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Austria Is Making Electric Cars More Affordable Than Ever

A new Austrian public-private partnership is expected to create jobs and spur economic growth — offering a powerful example for other countries.

By Bob Berwyn


(Image: Håkan Dahlström/Flickr)

On the day that Austrian drivers were able to start claiming €4,000 government rebates toward the purchase of electric cars, Laszlo Varro, chief economist of the International Energy Agency, came to Vienna to declare that the e-mobility revolution is underway in Europe. The price of batteries has dropped 73 percent in the last seven years, and their storage capacity is improving quickly.

“That really matters for cars,” said Varro, who advises the IEA’s 29 member nations on energy policy. Incentives like the new e-mobility package from the Austrian federal government will kick-start a process that will help the transportation sector move toward the ambitious goals of the Paris climate agreement, according to observers like Thomas Becker, a government affairs expert with BMW.

“Electrification will not happen without reliable and clear government policy on infrastructure, road usage, parking, and other things that define the total cost of ownership of electric cars,” Becker said during a recent webinar on European Union transportation policy.

Policies like Austria’s incentive package could help spur a shift toward e-mobility, according to Dan Sperling, a transportation scholar at the University of California–Davis. Government leadership is crucial to setting the tone.

“We need to get electric vehicles totally in the mindset of people. It needs a bully pulpit—our leaders saying, ‘This is our future.’ That will help people get comfortable with it. But right now, low oil prices are making that more difficult,” Sperling said.

A 2015 study conducted in 20 countries showed that a combination of cash rebates and widespread battery-charging infrastructure, such as the system planned in Austria, were likely the best incentives to hasten the adoption of electric cars.

But there is still a long way to go. As of today, 94 percent of the transportation sector’s energy use is from oil, and not just cars: When you consider land and ocean freight shipping and air traffic, the demand for oil in the sector will increase for the next 10 years even if half of all passengers cars are electric, Varro said, speaking on March 2nd in Vienna at an energy transformation session organized by the Neue Zürcher Zeitung.

“The critical point is 2040. if we don’t play our cards well the next 25 years, we surely lose,” he said, urging government and industry to cooperate on policies and investment strategies that will not only help meet climate targets, but will also improve air quality and public health and end up boosting the economy significantly. Already, the global investment markets are all pointing toward renewables, he said.

Austria is a case in point. With leadership from a newly elected president backed by the Green Party, the government is implementing a €72 million boost for e-mobility passed by parliament last fall, aimed at mobilizing consumers, businesses, and local governments.

The transportation and environment ministries are paying two-thirds, and the automobile industry will pony up the remaining €24 million. The package includes subsidies for installing charging stations, and smaller subsidies for plug-in hybrids and even electric bicycles. E-mobility infrastructure is key, so investments are aimed at improving charging capacity at transit nodes like park-and-ride lots and train stations.

On the consumer side of the equation, e-cars will get a green license, giving access to free parking spots in coveted downtown areas, the use of bus lanes, and also expanded delivery zones and times for commercial e-vehicles in shopping areas. Longer-term plans include electrified truck lanes along long-distance routes.

The aggressive timetable calls for countrywide e-mobility infrastructure and adding 16,000 electric passenger vehicles to the traffic mix by 2020. Economic studies supporting the investment suggest the push could add 30,000 jobs and generate €3 billion in economic activity by 2030.

The public-private partnership will also pay off in the freight sector. Along with boosting electric passenger cars, Austrian truck manufacturer MAN said last month that it will start producing thousands of light electric trucks intended for local and regional deliveries, beginning in and around Vienna. Long before the announcement, local government transportation officials met with the trucking industry and with retail chains like grocery stores to determine how the fleet of electric trucks would be incorporated into the transportation system.

Varro said it’s possible the transition could be accelerated by even more technological improvements, since, up to now, tech progress has exceeded expectations. The expansion of the electric vehicle market also meshes well with the emerging shared-vehicle economy, as well as with increasing use of digital technology to manage renewable energy systems.

That’s important for other sectors, too, Varro said, describing Spain’s recent upgrades to its renewable energy network. For example, the power sector is using high-powered computers to crunch data from real-time monitoring of wind conditions at 17,000 sites around the country. Boosting that capability has cut down on forecasting errors, which helps distribute supply and demand across the grid, according to a 2016 case study on energy system transformations by the European Environmental Agency.

All these incremental steps, and more, are needed to reach the Paris goals, which means that global emissions must peak no later than 2018 and decline thereafter. Participation from the United States will be crucial, of course, and Varro said it’s not yet clear what the Trump administration means for global climate and energy policy.

“I can’t speculate,” he said. “They are still in the process of formulating their policies.”

During the campaign, Donald Trump said he would pull the U.S. out of the global climate deal, and his administration is floating a draft budget that would slash certain climate protection programs. But Secretary of State Rex Tillerson has been mostly silent on climate policy, with some observers citing unnamed sources in reports that White House advisor Steve Bannon wants to pull out of the deal, while Tillerson and perhaps others in the president’s inner circle want to maintain a seat at that global table.

Asked to find something encouraging in Trump’s statements on reviving the coal industry, Varro said the world could benefit from U.S. carbon capture and storage (CCS) technology, whereby fossil-fuel energy producers reduce emissions by trapping greenhouse gases at the source of production. While many global CCS projects are languishing, Varro said that three such projects in Texas, Louisiana, and Mississippi show that the technology could be commercially viable.