Got Gas: Is hydrogen the reason EVs are getting taxed?

Got Gas is Stockhead’s fortnightly take on moves in Australia’s gas industry by our seasoned energy and resources journalist Bevis Yeo.

While electric vehicles (EVs) currently appear to have a sizeable lead over their hydrogen powered counterparts, some Australian states are introducing measures that seem designed to check their adoption.

Victoria recently joined New South Wales and South Australia in taxing electric vehicles to make up for the projected shortfall in fuel excise revenue.

The proposed amount of $375 for pure electric vehicles and $300 for plug in hybrids isn’t huge when taken in the context of how much an electric vehicle will set you back.

But the tax, a distance-based charge, is a move in the opposite direction from other jurisdictions such as Europe and China, where incentives have been offered to encourage adoption.

Electric vehicle proponents were rather predictably up in arms about Victoria’s move and it is hard to see who outside of government bean counters might see this as a good idea.

Little wonder that Australian Electric Vehicles Association (AEVA) president Chris Nash told Stockhead Australia’s lack of progress in EV adoption is disappointing.

However, not all is lost on the EV front with the ACT offering free registration and loans, indicating that we will likely see differing approaches to electric vehicles in each state.

Lending an advantage?

Now this might be a pure speculation on my part, but I’ll bet a shiny dollar that a similar tax will not be introduced for hydrogen vehicles.

There are several reasons for this.

Firstly, the fuel excise tax reason will come into play. Hydrogen powered vehicles will need regular refuelling once the pumps are established and these will dispense hydrogen via the good old-fashioned method, which can be taxed accordingly.

The second reason is where we enter into the realm of speculation.

As we continue the transition towards a lower carbon world, emissions-heavy fuels are also expected to fall out of favour.

This won’t happen soon but over time we can expect demand for gas, one of Australia’s biggest exports, to fall out of favour.

We will need to replace that giant chunk of revenue and what better way than the fuel of the future?

As retiring Australian chief scientist Alan Finkel told the Australian Financial Review, building a local hydrogen economy will ensure “the development of expertise in producing and handling it, reducing costs and giving confidence to overseas buyers”.

In other words, encouraging the local hydrogen economy will also pave the way for Australia to build a new, clean export commodity.

Ensuring that hydrogen vehicles have an edge over their far more established electric counterparts would arguably play a key role in this.

Supporting the hydrogen economy

The Australian government certainly seems to be backing the hydrogen sector.

Various state governments have launched policies to encourage the development of the sector while Geoscience Australia has just released what it described as a “world-first tool” for mapping the country’s clean hydrogen potential.

The Australia’s Hydrogen Opportunities Tool (AusH2) gives industry and government decision makers free access to online mapping tools and more than 7,000 national-scale datasets, including sites of major infrastructure, maps of renewable energy resources, and the location of hydrogen projects and research centres.

Geoscience Australia has previously identified clean hydrogen as a priority in the first Low Emissions Technology Statement released in September 2020.

Building a hydrogen industry might not be the sole driver behind why Australia seems to be giving EVs the short shrift. But it’s certainly getting a much smoother ride.

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