Green Car Innovation Fund

Yesterday I attended a forum for our governments new Green Car Innovation Fund (GCIF). This is an AUD$1.3B fund over 2009-2019 to support business in anything that reduces tailpipe emissions and fuel consumption in passenger cars.

One thing I liked about the fund was that the technology doesn’t have to be highly innovative or brand new, for example a company building components like low cost speed controllers and chargers for EVs would be acceptable, you don’t need to have new speed controller technology. Grants start at $100k so even a consortium of little guys could get involved.

I made a point of driving my Electric Car to the forum. I wanted to show that it’s possible to drive a green car (zero emissions, charged from solar PV, recycled from an old ICE car so low embodied energy) today. My EV is vastly greener and fuel efficient than anything the Government is currently supporting, and I built it using my basic mechanical skills in my back yard. What could a real car manufacturer do? However my 2 hour parking slot ran out before I had a chance to talk to any of the Government people about it! Oh well.

In general, I think the fund is a good thing. Well done Australian Government. Some interesting comments I heard were:

  1. Toyota is getting $300M to build Camry hybrids at their Australian plant. This is basically cut and paste of 10 year old Japanese technology. Ho Hum. General Motors Holden is also getting $300M to build an economical 4 cylinder car (rather than the traditional Australian 6 cylinder)! That’s really funny, as Holden used to build economical 4 cylinder cars 30 years ago!
  2. The government guys didn’t favor any particular technology – they said they honestly didn’t know what sort of technology we would be driving in the future so seemed happy to back all sorts based on the merits of each grant application. I like this approach.
  3. The funding ratio is 1:3 which is kinda low (you need to stump up 75% of the $ for your project).

However there was one fundamental flaw I spotted. This fund is to encourage “green” innovation in companies over the coming decade, 2009-2019. This technology will then go into production cars a few years later, which we will drive around for the next 10-20 years. Some of the earlier R&D projects will finish by say 2015. So the R&D from the GCIF will make it into production cars built in say 2015-2025, and get driven for 2015-2045.

Now our own CSIRO has predicted petrol at $8/litre before 2020. Even the rosiest assessments of oil production predict vastly less oil by 2030.

So what is the point of putting R&D into any technology that burns oil? The 20% reductions from a hybrid or smaller car are trivial if the price of fuel shoots up 800%. Oil is clearly a dead end, and we should be planning to scrap it today, rather than supporting any future R&D.

2 thoughts on “Green Car Innovation Fund”

  1. I also like the idea of supporting a wide variety of research, rather than trying to “pick the winners”. You never know what one of those little research projects might discover.

    I read an interesting proposal a little while ago. The guy reckoned we’d be better off setting a floor price for oil (say, $70/barrel). So no matter how low oil drops, it doesn’t get sold here for under $70/barrel. Or perhaps set a minimum petrol price at the bowser. It can rise, but can’t fall below the floor price.

    That way, companies wanting to invest in alternative technologies have a predictable framework to operate within. They just need to make sure their alternative technology is economical at that bottom-end price point.

    One of the factors holding back research investment is apparently the volatility of oil prices. If someone designs an electric, ethanol or biodiesel engine that is cheaper to run than petrol if petrol costs $1/litre, your product is dead if petrol drops back to 90c. It won’t matter if it hits $8 in a couple of years, you’re out of business.

    Apparently this happened a few times in the 70s and 80s, where the oil cartels dropped prices to undermine research into alternatives to oil. Once those projects got killed or the companies went out of business, the oil prices rose back up again.

  2. Thanks for your comments Darren, and I agree there should be a floor for oil prices, roller coaster prices have only short term benefits. I have friends in the oil industry who say new drilling has been neatly extinguished, which will only sow the seeds for supply problems in the medium term.

    However there are a growing number of people who will buy green car technology even if it costs a little more compared to current petrol prices. Motivations vary, but many people are starting to see beyond short term economics of fossil fuels.

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