Public Benefits of PEVs

PEV Action Tool

PEVs offer several advantages to the public over conventional vehicles. For example, they consume no oil in all-electric mode, thus enhancing energy security while protecting consumers from oil price shocks. At the same time, building a homegrown electric vehicle industry can sustain U.S. jobs if electric vehicles become increasingly popular. Finally, they improve public health by releasing zero tailpipe emissions in all-electric mode and have the potential to reduce greenhouse gas (GHG) emissions.

Energy security and oil independence

The transportation system and U.S. dependence on oil are fundamentally intertwined. In 2010, 95 percent of delivered energy to the U.S. transportation sector was from petroleum. Gasoline and diesel motor fuels also accounted for 64 percent of total U.S. liquid fuels consumption in 2010, making transportation the largest market for the oil industry.

The transportation sector’s dependence on oil harms the U.S. economy in several ways. For example, our reliance on oil makes consuming oil necessary even at high prices. Oil prices are projected to rise from a nationwide average of $3.43 per gallon in 2011 to $3.71 per gallon in 2020. Average oil prices could rise to $5.12 per gallon by 2020 in a high oil price scenario. Between 1995 and 2010, median nominal household income grew an average of 2.7 percent annually while nominal oil prices grew an average of 7.3 percent. If oil prices continue to outpace household income growth, consumers will have to spend a growing share of their income on gasoline. In 2011, the average American household spent $4,155, or 8.4 percent of median family income, on gasoline, the highest share since 1981.

Not only does oil dependence lead to higher consumer expenditures on oil, the U.S. economy is harmed by the need to import nearly 48 percent of U.S. crude oil supply. Dollars spent on foreign oil no longer circulate in the U.S. economy. From 2005 onwards, wealth transfers to other countries to pay for imported oil accounted for a GDP loss of at least $200 billion per year. Moreover, the fact that oil is controlled by the Organization of Petroleum Exporting States (OPEC) allows OPEC to set prices to be higher than they would be if the international oil market was competitive. Finally, the U.S. military must take steps to ensure a secure supply of oil in the Persian Gulf; a 2009 RAND study estimated that the cost of securing the supply and transit of oil in the Persian Gulf ranges between $67.5 and $83 billion per year.

The volatility of oil prices also negatively affects the economy. For example, in 2008, Brent crude prices collapsed from a high of $143.95 per barrel in July to $33.73 per barrel in December because of the global financial crisis. This volatility makes it difficult for businesses and consumers to plan their expenditures. Between 2005 and 2010, Oak Ridge National Laboratory estimated that oil price shocks reduced U.S. GDP by more than $100 billion each year on average because of dislocation losses, defined as delays in adjusting price, wages, and interest rates in response to sudden price changes.

Without including the military-related costs to secure the supply and transit of oil, oil dependence has regularly cost the U.S. between $200 to $500 billion per year from 2005 onwards due to wealth transfer, dislocation losses, and the loss of potential GDP. In comparison, average spending from the Recovery Act stimulus was $165 billion per year between FY 2009 to 2011 - the height of the stimulus.

In contrast, electric vehicles displace oil and draw electricity from the electrical grid, an almost entirely a domestic energy source. Electricity prices are also much less volatile than oil prices (see figure below from Edison Electric Institute). Moreover, the cost of a mile traveled on electricity can be three to five times less than a mile traveled on gasoline. Low operating costs allow consumers to spend more of their money on goods and services that can be more productive for the economy. The Resource Listcontains state-level data on oil prices, electricity prices, and other relevant information.

Figure 3: National Average Monthly Gasoline Retail Price vs. Monthly Residential Electricity Price

Blue denotes residential electricity prices in Feb. 2012 dollars. Red denotes oil prices in Feb. 2012 dollars. Source: Energy Information Administration, Short-Term Energy Outlook, February 2012. Data compiled, converted, and presented by Edison Electric Institute.

Economic Competitiveness

The electric vehicle industry can benefit the U.S. economy in a number of ways. For instance, developing the industry can enhance American economic competiveness in the global auto market as consumers increase purchases of alternative fuel vehicles. Local and regional economies can also benefit if consumers spend gasoline savings locally. A study by the New York State Energy Research and Development Authority (NYSERDA) forecasted electricity and gasoline prices to 2025 and estimated that New York gained an extra $4.45 billion to $10.75 billion per year, assuming electric vehicles comprised 40 percent of new car sales. Those savings could indirectly sustain between 19,800 and 59,800 jobs in the state economy due to petroleum displacement, increased domestic electricity demand, and annual fuel cost savings. A study by the Blue-Green Alliance projected that EPA’s and NHTSA’s new GHG and corporate average fuel economy (CAFE) standards could help sustain 570,000 U.S. jobs as demand for more fuel-efficient vehicles increases.

