Bridges: Electric Vehicle, Industry and Govt Roundtable
8 MAY, 2014
Speech to 2014 Electric Vehicle, Industry and Government Roundtable
Countries around the world are facing similar energy challenges.
We want to continue to grow our economies and help our people to prosper, but we need to reduce our carbon emissions and respond to climate change.
At the moment, the world is in a transition phase towards a low carbon future.
In the US, President Obama speaks of an “all of the above” policy on energy. That is also what we have here in New Zealand – a mixed and balanced approach to our energy future.
This Government takes a balanced approach to climate change – playing our part while avoiding imposing excessive costs on households and businesses.
In New Zealand, our biggest opportunities to reduce our carbon emissions lie in the energy sector.
About 42 per cent of New Zealand’s carbon emissions are from energy use.
Transport, industrial heat and the heating of commercial buildings are responsible for three quarters of that.
It’s transport I want to focus on today.
Transport is our largest consumer of energy and more than 99 percent of transport energy is oil-based.
Light passenger vehicles represent 60 percent of all transport energy consumption.
The average light passenger vehicle uses about ten litres of fuel for each 100 kilometres.
When you consider the light vehicle fleet travels 37 billion kilometres each year in New Zealand, that’s a lot of fuel.
Transport is clearly an area where we can improve fuel efficiency, make savings, reduce carbon dioxide emissions and improve New Zealand’s drive to increased use of renewables.
I recently announced two new energy efficient projects in the transport sector.
In the first of these initiatives, the Energy Efficiency and Conservation Authority will work in partnership with three road transport associations to train small to medium-sized heavy transport fleet operators to implement long-term fuel savings plans.
The initiative will train 150 fleets over three years and builds on EECA’s current heavy vehicle fuel efficiency programme.
The programme is expected to save up to one millions litres in diesel each year and around 7,500 tonnes of carbon dioxide (each year).
This is equivalent to the annual amount of carbon stored in a 400 hectare New Zealand pine forest.
In the second initiative, EECA will also work in partnership with the tyre industry to run an information campaign to increase the level of uptake of fuel efficient tyres.
Passenger cars are responsible for about 10 per cent of New Zealand’s greenhouse gas emissions and increased uptake of fuel efficient tyres presents an opportunity to reduce emissions at a national level.
By doubling sales of fuel efficient tyres, this programme will save 2.5 million litres of fuel each year and around 6000 tonnes of carbon, which is the equivalent of taking around 1,900 cars off the road.
These are modest but potentially important initiatives.
On the other hand, EVs present an opportunity for a serious leap forward.
Increased uptake of EVs could reduce emissions, increase use of renewable energy and improve transport fuel efficiency.
EVs can be added to the car fleet without any additional new carbon dioxide emissions.
Replacing a comparable petrol car with an electric vehicle would reduce carbon dioxide emissions by over two tonnes a year.
A transition to EVs could reduce New Zealand’s nine billion dollar oil bill and improve security of supply.
EVs could also increase New Zealand’s resilience.
Having EVs in your fleet means you are better placed to cope in a natural disaster or other crisis situation - you can have two sources of energy for transport rather than just one.
New Zealand has some unique advantages when we consider the use of electric vehicles.
We have high levels of electricity generated from renewable resources.
Currently around 75 percent of our electricity is generated from renewable sources and we have a significant number of consented renewables sites to allow for future demand.
We have a target for 90 percent renewable electricity generation by 2025.
This is a position most countries envy.
The energy benefits of EVs in New Zealand are consequently greater than in other countries.
Another advantage is that New Zealand does not need a major investment in infrastructure for the uptake of EVs.
Infrastructure is likely to be progressively extended.
Figures from Quotable Value NZ show eighty five percent of New Zealand homes have off-street parking, which is useful for recharging.
The EV Project in the USA, which has monitored over 200 million kilometres of EV driving in the US, shows eighty five percent of charging also happens at home.
Compared to other countries, we also have a low average commute, with each driver clocking up about 28 kilometres a day – a distance the batteries in today’s EVs can handle easily.
Advances with batteries will also help encourage EV uptake.
In fact, my colleague Amy Adams is in Whangarei today opening the first EV rapid charger in the country.
This rapid charger, which is being installed by Northpower, can recharge – for example – a Nissan Leaf from zero to eighty percent battery capacity in twenty to thirty minutes.
Northpower currently owns nine EVs, four of which it will lease to local businesses, and the rapid charger will be available to all EV owners to recharge, initially at no cost.
There is also government support for this evolving technology.
The exemption to the road user
charges for EVs runs until 2020.
This exemption recognises the importance of encouraging the use of alternative fuel technologies to help reduce carbon emissions.
EECA’s vehicle fuel economy labelling scheme also helps provide information to consumers on the energy running costs of both conventional vehicles and EVs.
The labels help buyers compare the total cost of ownership of operating a vehicle.
However, there have been challenges.
The price of EVs is seen as the barrier, with EVs having been up to three times more expensive than internal combustion vehicles. However, changes in the market this year suggest prices are starting to come down to a level where EVs can be a viable option, especially for fleet buyers.
We are also starting to see second-hand EVs arriving from Japan for private buyers.
This is important because most cars bought in New Zealand are second-hand imports.
I would like to hear from those of you who are members of the motor industry whether you think EVs are now poised to move beyond their current position in the market.
This Government will not subsidise the purchase price of EVs.
However, now the price of EVs is dropping, I am keen to learn if there are other barriers to EV uptake which the private sector cannot address on its own.
For example, is there a role for Government in providing information, or should we leave the business of selling cars and the electricity supply for EVs to you.
It is also heartening to see two major industries, the motor vehicle industry and the electricity industry, which have previously had little to do with each other, coming together in this forum.
For the motor vehicle industry, greater uptake by vehicle fleets may make EVs more viable when you take into account the fact most new cars bought in this country are bought by fleets.
It will be important for EV requirements to be integrated with future smart grid technology and infrastructure.
Emerging technologies such as EVs, solar energy, and advanced meters, as well as developments in distribution automation, distributed storage, and demand response will make different demands on the electricity systems of the future.
Smarter electricity networks will be needed, capable of transferring energy between a more diverse range of generators and consumers, while balancing demand and supply.
The way markets and customers can interact in future will be key to unlocking the benefits of smart electricity technologies.
This is about communications and ICT, and it’s also about having a robust and smart electricity grid that can deal with fluctuations in supply, and conveys market-based signals quickly and efficiently between the different components of the electricity system – generators, transmission, retailers, and users.
Internationally, spending on smart grid technologies such as advanced metering and fault management is increasing.
In 2012, global spend on smart grids was $13.9 billion, with around half of this being spent on smart metering and related infrastructure and services.
This investment was 7 per cent higher than in 2011, and is expected to rise to $25.2 billion by 2018.
In New Zealand we can build on the work that’s happening overseas.
This is why the Government recently announced the establishment of a Smart Grid Forum.
The new forum provides a platform for dialogue between senior representatives from all parts of the electricity system.
Consumers are represented, as well as business, scientific and academic interests.
The forum’s objective is to advance the development of smart electricity networks in New Zealand through information sharing, supported by analysis and by focussed work-streams where appropriate.
Members will bring a system-wide perspective to the opportunities and challenges that lie ahead for the electricity sector, including the opportunities offered by EVs.
You will be considering many of these issues today.
I look forward to hearing about your views on the next steps for EVs, which I will share with other Ministers and interested parties.