energy resource by 2035, IEA finds

Just over three terawatts will be installed by 2040. Coal generation will remain largely flat, however. Gas generation capacity will rise, making CO2-emissions reduction unattainable under current projection scenarios.


Solar will become the world’s biggest energy resource in the next decade according to the International Energy Agency’s (IEA) World Energy Outlook report.

Despite the optimistic-sounding headline finding of today’s study, however, the IEA says the volume of anticipated renewable generation capacity, rather than displacing fossil fuel power, will do little more than keep up with rising demand for electricity.

The volume of electricity generation rose 7% – 450 TWh last year, compared to 2017. That explains why global coal capacity will likely remain flat at around 2.2 TW from next year to 2040. Gas generation capacity is expected to increase from nearly 1.9 TW to 2.65 TW during that time and 3,142 GW of solar will overtake the capacity of wind next year (715 GW), hydro in 2027 (1,522 GW), coal in 2032 (2,120 GW) and gas in 2035 (2,476 GW) to become the world’s biggest energy supplier.

The IEA says the world will see power generation capacity additions of around 8.5 TW up to 2040, of which around two-thirds will be renewables. In China and the EU, renewables will account for 80% of new capacity but clean energy will add up to less than half of new installations worldwide.

Solar is the most popular source of new renewables capacity in most parts of the world, says the IEA. In China, for example, PV will comprise 44% of all renewable capacity additions until 2040. In Japan, that figure will be 53%, in India 46%. In the EU, solar will supply 29% of new renewables capacity up to 2040, to trail wind’s 39%. In central and South America, solar is on par with wind at 18%, and behind hydro, which will supply 26%.

The IEA said $390 billion was invested in renewables last year, a slight fall from 2017. Under the agency’s “stated policies scenario”, the figure is expected to rise to an average $440 billion per year through 2030. The agency says $650 billion per year will be required to meet energy-related sustainable development goals.

Solar investment from 2017 t0 2018 fell 4% to $135 billion largely as a result of China’s decision to rein in solar subsidies. Looking further out, the IEA claims that investments in solar PV will fall to $116 billion annually in the SPS. Should the world follow what would be needed for an SDS that figure would rise to $169 to $189 billion in 2030 to 2040, respectively. This presumed decrease in investments makes solar the only renewable energy resource which’s market volume in terms of investment could decrease in an SPS. The drop would be -7%, while wind would increase by 37% for comparison. In an SDS, solar PV investments would grow by 41% while wind investments would be up 151%.

Yet still, solar PV is poised for robust growth. Sitting at 592 TWh in 2018, the agency believes that with the SPS, that number will hit 2562 TWh in 2030, and 4705 in 2040, or fivefold and eightfold, respectively. In the SDS solar with grow to 3513 TWh by 2030, and 7208 by 2040.

McCrone: Electric Cars and the Response of Tax-Strapped Governments | BloombergNEF

https://about.bnef.com/blog/mccrone-electric-cars-response-tax-strapped-governments/

McCrone: Electric Cars and the Response of Tax-Strapped Governments

October 29, 2018

By Angus McCrone
Chief Editor
BloombergNEF

Honeymoons are a time of passion. Afterward, the mood may cool just a little as the realities of washing dishes and paying mortgages sink in.

Electric vehicles are currently in a honeymoon phase. You can see that in investors’ eyes: according to BNEF’s figures, Chinese EV companies accounted for the six largest venture capital and private equity new money deals in clean energy globally in the first three-quarters of 2018.

Many governments are also feeling the “lurve” for EVs. Policies have been encouraging motorists to go electric, because ministers want to be seen to be acting to reduce CO2 emissions and urban pollution. Some countries have been offering subsidies.

The honeymoon passion of governments in developed economies for electric cars is likely to fade a bit as the EV market grows. One reason lies in public finances and their reliance on tax revenues from road fuel.

OECD figures show that the Group of Seven advanced economies raised some $223 billion in excise duty and local taxes on hydrocarbon oils in 2016. And then there was the revenue raised in value added tax or sales tax on gasoline and diesel – probably somewhere in the $50-100 billion range.

The degree of dependency on taxing road fuel varies within the G7: I estimate from less than 2% of total government tax revenue in the case of the U.S., to 4% in the case of Germany and more than 5% in the case of the U.K. – equivalent in money almost to what that country spent on defense in 2016. For all of the G7, road fuel taxation is important enough to create a hole in the public accounts if it disappeared.

Fading tax source

Disappear is what it looks like doing, albeit gradually, as gas-guzzling cars get displaced by electric models. BNEF’s Long-Term Electric Vehicle Outlook, published in May, shows the cost of electric cars falling in the years ahead, largely due to deflation in lithium-ion battery prices. By the mid-to-late 2020s, EVs will be cheaper than internal combustion engine, or ICE, vehicles on both a lifetime-cost and an upfront-cost basis.

