Editorial | Electric vehicles beyond JUTC

The Government’s planned acquisition of 200 electric buses for the capital’s state-owned transit company over the next two years is good for the environment and potentially, too, for the economy, especially if it proves a fillip to a large-scale transition to electric vehicles (EVs).

Put another way, a rapid expansion of EVs in Jamaica would increase demand for electricity, thereby cushioning the migration of big consumers from the grid and probably help to keep energy affordable, and hopefully more competitive, to the economy. Especially poorer consumers.

This week’s announcement of the proposed acquisition of the EV buses was surprising on two fronts. First, the disclosure came from the finance minister, Nigel Clarke, rather than part of a broad transportation policy by the portfolio minister, Audley Shaw. Second, Jamaica’s transition to EVs hasn’t been a consistent element in public discourse on energy policy, either generally or in Minister Clarke’s announcement on Tuesday. Maybe it is talked about in wonky tones among policymakers and bureaucrats.

To be fair, in a move to encourage EVs, the Government last year slashed import tariffs on electric vehicles by two-thirds, to 10 per cent, if the vehicles are no more than three years old. Licence fees on EVs were also suspended for five years.

There is no clear data on how the policy has impacted vehicle imports in the eight months it has been in place, but the anecdotal evidence suggests that it hasn’t, as yet, moved the needle much. Internal combustion engine (ICE) vehicles still account for the vast bulk of automobiles, new and preowned, imported into the island.

MAKES SENSE

However, it makes sense that the Government aggressively promotes EVs. For notwithstanding recent hiccups in the global energy environment that caused the slowing of the tilt away from fossil fuels, the world is moving towards EVs.

Despite an overall decline in vehicle sales in the United States last year, 65 per cent more EVs were bought than in 2021. EVs accounted for 5.8 per cent of all new cars sold, against 3.1 per cent the year before.

Globally, they, for the first time, topped 10 per cent of new vehicle sales, driven by strong growth in China and Europe. In Europe, 11 per cent of all new cars sold were EVs. If dual capacity vehicles are added, the figure jumps to 20 per cent. In Germany, Europe’s top market for EVs, a quarter of new cars bought were electric. In China the figure was 19 per cent.

Several of the major vehicle manufacturers have said they will stop making ICE vehicles within a decade, a time frame which, even if slowed, is unlikely to be reversed.

Jamaica, a small island developing state, facing disproportionate risks from climate change, has a stake in limiting emissions of greenhouse gases, the major cause of global warming. Transportation accounts for over 30 per cent of the carbon dioxide released into the atmosphere, and more than 70 per cent of that comes from ground transportation.

Further, of the over 20 million barrels of oil equivalent Jamaica imports annually, on which it expends about US$1.5 billion, a third is fuel for transportation. EVs, especially if powered by renewables, would eat into that oil bill, with the advantage of lessening the amount of CO2 spewed into the atmosphere.

VALUE TO ELECTRICITY CONSUMPTION

Then there is the value to electricity consumption, which, all things being equal, should help temper the unit cost of power generation and therefore the price to consumers.

In recent years, before the COVID-19 pandemic pushed it downwards, electricity consumption was flat, and government forecasters expected only relatively modest annual expansion up to mid-2030s, hardly more than two per cent a year at the top end. This problem has been exacerbated by big firms leaving the grid to escape Jamaica’s high cost of power. This, if it continues, would mean even higher rates for those consumers who have no option but to stay.

In the absence of robust business and household demand for power, EVs could make a difference to the economics of electricity generation and distribution that translates to lower rates and a more competitive Jamaican economy. Increased demand would also positively affect the feasibility of power generating capacity based on renewables, such as the 200 megawatts for which the energy minister, Daryl Vaz, said the government will next month issue a request for proposals.

In that regard, the Government, apart from its planned purchase of electric buses for the Jamaica Urban Transit Company, should cause all new vehicles bought by its ministries and agencies for fleet use to be EVs. Similarly, the policy should set a time frame for the phasing out of ICE vehicles, starting with an insistence that all replacements be EVs, in public transportation.

That requires that the government urgently begins serious discussions with all stakeholders on the policy, including on what incentives it can provide to help drive the transformation. At the same time, the Office of Utilities Regulation and the Government must accelerate regulatory work on who will provide charging stations, how and at what price.