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EV subsidies – an electric dream or a fiscal nightmare?

Malaysia is fuelling its EV revolution with electricity predominantly generated from coal. – June 26, 2024.

EV subsidies – an electric dream or a fiscal nightmare?

THESE days, Kuala Lumpur is a city as famous for its sizzling street food as for its snarling traffic. The latest government push to get more electric vehicles (EVs) on the road smells more like old fish than fresh innovation. It’s a curious, perhaps misguided love affair, where the seductive allure of sleek, silent cars clashes loudly with a soundtrack powered by coal.

Here’s the bitter irony, marinated in a thick sauce of subsidies. We are fuelling our EV revolution with electricity predominantly generated from coal. That’s right, in 2023, about 54% of the country’s electricity comes from the sooty stuff, and another 37% from natural gas. This isn’t a clean energy revolution; it’s an environmental misstep dressed up in green.

The energy conversion process from coal to electric power involves multiple stages, each with inherent losses. First, coal’s combustion efficiency in converting to heat is approximately 35-40%, depending on the technology used. This heat is then used to boil water, creating steam that drives a turbine.

The conversion efficiency from thermal to mechanical energy is around 35-45%. The generator then converts mechanical energy to electrical energy with about 90-95% efficiency.

Transmission losses through extensive power lines can be 5-10% due to resistance, especially over long distances. Finally, converting AC electricity to charge a DC battery (as in EVs) incurs a further 10-15% loss. Cumulatively, the overall efficiency from coal to battery charging might be roughly 10-16%.

Here we are, at the gritty crossroads of energy and irony. The internal combustion engine – powered by the ancient dance of petrol – hums along with a rough-and-ready efficiency of 20% to 30%. It’s a straight shot from the volatile world of chemical energy straight to the mechanical, skipping the bureaucratic mess of energy conversions that plague our coal-dependent electric avenues.

This old-school, gas-guzzling warrior spits out pollutants, yes, but let’s give a nod to those unsung heroes: the modern catalytic converters and clever engine management systems that scrub clean its smoky breath.

So, in this twisted tale of coal versus crude, the petrol engine – in all its roaring, unapologetic glory – might just be the lesser of two evils, especially in places where coal still darkens the skies. It’s a potent reminder that the road to a cleaner ride is as complex as it is crucial, demanding a deep dive into the sources we tap and the machines we rev up.

The government is rolling out the red carpet for EVs, offering tax breaks and incentives like a desperate host pushing the last drinks at a dying party. These incentives include significant import duty, excise duty, and road tax exemptions/reductions.

For EVs, these exemptions can result in substantial cost reductions, making EVs financially attractive compared to traditional combustion engines.

The EV market in Malaysia is buzzing, all right, with about 15,000 electric cars as of early 2023, and yes, they’re growing, expediting Malaysia’s energy transformation journey. But what’s the use if every kilometre driven is a silent toast to coal? The energy policy here feels like one of those elaborate multi-course meals where the dessert arrives first and the appetiser is forgotten.

Then there are hybrids, the automotive equivalent of a diet soda at a fast-food joint. Promoted as a ‘greener’ alternative, they enjoy similar tax reductions, supposedly mitigating the import duty sting.

Yet, these vehicles are heavier due to their dual drivetrains and often rely on their gasoline engines. The environmental benefit? Negligible, at best. These hybrids are nothing more than a trick to navigate fiscal policies, leaving us with heavy cars and batteries that contribute little to environmental goals and, ultimately, are a net negative when considering their full lifecycle.

Now, let’s chew on this. The government aims for renewables to hit 31% of total capacity by 2025, aspiring to touch 40% by 2035. Noble, but let’s not pop the champagne yet. Until we see a substantial plate of renewables – say, 70% of the mix – the EV subsidy party is like serving caviar on a trash can lid.

Why not hold off on the EV parade until the electricity that fuels them is mostly green? Subsidising EVs now is like selling umbrellas during a drought. Futile. Costly. Absurd.

Taxpayers and the environment would be better served if we slammed the brakes on EV subsidies and redirected that passion and those funds into ramping up renewable energy sources.

It’s not about being anti-progress; it’s about smart progress. It’s about not getting intoxicated on the sweet liquor of innovation without checking the ingredients first. We need to cook our green transition on a slow simmer, ensuring the base is rich with renewables before adding the spices of EV incentives.

So, let’s get our kitchen in order before we throw this dinner party. Let’s make our grid as clean as the vehicles we dream to drive. Until then, subsidising EVs in a coal-heavy economy is not just nonsensical – it’s a recipe for disaster. – June 26, 2024.

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