EAEU Greening its Transport but Without ICE Ban

By Roman Nazarov

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19th January 2021

In the next five years, member countries of the Eurasian Economic Union (EAEU) will not mimic Europe’s fashionable ICE bans.

Dina Akpanbayeva, deputy director of the trade policy department of the Eurasian Economic Commission, outlined EAEU’s green transport promotion plan 2021-2025 for TU-Automotive. As a point of consideration, in the last two days of November last year, more than 80 people in Kazakhstan were caught in a blizzard and trapped in snow in their vehicles far from living areas.

While the rescuers could use telematic technologies to respond faster, it still took them several hours to get through to the blocked vehicles. In that situation, ICE’s ability to run idle for hours providing heat for the passengers was priceless. A pure BEV in a similar situation would be running out of charge frighteningly fast. The story is yet another evidence that BEVs don’t match every circumstance and it helps to understand the EAEU’s solution to support both ICE and BEVs.

Learning from national experiences

Currently each member country has already had experience in performing national clean transport strategies, Akpanbayeva said. However, because local conditions can vary widely, each state has developed its own vision of which propulsion technology is optimal.

Placing hopes on BEVs appears to be a more natural choice for Belarus, Armenia and Kyrgyzstan – smaller countries with milder climates and large shares of natural gas, hydro and nuclear power in electricity production.

Armenia is heading in this direction with VAT exemption for the purchase of EVs. Meanwhile, Belarus launched a comprehensive BEV support plan in 2020 featuring a national-wide charging network deployment as well as incentives for producers and vehicle owners.

Although Kazakhstan is deploying a charging network as well, the government hedged its bets by supporting hybrid-electric vehicles. “Hybrid-electric vehicles are easier to dispose of because of smaller batteries,” Akpanbayeva explained. “Besides, hybrids are more convenient in cold weather.” It makes Nissan’s third generation hybrid Qashqai just the right vehicle for Kazakhstan.

Akpanbayeva warns against putting too much effort in accelerated transition to electric vehicles because of the obvious problems of battery disposal and dirty energy sources. The latter issue is especially true for Russia and Kazakhstan, the two largest national markets in the EAEU. The share of coal in power generation is especially high in Kazakhstan, around 70%, while in Russia 35% of energy is derived from coal and mazut. “In those circumstances, natural gas fueled vehicles come closer to green mobility than vehicles with electric propulsion,” she said.

The notion sits well with the fact that Russia and Kazakhstan are two major natural gas producers. For decades, liquified natural gas has been the number-one green alternative for Russian vehicle owners thanks mostly to sizable savings on fuel.

Yet another reason to promote natural gas is that the EAEU fleets include large shares of older vehicles which can be easily retrofitted with LNG fuel systems. In Russia, the federal government, regional authorities and gas producer Gazprom are in the middle of executing a five-year program worth roughly $10Bn in subsidies for vehicle conversion to natural gas, covering up to 95% of the upgrade costs.

However, in the last year, Russia complemented that program with comprehensive support of EVs. One possible cause of that move is the slow uptake of gas-fueled transport. “The share of NGVs is growing but we don’t see a dynamic rise,” said Tatiana Arabadji, director at Russian Automotive Market Research.

At the same time, much enthusiasm is seen about electric propulsion by both drivers and organizations. Thanks to the 2020’s legislative advancements, charging infrastructure has taken over from the natural gas fueling system in terms of speed of deployment, said Iya Gordeeva, chairperson at association for the development of EV, autonomous and connected vehicles and infrastructure AETI, said: “Natural gas filling points are expensive and must be allocated remotely from buildings while a charging point can be installed everywhere from car parks to gas filling stations. Today, all the barriers have been removed.” Notably, the 2020 national bus sales figures show that electric buses take the market share away from natural gas rivals while the share of diesel and petroleum buses remains generally unchanged.

The result

The new five-year plan in development at the Eurasian Commission is an attempt to summarize and harmonize the national experiences, Akpanbayeva said: “Our decision was to support the national initiatives in the frame of the EAEU. In that relation, the NGV- and hybrid-related measures were included in the plan.”

The Commission is willing to offer the national governments a whole package of incentives such as tax benefits, subsidies, removal of trade barriers, free parking and free passing on toll roads and bus lanes. “However, it’s under the purview of the member state governments to embrace concrete measures,” Akpanbayeva said.