Just before the Victorian state election, the then opposition Labor party announced an investigation into a so-called LPG innovation centre for Geelong. This announcement, made in conjunction with the Victorian Automobile Chamber and Commerce, was Labor’s answer to the loss of employment associated with the complete shutdown of the nation’s auto manufacturing sector, which would likely hit Geelong harder than any other area.
LPG has been used in Australian vehicles to cut transport costs for more than 50 years. Originally, LPG was a byproduct of natural gas and oil refining and was even burnt off at the refinery, being considered of little value. Car owners who converted their cars to run on LPG took advantage of a net price of LPG that was about a third that of petrol. In recent times, due to the tradable value of LPG and the higher price of petrol, the difference has dropped to around half, lessening the economic value of conversions.
An LPG conversion typically cost around $2000-$4000; the high capital cost coupled with the lower return on investment (only 50% fuel savings compared to 70% previously) means that fewer and fewer Australians are willing to stump up the cash to make the switch to LPG.
The industry, which has arguably been charging too much for decades, is in dire straits; things got worse for it when the previous government removed John Howard’s $2000 subsidy on LPG conversions.
So what innovation would a Victorian LPG innovation centre give us? Labor claims that they can “streamline production” by creating a centre that converts up to 36,000 vehicles per year. The problems with this approach are many and varied. One such problem is the location being Geelong ... how would such a small location with around 200,000 people even get the throughput to sustain such a facility?
In terms of “innovation”, there is really no significant innovation to be had in converting vehicles to run on LPG. This is mature technology, any gains and so-called innovation will be marginal and incremental. We already have 'liquid phase LPG injection' which is a very advanced means of getting LPG into a vehicle’s combustion chamber. But in the end, it is still LPG and its price is trending towards parity with liquid fuels (such as petrol and diesel) which are also trending up over the longer term.
Electric vehicle innovation centre
Australians are now becoming increasingly aware and interested in electric vehicle technology. Unfortunately, due to bad policy and backwards thinking on the part of Australian governments and automakers, the opportunity for Australia to get in on the ground floor in developing an electric vehicle manufacturing industry has probably passed. Barring a revolution in thinking and the emergence of an Australian version of Tesla, or Tesla setting up manufacturing here, Australia’s auto industry is likely to sink beneath the waves. However an alternative industry in aftermarket electric vehicle conversions and manufacture of electric vehicle components might be possible, arrangements not dissimilar to how the LPG conversion business has operated for 50 years.
The opportunity is to invest in electric vehicle innovation, that’s battery and electric drivetrain research, along with materials research to (among other things) make vehicles lighter and lower cost.
The second opportunity is to convert existing petrol vehicles to electric vehicles. This would prove to be most economical when a vehicle has reached its 100,000km service, when the timing belt is usually replaced (or similar major service requirements). This major service costs around $2000. An electric drivetrain will soon reduce in cost to around $1500 while a (40kWh) battery system that gives a range of up to 200km will soon cost around $4000.
Until that time, an electric vehicle innovation centre could convert cars for the same cost outlined above, with a state government incentive. If each battery system was 50% subsidised by the government then the required learnings and efficiencies could be achieved in preparation for an unsubsidised electric car conversion industry. This industry would offer a very attractive option for suitable petrol vehicle owners, when relatively inexpensive batteries with a capacity of 100kWh are projected to become available for vehicles (around 2020-2024).
Spending money on “learning” how to convert cars to LPG today is a waste of money and something that we’ve known how to do since the 50s. Dan Andrews, you are seen as a progressive leader, moving Victoria into the future, so let's have programs that invest in the future, such as an electric vehicle innovation centre. Which converts our vehicle fleet to run on electricity, which can – and in the future will – be supplied by renewables.
An LPG “innovation centre" clings to the past and wastes precious resources, using our money to cement carbon emissions into the vehicle fleet, doing nothing to avert dangerous climate change and even less for the state's energy security.