Bank Australia will no longer offer loans for new gas-powered cars and is encouraging customers to buy electric vehicles, the company announced on Friday.
The customer-owned bank, which has roughly $5 billion in assets under management, will implement the policy beginning in 2025 as part of its commitment to achieving net zero carbon emissions by 2035.
“By ceasing car loans for new fossil fuel vehicles, we are sending a signal to the Australian market about the rapid acceleration in the transition from internal combustion to electric vehicles we expect to see in the next few years,” Bank Australia Chief Impact Officer Sasha Courville said at a recent summit, according to a press release. “We’ve chosen 2025 because the change to electric vehicles needs to happen quickly, and we believe it can with the right supporting policies in place to bring a greater range of more affordable electric vehicles to Australia.”
Noting that many consumers are not yet able to afford an electric car, Courville specified that Bank Australia would “continue to offer loans for second hand fossil fuel vehicles until there is a viable and thriving market for electric vehicles.”
Roughly 7% of Australia’s total energy consumption came from renewable sources as of 2019 and 2020, according to data from the Australian Department of Climate Change, Energy, the Environment and Water. Beyond renewables, oil, coal, and gas respectively account for 37%, 28%, and 27% of energy use. Australian policymakers, including Prime Minister Anthony Albanese, have endorsed higher rates of electric vehicle adoption, with the Labor Party vowing earlier this year to construct a national network of charging stations.
Meanwhile, President Joe Biden and other White House officials have come under fire for suggesting that renewable energy subsidies will help the middle class contend with higher inflation, particularly with respect to fuel prices.
“If you are low income, you can get your home entirely weatherized through the expansion from the bipartisan infrastructure laws,” Energy Secretary Jennifer Granholm said this weekend on Fox News. “If you are moderate income, today you can get 30% off the price of solar panels. Those solar panels can be financed, so you don’t have to have the big outlay at the front … If you don’t qualify for the weatherization program, you will be able to, starting next year, get rebates on the appliances and equipment that will help you reduce your monthly energy bill by up to 30%. That is all about reducing costs for people.”
Critics noted that a 30% tax credit would leave struggling homeowners liable for 70% of an expense that they are by no means able to afford. A recent analysis found that inflation cost American families an average of $717 in the month of July alone.
Granholm has nevertheless said that the “only way out” of “boom-and-bust cycles” in energy prices is higher renewable energy adoption.
“The real truth is that as long as our nation remains overly reliant on oil and fossil fuels, we will feel these price shocks again,” Granholm argued earlier this summer. “This is not going to be the last time. The next time there’s a war, the next time there’s a pandemic or another hurricane, these extreme weather events we are experiencing — they will impact the access that we have to fossil fuels.”
The Inflation Reduction Act, which Biden signed last week, offers $7,500 electric vehicle tax credits. The policy, however, went into effect as automakers hiked their prices by approximately the same amount.
Virginia Kruta contributed to this report.