ICE cars will not, of course, vanish from the roads at that moment. Gasoline and diesel will continue to be needed. Our forecast has EVs making up 55% of global new light-duty vehicle sales in 2040, but “only” 33% of the total fleet. The figures for individual countries will vary around that average, so for instance Germany would reach 76% of new car sales and 55% of the fleet by that date.

With the total number of cars on the road hardly growing any more in most G7 countries, the prospect is for the absolute number of ICEs to fall sharply during the 2030s, if not before. Meanwhile, the impact on the tax take may be magnified by three other factors. The first is that makers of ICE cars will be trying their hardest over the next decade and more to improve fuel economy in order to stay competitive with EVs, so each conventional vehicle is likely to need significantly less fuel. BNEF clients can see our estimate of this effect to 2040 in Figure 102 of BNEF’s Electric Vehicle Outlook report.

The second is that some other road transport sectors will also go electric, so reducing or eliminating their thirst for hydrocarbon fuels. BNEF sees electric buses making even faster inroads into their market than electric cars. By the late 2020s, delivery vans and two-wheelers may be going the same way.

The third is that many of the car drivers who do go electric in the early years will be very heavy road users looking to cut the costs of their high annual mileage.

BNEF’s Electric Vehicle Outlook does not assume any particular changes in taxation of fuel, electricity or vehicles in the coming decades. That is sensible: a forecast should concentrate on the economics and not try to second-guess the future actions of politicians.

But, in practice, changes in tax policy there may well be. Before discussing some of those, and what effect they might have on the EV revolution, we need to look at the question of timing.

Timing of the tax impact

How quickly will the advance of EVs impact government finances? Well, in a small way it is already. To take the U.K. example, electric vehicles made up 1.9% of new car sales in 2017, and a far lower proportion of the total fleet. The pure battery EV subset made up just 0.15% of licensed cars in 2017, according to the Department of Transport. Nevertheless, my estimate is that this means the U.K. government received 23 million pounds less in road fuel excise duty than it would have done if the same vehicles had instead been average ICEs.

OK, that is not a lot for a large economy. But the figure is only going to escalate. By the way, I simplified the calculation by leaving out plug-in hybrids, which are generally classed as a type of EV but use some road fuel as well as electricity. And I also left out VAT – both the tax charged at 20% on road fuel and that charged at 5% on electricity.

BNEF forecasts that EVs will make up 3% of the total European Union car fleet by 2025, rising to 12% in 2030, to 28% by 2035 and 45% by 2040. Meanwhile, the number of internal combustion engine cars sold in the EU will peak in 2022, and the total number on the road will top out in 2025 at 267.8 million. The latter figure is seen falling 9% by 2030 and 41% by 2040. It would be reasonable to expect the tax take on light-duty vehicle road fuel to fall by at least those percentages.

There would be a minor offset in the shape of extra VAT on the electricity used to charge EVs. However, the cost of the electricity per mile would only be a fraction of the cost of hydrocarbon fuel per mile.

Pile more pain on ICE vehicles

One way of recouping the shortfall in tax on road fuel would be to load even more taxation onto the gasoline and diesel vehicles that remain – probably by raising the rate of excise duty or local road fuel tax. This might be welcome for the EV industry and for environmentalists, since it would add to the urgency for drivers to drop their fossil fuel cars and go electric instead.

The disadvantages would be three. First of all, the extra road fuel tax would fall not just on diehard ICE fans (the famed “petrol heads”) but also on those driving around in old cars because they could not afford to buy new ones. France is currently trying to square this circle by increasing the cost of road fuel via a carbon tax, while also offering incentives for low-income households to buy electric cars.

Second, parts of the transport fleet that had not electrified, for instance trucks, would face heavy increases in their fuel bills. The trucking industry tends to be a powerful lobby.

The third disadvantage is a practical one to do with public finances. Turning the screw on ICE drivers would probably be so effective that it would push them onto electrics at an accelerated pace, eroding further the government’s tax revenues.

Put a tax on distance traveled

The most obvious way to tax distance traveled would be by taking a monthly or annual read-out from a car’s odometer, otherwise known as mileage clock. This would have to be transmitted electronically to a tax office or charging center, making the instrument akin to a smart meter.

That remote charging entity would then bill car owners. The amount per mile or kilometer could vary depending on the type of vehicle. For ease-of-collection purposes, the fees would be taken automatically from bank accounts. There could be a pay-as-you-go variant in which vehicle owners would pay upfront for a certain number of miles or kilometers.

Tampering might be a problem – although telematics are established in commercial vehicles in some countries to check that regulations are being observed. And enforcement of collection could be laborious and acrimonious, possibly involving the seizure or immobilization of the vehicle.

There would also be the question of how this tax could be made to apply to older vehicles already on the road. Would a new-tech odometer really be retrofitted to Uncle Henry’s 1952 Bugatti, or for that matter to the hundreds of millions of cars sold over the last two decades and still being driven?

As far as the low-carbon transition in transport is concerned, this idea could be neutral or negative. Neutral if it coincided with the continuing collection of tax on gasoline and diesel, so the incentive to switch to electric (or simply from a thirsty ICE model to a more economical one) would be very much in place.