As demand for alternative fuel and high efficiency vehicles gradually increases in response to higher fuel prices, policymakers and auto manufacturers can work together to ensure a resilient automotive sector. Recently, government and private industry have invested in manufacturing capacity and infrastructure for electric vehicles. For example, the battery manufacturing and electric vehicle industry supported over 32,000 permanent jobs in 2010 according to the Brookings Institution. Moreover, Tesla Motors, a start-up electric vehicle manufacturer, currently employs more than 2,000 people. Charging station installation and service is projected to be nearly a $4 billion industry later in this decade, and vehicle-to-grid (V2G) development may require a number of jobs related to the smart grid. Policymakers can help sustain the initial manufacturing and demand base for electric vehicles so that the long-term benefits may materialize.

Public health and air quality

Ozone (commonly known as smog) and fine particulate emissions (known as PM2.5) are two EPA-regulated pollutants with severe consequences to human health. Motor vehicles are a primary source of both these pollutants, especially in densely populated areas (see Table 1).

Ozone and PM2.5 are linked to various heart and respiratory conditions including asthma, bronchitis, and heart attacks. A study examining 450,000 people in the United States showed that people living in cities with high ozone and PM2.5 levels faced an increased relative risk of death from cardiopulmonary, cardiovascular, and respiratory causes. The EPA has estimated that ozone and particulate regulations prevented the premature deaths of 160,000 people, 130,000 heart attacks, and 1.7 million asthma attacks in 2010 alone. These regulations will save $2 trillion in the year 2020 alone while the cost of implementation will be $65 billion.

Table 1: Conventional air pollution for highway vehicles. NOx and VOC are precursor chemicals to ozone.

Pollutant

Share of U.S. total from 2010

CO

46%

NOX

33%

Direct PM10

9%

Direct PM2.5

9%

SO2

1%

VOC

23%

NH3

7%

Pb (2008 Data)

0%

Source: http://www.epa.gov/airtrends/2010/dl_graph.html.

 

The effect of electric vehicles on regional air quality and public health is mixed and depends heavily on the source of electricity in the region. Electric Power Research Institute (EPRI) and Natural Resources Defense Council (NRDC) analyzed a scenario in which PHEVs comprised 40 percent of total on-road vehicles by 2030, and all additional electricity demand was assumed to be from coal generation. In this scenario, 61 percent of the U.S. population would experience decreased ozone levels and 1 percent of the population would experience increased ozone levels. However, the study also found that particulate matter would increase by 10 percent nationwide, primarily in areas around coal power plants. Notably, the study makes the conservative assumption that all PHEVs charge on coal generation. Generation sources have changed significantly since 2007 and the grid is likely to get cleaner. Natural gas, in particular, has displaced some of coal’s share of power generation recently due to a variety of reasons, including record low natural gas prices, implementation of new EPA standards, and aging infrastructure. Coal’s share of electricity generation is projected to decline through 2035. The decreasing emissions intensity of the grid over time may lead to smaller increases or even decreases in PM10 concentrations attributable to electric vehicle charging.

Because electric vehicles are primarily beneficial for air quality, especially over the long run, they may be incorporated into long range transportation plans and state implementation plans to improve air quality. If an area does not meet an air quality standard, it is designated as a “non-attainment area” under the Clean Air Act, which requires the state to submit a plan on how non-attainment areas can lower air pollution levels to reach attainment standards. Plans must include control measures, means, and techniques for reaching attainment. For example, the Maryland Department of the Environment’s State Implementation Plan for Baltimore PM2.5 non-attainment highlighted the use of PEVs in public fleets. California has formally adopted a zero emission vehicles program. The ZEV program promotes a number of policies to accelerate adoption of zero emissions vehicles, which include electric vehicles.

Climate Change

According to the National Research Council, a “strong, credible body of evidence based on multiple lines of research” supports the assertion that climate is changing, and that climate change is in large part due to human activity. In a business-as-usual scenario, climate change would lead to weather pattern changes including drought and heavy rainfall, rising sea levels, and sea ice loss. These weather pattern changes would seriously diminish economic growth while threatening public health and ecosystems.

Reducing GHG emissions to lessen the impacts of climate change has become a key priority for many state governments. The transportation sector is the largest emitter out of any end-use sector (residential, industrial, commercial) and made up about 27 percent of total emissions in 2010 As such, reducing transportation emissions is a key strategy in reducing total GHG emissions.

