Opinion: when it comes to moving away from diesel and petrol, natural gas vehicles should also be part of the conversation
Meet Jimmy. He cares about the environment and climate change and is enthusiastic to contribute something from his part. He decides to buy an electric vehicle (EV), as he thinks it will help the environment. Jimmy goes to an EV dealer and enquires about the cost, efficiency and range of an EV. The car dealer explains the nuances of an EV to him. We join them as they begin to talk money
Car Dealer: The Irish government gives a subsidy to encourage people to use an EV.
Jimmy: How much subsidy does the government give for an EV?
Car Dealer: EV buyers will get a €5,000 reduction in capital cost, €5,000 free from vehicle registration tax (VRT), a charger installation grant of €600, toll leverage up to €500, free parking, free charging and less motor tax.
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Jimmy: That’s a lot of money. Did you say free parking and charging?
Car Dealer: Yes. Let’s say you park the car for five hour a day at the rate of €1.50 per hour, you will get €2,700 per year.
Jimmy: That’s great. Can you help me calculate how much I will save per year?
Car Dealer: Sure. Let’s assume your drive 20,000 km per year and the life time of a car is 20 years. If you annualize the capital savings, VRT and charger installation grant, it will come to €250, €250 and €30 per annum respectively. Add €500 for saved tolls and €2,700 for free parking. The daytime electricity charges are 17 cents per kWh, and if you charge for an hour a day, it will save you €372 each year. Totalling all that comes to €4,100. This is what you could save every year.
Jimmy: I might not park the car in public spaces that much.
Car Dealer: Alright, let’s say you don’t use public free parking at all. In that case, you will get €1,400 per year. Still a lot of savings, isn’t it? Would you like to buy this EV now?
Jimmy: Of course, I’m very interested. Can I check with my bank and come back to you next weekend?
Car Dealer: Sure, we can provide you all the documents that you need to go to a bank for loan.
Jimmy walks out of the showroom thinking the government is doing an amazing job. In addition to contributing to the environment, he will also get a lot of savings every year driving an EV. That’s fantastic, he thinks, I'm going to get an EV for myself.
On the way back to his office from the showroom, Jimmy meets an old friend called Jeff and they decide to go for a coffee. Jeff is a scientist who works on clean energy and climate change. Jimmy tells him about his decision to buy an EV.
Jimmy: The government gives a lot of subsidies. I’m planning to get one. You're a clean energy scientist so tell me what you think about EV.
Jeff: Jimmy, do you know why the government gives so many subsidies?
Jimmy: Of course! To reduce our emissions and encourage people to use clean energy.
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Jeff: Right. Do you know how much EV reduces our emissions?
Jimmy: No. I don’t but I suspect what my diesel car emits will be saved.
Jeff: Yes! Let’s say you drive 20,000km per year in a VW Golf. This emits two tonnes of CO2 per annum. This is what you will save driving an EV. Let’s do a little math here. If you divide the total incentives the car dealer gave you by the emissions you avoid, you will know how much incentives government gives to avoid a tonne of CO2.
Jimmy: With parking, it's approximately €4,100 per annum or 2000 €/tCO2 avoided. Without parking, it is €1400 or 660 €/tCO2 avoided.
Jeff: Do you think the government should spend the tax payers’ money efficiently?
Jimmy: Yes. To reduce our emissions, this is the only option, right? Are there alternatives?
Jeff: Do you know about natural gas vehicle (NGV) cars?
Jimmy: Yes, I do. But they run on natural gas, which is a fossil source, right?
In Germany, for instance, they give higher incentives if you find new ways to reduce emissions
Jeff: You can produce biogas from resources like food waste, slurry or grass.
Jimmy: How can you produce it from food waste or grass?
Jeff: It's possible by the process of anaerobic digestion.
Jimmy: What is the cost of that technology?
Jeff: The biogas costs between €0.87 and €1.40 per litre of diesel equivalent, depending on the feed. Biogas is also a waste treatment process so the waste would have been treated anyway. On a whole life cycle, the fuel cost would be less.
Jimmy: Isn’t it expensive?
Jeff: Yes because this technology is not mainstream in Ireland. In Germany, for instance, they give higher incentives if you find new ways to reduce emissions. This allows the companies to innovate and reduce their costs. We could do the same here.
Jimmy: Is there any engine modification needed?
Jeff: No, there are lots of cars and buses already running on gas especially in the UK, Sweden and Italy.
Jimmy: Then why aren’t we pushing for clean NGV?
Jeff: The problem is that it is new to Ireland and there is very little policy support available. This makes the industry reluctant to commercialise this process.
Jimmy: What level of incentives would this clean NGV need?
Jeff: Let's do some more maths. The fuel efficiency of an NGV is 4.4 m3 per 100 km. To drive 20,000 km, you would need 880m3. As of now, there is no incentive scheme for using an NGV. However, if you assume the highest incentive given from renewable heat scheme at 29.5¢/m3 to the NGV, it would come to €260 per year. If you divide the incentive with the diesel car emission avoided, how much will you get?
Jimmy: It comes to €130 per tCO2 avoided.
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Jeff: Do you think it’s fair?
Jimmy: It's 16 times less than the EV if you include parking!
Jeff: You save the same amount of emissions, yet one technology receives much higher incentives than the other.
Jimmy: What are the typical incentives for renewable technologies across the EU?
Jeff: My calculation shows most renewables in the EU receive between €140 and €260 per tCO2 avoided.
Jimmy: Which renewables and countries did you consider here?
Jeff: Biogas and Photovoltaic (PV) in Germany, and biogas to grid in the UK.
Jimmy: How was the policy constructed in other countries and why it is different in Ireland?
Jeff: In Germany, you know, the Renewable Energy Sources Act was started way back in 2000. This was amended many times since according to prevailing market situations. The policy support gave additional incentives on top of the original incentives so when the industry innovates and reduces emissions, more incentive is given.
Good policy allows efficient technology to prosper and innovate
Jimmy: How long it takes to see the effect of a policy?
Jeff: Usually, you can see the effect of policy a year ow two years after it is implemented. For example, the government in Norway announced financial incentives for 50,000 EVs in 2012. At that time, the market share of EV was 3 percent. By 2016, it was close to 30 percent. In fact, the government exempted the 25 percent VAT rate on EV by 2015.
Jimmy: So what do you recommend if I must save the environment at a lower cost?
Jeff: Well, good policy allows efficient technology to prosper and innovate. The support should be withdrawn once the technology matures. The incentives should be provided based on the amount of CO2 avoided.
Jimmy: What’s your take on EV then?
Jeff: Why should EVs have all the fun?
The views expressed here are those of the author and do not represent or reflect the views of RTÉ