Assessment of policy options to achieve high shares of battery electric vehicles in Malta

Abstract

The EU’s Renewable Energy Directive obliges Member States to have 10% of the energy used in transport sector from renewable energy sources (RES). Malta, among other states, is looking for a solution to achieve this. A transport form that does not emit tailpipe exhaust is needed in Malta since the country is suffering from heavy air pollution. Year after year Malta exceeds annual allowed air pollution limits set by the World Health Organization (WHO). Air pollution can lead to respiratory symptoms and may expose population to cardiovascular diseases and even to cancer. In this study, electric vehicles are used as a measure to achieve the target of 10% renewable energy in transport. Electric vehicles do not emit any tailpipe exhaust and therefore are as clean as the energy source of the electricity. Electric vehicles are usually marketed in combination with an incentive scheme. Likewise, the Government of Malta has launched an incentive scheme. This scheme promotes a purchase grant for individuals when buying an electric vehicle. Even though the scheme has been available for several years, compared to the registration rate of conventional vehicles, the number of electric vehicles remains low. The reasons for the low registration rate were investigated by conducting a survey on the residents of Malta. The survey made it clear that one of the reasons is lack of information regarding the incentive scheme. Majority of respondents had never heard about government incentive scheme. This information gap, combined with the relatively large price difference between an internal combustion engine vehicle and an electric vehicle, made it clear that the incentive scheme needed some improvements. As the studies from countries such as the Netherlands and Norway, show the higher the tax incentives the more electric vehicles are registered. Following a proven way, registration tax exemption was included in the incentive scheme. The costs and benefits for this scheme were calculated. Cost and benefit analysis showed that the incentive scheme is not financially feasible. However even benefits gained from savings in external costs of air and noise pollution were not comparable with policy costs. It should be noted that in environmental policies the health and recreational values are worth much more than the money spent on health care. Therefore, decisions should not be made only by looking at the numbers. Moreover, the current capacity of RES electricity was found to be sufficient enough to provide annual electricity to the electric vehicles. Although, to fulfil the hourly demand, the charging profile should be transformed in a way that night-time peak hours do not exist. Charging habits of people could be supported by installing enough charging stations to the busiest areas, enabling charging next to workplaces, shopping areas etc. In case charging profile remains as expected, during night time peak hours more RES electricity needs to be purchased or installed. The electricity can be bought through Malta-Sicily interconnector or by building new RES installations. Finally, the implementation of suggested incentive scheme is dependent on the value judgement of the government.