The Top 5: Why EVs “Aren’t Always Environmentally Sound”

01.12.17 | Blog | By:

Happy Thursday friends! Here’s my weekly take on the five most interesting developments in future fuels and vehicles trends over the last week.

  • The London School of Economics released a paper this week that questions the environmental creds of EVs, not just for GHGs, but especially for air pollution, especially PM and that EVs export pollution to other states.
  • ExxonMobil recently released its Outlook to 2040 noting that all energy sources are going to be needed to meet growing energy demand most critically in non-OECD countries. Global transportation energy demand is expected to grow over 25%.
  • As if to underscore the previous point, gasoline consumption in India rose 12% in 2016 compared to 2015.
  • A new report from the Institute for Energy Economics & Financial Analysis (IEEFA) found that the change in leadership in the U.S. is likely to widen China’s global leadership in industries of the future, including in renewable energy and transport.
  • IEA and the Global Fuel Economy Initiative (GFEI) say found that average light-duty vehicle (LDV) fuel economy improved in all regions between 2005 and 2015, but more work is needed to meet the GFEI target of halving fuel consumption to 4.4 kilometers per liter of gasoline-equivalent (Lge/100 km) from 8.8 Lge/100 km in 2005.

1. London School of Economics: Why Electric Cars Aren’t Always Environmentally Sound

This article, originally published as a paper in the December 2016 American Economic Review, makes an argument that has been highlighted by others before and that is the environmental benefit of driving an EV is highly dependent on what kind of electricity is charging the vehicle. But they go further in this paper, looking at not only GHGs, but also air pollution, namely PM. They say:

“One hundred years ago, electric cars had around a 30 percent market share. They quickly lost out to gasoline cars. The last five years have seen a modest comeback, with market shares inching up to around one percent in many countries. Electric car enthusiasts believe that these vehicles will help solve our air pollution problems. Our work illustrates the importance of cleaning up the electricity grid before that vision can be achieved.”

Figure 1 shows the environmental benefit of driving an electric Ford Focus rather than a gas-powered Ford Focus in each county in the United States. The authors note that in the green shaded counties, the electric car generates positive environmental benefits― damages from air pollution are lower than what would have been generated had the gas car been driven instead. In the red shaded counties, the electric car generates negative environmental benefits, implying the electric car generates more damages from air pollution than the gas car.

The authors note:

“A defining characteristic of our work is that we consider both global and local pollution. Global pollution comes from emissions of carbon dioxide. An environmentally concerned citizen that turns to the Internet to learn about the benefits of electric cars is likely to turn up one of the many studies that focus only on carbon dioxide emissions. These studies show that in most places in the country an electric car generates less carbon dioxide emissions than a gasoline car. We find this as well. But, including emissions of local pollution such as particulate matter can reverse the environmental benefit of the electric car, as happens in much of the eastern U.S.

The authors say that studying local pollution “leads to another important insight.” Electric cars export pollution across state lines to a much greater degree than gasoline cars. This is illustrated in Figures 2a and 2b from the authors’ paper. Figure 2a shows the dispersion of particulate matter pollution from a fleet of gasoline Ford Focus cars driven in Fulton County Georgia. Most of the pollution is concentrated in the half dozen counties around Fulton County (which encompasses the city of Atlanta). A small amount is exported to nearby states.

Figure 2b shows the dispersion of particulate matter pollution from charging a fleet of electric Ford Focus cars in Fulton County Georgia. The geographic footprint of the pollution encompasses almost the entire east coast. This is due to the interconnected nature of the electricity grid. An increase in demand for electricity in Fulton County can affect the production in electricity in a power plant many states away.

The authors note:

“The pollution export phenomena we identify creates dilemmas for environmentally concerned citizens as well as policymakers. In just about every state, driving an electric car improves the air quality in that state, relative to a comparable gasoline vehicle, but decreases the air quality in nearby states. This may entice concerned citizens to purchase electric cars and policymakers to subsidize these purchases, even in places where electric cars generate overall negative environmental benefits to society.”

With many countries introducing or implementing incentives for EVs or even considering mandates, this is a big deal if this pollution export problem is real. Many of these countries, particularly in Europe, have serious particulate matter issues that are expected to increase (something that I continue to follow and cover perhaps ad nauseam at this point).  To make the point, I want to trot out a favorite chart again from the World Health Organization that shows worsening PM pollution globally in the 2008-2015 period alone.

The authors note there are “important caveats to our work”:

“First, we only consider emissions of pollution from driving gas cars and charging electric cars. We do not consider upstream emissions associated with drilling and refining oil into gasoline, mining coal or drilling for natural gas to provide fuel for electric power plants, or manufacturing the vehicles. Prior research shows that electric cars have slightly greater upstream costs due to battery manufacturing. Second, our data on grid emissions is the latest available, but corresponds to the years 2010-2012. There is an ongoing transformation from coal to natural gas generation in the electricity industry and this is only partially captured in our results.”

2. ExxonMobil: Energy Outlook to 2040

I missed the release of ExxonMobil’s 2017 energy outlook in late December, and I wanted to go back and take a look at it for myself and readers, especially what the company had to say about energy demand and transportation. Read more about it here.

