Policies Promoting Electric Vehicles: Too Fast, too Furious?

Dr Dennis Wesselbaum
Insights Newsletter
12 August, 2022

Politicians are recently pushing for a large-scale adoption of battery electric vehicles (BEV; currently <1% of vehicles in NZ) to reduce the emissions generated by the transport sector.

The emissions reduction plan supports this with $1.2bn of spending, of which $569m are used for the “Clean Car Upgrade” programme. In addition, the government plans to ban importing high-emitting vehicles in the closer future. These policies imply that the government appears to have picked the “best” technology (BEVs) and now wants to implement it.

Of course, most additional policies are unnecessary with an Emissions Trading Scheme (ETS) in place.

However, even without an ETS, “cash-for-clunkers” programmes do not work. Evidence from the US shows that about 45 percent of the spending goes to people who would have purchased a new (cleaner) car, anyway. Importantly, the reduction in emissions is small and expensive (92-288 USD per ton of CO2). Further, car sales drop after the programme expires, offsetting the initial effect.

Driving BEVs is also not free of emissions: over its life cycle, an EV emits 33% fewer greenhouse gases and 93% less carbon monoxide than a comparable internal combustion engine vehicle. However, they emit 273% more sulphur oxide and 15% more fine particulate matter. Production and recycling of batteries have substantial environmental effects, including human toxicity and ecosystem effects.

A key factor is how the electricity required by BEVs is produced. Most OECD countries use a combination of fossil fuels, nuclear power, and renewable sources (solar and wind). Using this electricity mix, various recent studies show that BEVs only reduce emissions relative to diesel engines after about 200,000km.

It is not clear how the additional electricity required by millions of BEVs will be produced and distributed. If all the additional electricity is generated using renewable sources, it will have to be stored, because of the stochastic nature of production and demand. The inevitable gap will have to be produced by “traditional” sources. In New Zealand the situation is better, where most of the electricity is produced by “green” technologies. The question is whether renewable energy sources will be sufficient to meet the increased demand.

Due to these concerns, the need to change customer behaviour (charging, planning of long-run trips, battery replacement), and the ethical and socio-economic implications of mining the required elements, I doubt BEVs are the future. The market, not politicians, should lead us to the best technology.

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