I’ve been thinking about all the economic stimulus that is occurring in an effort to restart the New Zealand economy to lessen the negative impacts of Covid-19. I’ve already written about government procurement but today I wanted to opine a little about public transportation and producing a forcing function to really take it to the next level. In doing so I want to try and take a systems-thinking approach, to look not only at the short-term needs to kick start the economy but also other pressing issues that we need to think about as well.
Love him or hate him, most people would agree that Elon Musk has some big vision around transformation, and is prepared to make some huge bets on his view of what the future will look like. A case in point is Tesla. While people look at Tesla and see a cool (and, let’s face it, sometimes kind of wacky) range of vehicles, what Musk has really done is to reimagine an entire industry. New sales models that turn the industry on its head with no dealer franchises and high street retailing of cars is one example. Perhaps even more impactful is Tesla’s approach of building a distributed network of charging stations across the US and beyond in an effort to deliver the total package for electric vehicles. Add in-car updates over the air and free charging as part of the purchase price for some vehicles and you have a brand that is worthy of its transformational ideals.
If we, for a minute, accept the contention that the internal combustion engine is something that will, in our lifetimes, be relegated to history, then what could we do with this economic stimulus package to get that future happening more rapidly? And, in thinking about that, think as well about some other pressing issues – climate change and the need to de-carbonise the economy and the slightly pressing issue of our country being held to ransom by an industrial manufacturer of aluminium that expects to get cut-price energy and threatens, on a regular basis, economic malaise if it doesn’t get its way.
Throw all those balls in the air and what do you get?
What you get is a government that spends some of its billions of stimulus dollars on rolling out, ultra rapidly, a network of charging stations for electric vehicles all around the country. Thousands of superchargers from Cape Reinga to Bluff and with sufficient density in urban areas to supply the high proportion of vehicles that will be electric under plan two of the initiative. All of a sudden we remove, in one fell swoop, range anxiety and all the barriers to widespread adoption of electric vehicles. Like those who suggest that government investment in the rollout of broadband is a foundation upon which economic growth can be created, so too does EV charging infrastructure enable beneficial outcomes.
And then we get to the demand side of things. Instead of introducing negative incentives to stop people burning fossil fuels, simply zero-rate electricity supply from those charging stations. Anyone who wants to drive a big, gas-guzzling V8 or diesel ute is welcome to. The market may very well decide that buying fuel will get harder as petrol stations disappear rapidly but, just as the die-hard cigarette smokers have continued to be able to get their fix, so to will my petrol head mates get their smelly kicks. For everyone else, however, all of a sudden, outside of the capital cost of buying vehicles, and the very limited maintenance that EVs require, people get free transportation.
The government could, at the same time, enter into an agreement with the electricity generators to buy all of the excess capacity they have at prices over what NZAS is trying to extort for the Tiwai Point smelter, but below wholesale rates. That spend gives the generators a consistent and known demand and revenue curve and also avoids the pendulum-like impact of a mass user such as Tiwai Point skewing the supply and demand equations.
Put all of this together and what do you have? Firstly, a greatly reduced national carbon footprint. Short term we get cleaner air, long term we avoid the impacts of climate change, Through free running costs, we would accelerate the refreshing of the vehicle fleet and would, therefore, reduce the road toll as the entire fleet increases in safety and protection levels. We would make transportation more equitably distributed and would enable the ideation and creation of a number of potential initiatives – from car sharing for low-income New Zealanders to regional growth as businesses look to distribute their footprint as the cost of transportation (both of goods and workers) is slashed.
And, before the Business Roundtable or Taxpayers Union come out baying for my blood, how about the government approaches this as a public/private partnership. Open the opportunity up to the oil companies who (not being fools themselves) realize that they stand on a burning platform. The oil companies are looking for an opportunity like this to “cross the chasm” and phase shift from oil to electricity. A government-mandated PPP could be the trigger that makes that viable.
Covid-19 created the crucible for transformational change. let’s not waste that opportunity – transportation can be one of the anchor projects for changing the way we work as a society and an economy.