3. Reuters: India’s Gasoline Thirst Shows No Sign of Being Slaked

This article from Reuters notes that India is one of the fastest-growing on-road fuel markets in the world, with gasoline consumption rising 12% in 2016 compared to 2015, according to the Ministry of Petroleum and Natural Gas and Reuters (figure below).

As I’ve noted before, India’s gasoline consumption continues to grow rapidly as an increasing number of individuals purchase their first motorized vehicle, helping drive the fastest growth in fuel demand in the world.  Gasoline consumption averaged 574,000 barrels per day (bpd) in 2016, up from 513,000 bpd in 2015 and 447,000 bpd in 2014. Consumption is being driven by an enormous increase in the number of drivers on the country’s roads for the first time, who have purchased their first motor vehicle, 75% of which were motorcycles (figure below).

The number of registered motor vehicles hit 210 million by March 2015 up from just 105 million in March 2008, according to the Ministry of Road Transport and Highways, 2016. And the number of registered motor vehicles is doubling every seven years and shows no sign of being saturated (figure below).

Vehicle ownership stood at an average of 167 per 1,000 people in 2015, up from 86 in 2007, according to Reuters. But penetration rates were still low compared with other developing countries such as Mexico (285), Brazil (290) and Malaysia (396). And ownership was very low compared with developed economies such as the United Kingdom (517), Japan (598) and the United States (783). According to the Ministry of Petroleum and Natural Gas gasoline consumption hit a new record in August of 600,000 bpd, lower than countries such as the U.S. or China. However, the difference is that the growth is fast and sustained.

Last year I highlighted fuel demand and personal vehicle growth in India. At that time, A quote from a report in mid 2016 from the Ministry of Petroleum and Natural Gas caught my eye, and it’s relevant here:

“Owning a personal vehicle rather than relying on public transport is an important status symbol for India’s fast-expanding middle class but many buyers opt for motorcycles due to cheaper purchase and operating costs.”

I still find the statement ironic. Millions in the developed world are now beginning to eschew personal transport altogether in favor of electric vehicles, public transport, ride sharing and even walking.  Meantime, millions in the developing world have proudly climbed the economic ladder and now have a personal vehicle to show for it (and want a better one). I’m not sure they’re going to be willing to go back without a massive mindset change and major improvements in public transport.

4. China Dialogue: China Emerges as Global Leader in Clean Energy

According to a report from the Institute for Energy Economics & Financial Analysis (IEEFA) and featured in China Dialogue this week, “the change in leadership in the U.S. is likely to widen China’s global leadership in industries of the future, building China’s dominance in these sectors in terms of technology, investment, manufacturing and employment.” The authors say the U.S. will very likely become less competitive economically if the Trump Administration is able to deliver on its intentions to slow a global energy transition that is gaining momentum. Recall a recent study I highlighted from the International Finance Corporation that showed a $3.6 trillion opportunity for climate-smart investment in transport alone.

The report details how China made a record $32 billion in overseas investment deals in 2016 alone, marking a 60% year-on-year rise in spending. Nuggets from the report include the following:

  • “China’s impressive drive into renewable energy (RE) has made it the world’s largest investor in clean energy with US$102.9bn invested in renewables (excluding large hydro) in 2015, up 17% over 2014. This represents well over one third of global investment, with the U.S. in second place, but well behind, at US$44.1bn. Most of this Chinese investment has been domestic, but Chinese companies and institutions are increasingly looking overseas for opportunities in renewable energy development.”
  • “China will install 36% of all global hydro electricity generation capacity from 2015-2021. Similarly, China will install 40% of all worldwide wind energy and 36% of all solar in this same period.”
  • “Five of the world’s six largest solar-module manufacturing firms in 2016 are in China.”
  • “On the wind front, Goldwind, a Chinese company, overtook Vestas in 2015 to become the largest wind-turbine manufacturer globally. Counting its more domestic-focused companies, which included United Power, Ming Yang, Envision and CSIC, China owns five of the ten top wind-turbine manufacturing firms.”
  • “China’s Tianqi Lithium is the largest lithium ion manufacturer globally following its acquisition of Talison Lithium in 2012 and Galaxy’s Jiangsu processing facility in 2015.”
  • “Chinese leadership and control of the global lithium sector is developing along the lines of the rare-element mining and processing sector, which is now 90% and 72% controlled respectively by Chinese enterprises.”
  • “State Grid Corp of China (SGCC) is the world’s largest electricity utility, employing over 1.9 million staff and generating annual sales of US$330bn.”
  • “China holds 3.5 million of the 8.1 million renewable energy jobs globally. This compares to 769,000 jobs dependent on renewables in the U.S.”

5. IEA/GFEI: New Analysis Shows That Fuel Economy Policies Work – But More Is Needed

An analysis released this week by IEA and the Global Fuel Economy Initiative (GFEI) and launched at a side event at the annual Transportation Research Board meeting found that average light-duty vehicle (LDV) fuel economy improved in all regions between 2005 and 2015, but clear differences exist between countries and regions. More than 20 countries and four regions were featured in the report, representing 80% of the vehicle market. Read more about it here.