Asian legislators need to rethink their strategies to accelerate the uptake of PHEVs, Dr. Benjamin Sovacool, National University of Singapore, concluded in a pre-conference workshop in Hong Kong. The good news: Removing split incentives, internalising all costs of fossil fuels, and removing non-technical obstacles could help to quickly realise the full potential of EVs. A cars21.com live report.

Policy makers in Singapore, Hong Kong, and remaining Asia have to more thoroughly apply lessons learnt in the past from technological failure to help electrified vehicles find their way on to Asian roads, Sovacool told the 20 participants meeting at a pre-conference workshop to the “Electric Vehicle Asia” conference in Hong Kong yesterday, 26 January. The interactive workshop brought together the supplying industry, electric utilities, and regional governments from Singapore, Hong Kong, India, and Malaysia to examine “Key Drivers to making PHEV and V2G a Success in Asia” from a non-technical perspective. Sovacool emphasised that a technology failing to establish itself as a mass product - as happened with electric vehicles around 1900 and again in the 1990s - could almost always be explained by an amalgam of non-technical obstacles, including social, political, economic and cultural barriers. The third attempt of electric vehicles to enter mass production today would therefore need to be supported by a consistent public policy strategy creating the right framework conditions to make an otherwise technically superior alternative economically and socially viable.

Internalising all external costs

Sovacool, Assistant Professor at the Lee Kuan Yew School of Public Policy with a special expertise on renewable energies and the role of public administrations in creating the right climate for PHEVs, insisted that a major key to success would lie in internalising all economic and social costs incurred by fossil fuels and non-renewable sources of energy. Taking into account all costs not included in their price – including catastrophic risks from nuclear meltdowns, higher probability of wars over natural resources extraction, public health issues and deaths, destruction of land, atmospheric damage, extensive water use, cumulative ecosystem damage, or the degradation of cultural icons – would render conventional energy sources many times more expensive than currently thought. As a result electric vehicles powered by renewable energy sources would make perfect economic, social, and political sense. Given the huge potential for renewable energy in China and other Asian countries, Sovacool concluded that energy independence and electric vehicles would need to go hand in hand.

Beware of the “technical potential”

Taken the example of wind power generation in the USA, he warned that lauding the “technical potential” of a certain technology as the only decisive factor to determine their market penetration could grossly overestimate their real potential. The “maximum achievable potential” as the economic potential achievable under the most aggressive policy programme, including all administrative and programme costs as well as market barriers, would be a much more realistic figure to forecast the uptake of electric vehicles.

As a result, governments’ main responsibility would be to avoid creating flawed expectations that would harm the steady investment in PHEVs and EVs. The current global hype suggesting a rapid appearance of mass-produced electric vehicles would be counterproductive if advances would not be as fast as suggested. This could lead to a renewed failure of EVs on the market.

Subsidies and other “wrong” incentives

On the contrary, governments in Asia and beyond would now need to seriously reconsider their current incentive schemes. With almost all governmental R&D expenditures over the past decades having been directed at nuclear energy and fossil fuels, a removal of these subsidies would be a most effective promotion tool for electric vehicles. Sovacool was positive that a strong political will could quickly shift subsidies away from competing energy sources and a fossil fuel-based infrastructure towards energy efficiency and clean electricity.

The most effective policy mechanisms

Concluding the workshop, participants analysed policy mechanisms needed in Asia to drive the market for PHEVs and EVs. Following extensive surveys conducted in South-East Asia, policy makers considered the following tools most effective:

• Feed-in Tariffs: Similar to the governmental support of solar and wind power in Germany, Asia would need to financially support clean electricity for EVs in form of national feed-in tariffs. Benefits would ultimately outweigh costs, leading to a stimulated market at negative costs for the government. Among respondents from 8 Asian, mostly developing, countries this tool was rated a top priority by an overwhelming 61%.
• Renewable Portfolio Standards: While creating continuous pressure for lower electricity prices and providing flexibility when coupled with a renewable energy credit market, this tool would not initially support higher cost renewable energy and off-grid systems. 12% of respondents would apply this tool to incentivise electric vehicles.
• Production Tax Credit: While being wide in scope and socialising the costs of renewable energies, this tool could be insufficient to attract new investment and would be coupled to the availability of a significant budget.