Negative if tax on hydrocarbon road fuel ended when this new tax came in, delaying the tipping point when lifetime costs of choosing electric go below those of staying with fossil fuels. Or negative if this charge on distance traveled were only applied to electric models, with gasoline and diesel cars continuing to pay existing fuel duties.

Put a tax on road use

The likelihood is that a road use charge would rely on the introduction of new tolls on thousands of major, minor and urban roads – probably policed by camera rather than old-fashioned tolling barrier, and payable by internet.

Like the mileage levy above, it could be charged at a flat rate, or more likely graduated according either to the emissions of the vehicle concerned, or its weight – and therefore likely wear and tear on the road surface.

The concept in some ways is superior to the mileage levy, in that a road use charge could be graduated according to the actual route taken, and even whether the driving was done around rush hour or at quiet times of day or night. The latter might mean that it would contribute to reducing congestion and thereby increasing economic output.

Those are the benefits. As with the previous option, it could be neutral or negative for EVs, depending on whether road fuel taxes were retained, or abolished, with its introduction.

The appearance of a large number of new cameras on roads, and the collection of vast amounts of additional data on the movements of individual cars, would lead to opposition on civil liberties grounds in some countries. Other places that already have large numbers of cameras checking out for speeding, or like Japan and South Korea already have a big network of road tolls, might find their populations less worried about ‘Big Brother’ issues.

Skeptics might be partially reassured if it was written into law that the proceeds of the road use tax would be used solely to pay for new highway building, improvements and maintenance.

Increase tax on EV electricity use

And then we move onto taxes on EVs alone. Any dilution of the economic case for drivers to switch away from gasoline or diesel cars would be a retrograde step from a climate point of view. However, that does not rule out certain governments choosing to take this approach.

Such a tax could come in at least two forms. The first would be to impose a tax on charging, so that every time an electric car driver plugged in, that electricity used would be subject to a special government impost.

The problem here is that it might be possible to implement this at public charging points, but it would be hard to do so in the home because drivers could simply use the same power socket that is connected to their fridge or kettle. That is, unless a fraud-proof way can be found – inside the home or the vehicle – to meter the electricity flowing into a car battery as opposed to other appliances.

The simpler version would be for governments to lift taxation of all electricity by a significant amount. That would force EV drivers to pay more, in proportion to the amount of charging they needed to do, and therefore to the amount of driving they did.

But additional, blanket electricity taxation would run into howls of protest from consumers. Those not owning cars would complain at having to pay higher bills, and the old and poor might be disproportionately affected.

Registration fees for EVs

A final possibility that might tilt the playing field away from EVs would be the introduction of special registration fees for electric cars. According to the Sierra Club, by April this year there were 17 U.S. states with annual registration fees for electric vehicles, and another nine considering them. In many cases, these fees are above those for conventional cars.

For instance, the state of Tennessee’s Department of Revenue says on its website: “Currently, the registration fee for a hybrid is the same as all other private passenger vehicles, the state fee is $26.50. Electric car drivers will be charged a $100 registration fee in addition to the standard registration fee.”

The Indiana Department of Revenue said in 2017: “HEA 1002 created new supplemental registration fees for hybrid and electric vehicles. These new fees apply to registrations of all hybrid and electric vehicles and will be due and payable each year during the registration renewal process. The supplemental registration fee for hybrid vehicles is $50 per vehicle, while the supplemental registration fee for electric vehicles is $150 per vehicle.”

Such measures erode the relative economic appeal of EVs – even if only to a small extent. That means they are retrograde steps from the point of view of controlling emissions.

The registration fees in some U.S. states could end up giving a boost to plug-in hybrids, or PHEVs, at the expense of pure battery electrics. PHEVs made up 36% of all EV sales globally in 2017, and are forecast to still be 24% of that market in 2025. But they use some gasoline as well as being chargeable from mains electricity.

Possible impact

Above, I have outlined a range of measures that governments could choose from, in order to raise revenue to make up for the approaching shrinkage in their tax take from road fuel. Road use charging applied to all vehicles would appear to be the most elegant option from the point of view of reducing emissions and improving the flow of traffic. For EV sales prospects, it would matter whether such a tax co-existed with current road fuel duties, or whether it replaced them.

It is hard to imagine a government response to the tax issue that would prevent the eventual conversion of vehicle fleets to electric, but there are a few options that might affect the speed of the EV revolution over the next two decades. BNEF will be examining in more depth both the issue and the choices, particularly as it affects Europe, in a research note to be published in the coming months.

National treasuries and economics ministries have so far paid insufficient attention to the low-carbon transition, except for the impact of subsidies on electricity bills. As I argued in a VIP Comment article last August, How Economies May Flex to Transition in Energy, Transport, that transition is starting to become significant for a range of macroeconomic indicators, from GDP growth and inflation, to trade and jobs and tax revenue.

It’s time for finance ministers to start getting to know those “what’s-their-name” colleagues in their governments’ energy and transport departments.

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