If you can't compete with it, ban it

A while ago I wrote an article about green hydrogen, in which I made the argument that the only way green hydrogen could become commercially viable was if the cost of all other “colours” of hydrogen rises. Enter the European gas crunch, which has made gas more expensive than pretty much everything except, perhaps, bitcoin.

This approach, if it could be called an approach since the crunch seemed to surprise the lights out of Europe, works even better with bans. You have a product you want people to buy more and another that you want them to buy less? Easy. Ban the latter.

This is what the European Union plans to do with internal combustion engine vehicles, beginning 2035. But not everyone goes about it as crassly as Brussels. Bank Australia, for example, has found a more elegant way, as it were, to discourage the purchase of ICE cars: it will stop lending money to car buyers from 2025 if they want to use it to buy an ICE car.

A quick note for readers who, like me, had not heard about Bank Australia until last week. It’s a customer-owned bank with assets of some $7.2 billion as of 2020 and, per its own website, a bank that’s really got on the ESG bandwagon, promising it would “never, ever support industries that do harm, like fossil fuels or animal exports.”

Now, even if you’re a lifelong fan of the petrol engine you must admit Bank Australia’s approach is elegant, for a certain value of the word elegant, of course. They are not banning ICE cars outright (to be fair, they can’t. They’re not a government). They are simply refusing to lend you money for a car purchase unless the purchase is an EV.

I don’t often write about Australia, which is a shame because it’s one of many countries in the world I would really love to visit some day, but when I do I always learn something new and interesting, like the fact that Down Under has the lowest uptake of EVs in the western world — clearly a problem that needs solving.

Indeed, this report by the Australian Electric Vehicle Council shows that Australians are not too eager to buy an EV, with total EV sales making up just 0.78% of all new car sales in 2020. This rose to 1.8% in the first six months of this year but is still far behind such EV outperformers as the UK or Norway.

To fix this, the new Australian government will be soon presenting a National Electric Vehicle Strategy and guess what it will include? Why, it will include fuel efficiency standards aimed at improving demand for EVs, which, to me, says “We will penalise ICE car drivers for driving ICE cars and reward EV drivers for driving EV cars”. It’s not like it hasn’t been done before.