Table 2: Well-to-Wheels EV Miles per Gallon GHG Equivalent (MPGGHG) By Electricity Source

An electric vehicle charging exclusively on…

…emits GHGs equivalent to a gasoline-powered vehicle with a fuel economy of

Coal

30 MPG

Oil

32 MPG

Natural gas

54 MPG

Solar

500 MPG

Nuclear

2,000 MPG

Wind

3,900 MPG

Hydro

5,800 MPG

Geothermal

7,600 MPG

Source: State of Charge: Electric Vehicles’ Global Warming and Fuel-Cost Savings across the United States. UCS, 2012.

Unlike gasoline-powered vehicles, electric vehicles deliver zero tailpipe emissions. However, if electric vehicles are charged with electricity generated by fossil fuels, driving electric vehicles still results in GHG emissions. The climate benefits of electric vehicles are determined by the actual GHG emissions resulting from plugging electric vehicles in the grid.

Calculating the GHG emissions from charging electric vehicles is complicated. One primary decision is whether to calculate emissions based on the average grid mix – the GHG emissions from electricity generation averaged across all sources including renewables and nuclear – or marginal grid mix – the GHG emissions from generating an additional kilowatt-hour from the next available dispatch source. Average grid mix can result in lower emissions than marginal grid mix because the average grid includes renewables and nuclear power. Marginal grid emissions will be higher than average grid emissions if additional load is met by fossil fuels. Average grid mix is often used for loads that electric utilities have planned to accommodate (i.e., loads that have been on the grid for some time), while marginal grid mix is used for loads that are new, unplanned, or infrequent.

So far, most published studies show that PEVs emit less GHG emissions than conventional vehicles even in the worst-case scenario. A joint study by the EPRI and NRDC as well as a study by the Argonne National Laboratories (ANL) used marginal analysis and timing to show that PHEVs led to less GHG emissions than a 30 mpg conventional vehicle even when electricity came entirely from coal.

The EPRI-NRDC study forecasted business-as-usual scenarios dominated by coal and natural gas and alternative scenarios in which new technologies become the marginal mix, including coal with carbon capture and storage; natural gas peaker plants; neighborhood solar and microgrids; and advanced renewables with dispatch capabilities. Assuming a 0.5 percent fuel economy improvement per year in both hybrids and conventional vehicles, different penetrations of PHEVs always resulted in net GHG reductions. These reductions range from 163 in the business as usual case to 612 megatonnes of carbon dioxide equivalent (CO2e) per year by 2050. However, with the new CAFE standard mandating an average fuel economy up to 54.5 mpg, actual fuel economy of hybrids and conventional vehicles should be higher than that estimated by the study, potentially resulting in diminished net GHG reductions from electric vehicle penetration. The EPRI-NRDC study assumes a 30.0 mpg fuel economy for conventional vehicles and a 46.3 mpg fuel economy for hybrid vehicles in 2050.

The ANL study reached similar conclusions. Plug-in hybrids with a 20-mile electric range had an emissions intensity of about 230 grams of CO2e/mi using the marginal emissions profile of the national grid, while conventional vehicles with 30.5 mpg fuel economy had an emissions intensity of roughly 370 grams of CO2e/mi. PHEVs were comparable to HEVs when natural gas was the marginal generation source. In contrast, the Oak Ridge National Laboratory found that efficient HEVs in 2020 and 2030 would have a lower emissions profile than electric vehicles charging from coal-based or oil-based electricity. However, the Oak Ridge scenario may be unlikely because natural gas has become much more widespread as a generation source.

Finally, a more recent study by the Union of Concerned Scientists justified using average grid mix emissions by saying that from the perspective of the individual purchasing an electric vehicle, the added load is indistinguishable from any other load. The results showed no regions in the United States in which electric vehicles would have higher emissions than the average 2011 conventional vehicle with a 27 mpg fuel economy. Moreover, 45 percent of Americans live in regions where a PEV will beat even the highest-performing hybrid vehicle (assumed to have a 41 to 50 mpg rating), 38 percent live in regions where a PEV compares favorably to hybrids, and the rest live in areas where a PEV beats a 27 mpg conventional vehicle. Considerable regional variations exist – as seen in the figure below, the emissions intensity of the highest intensity region is three times that of the lowest intensity region.

As such, electric vehicles hold great potential to reduce GHG emissions both currently and in the future. More data on state-level data are available in the Resource List.

Figure 4: GHG Emissions Intensity of Charging Electric Vehicles Across Electric Grid Subregions

Source: State of Charge: Electric Vehicles’ Global Warming and Fuel-Cost Savings across the United States. UCS, 2012.