Are electric cars more environmentally friendly? It depends where you drive them.

Electric cars are driving their way into the mainstream. It may be the result of more environmentally conscious drivers, the $7,500 federal subsidy on the purchase of those cars, or just a passing trend, but, during 2014, electric vehicle sales increased by 23 percent from the previous year—and doubled the figure from 2012. However, are electric cars actually cleaner than conventional ones? A recent paper raises questions about the common understanding of the environmental benefits of electric vehicles, pointing out that those pros are dependent on how clean the electricity generation is, as well as the geographic scope of the analysis.

Last year, burning coal and natural gas generated 66 percent of US electricity. Therefore, in some way, when evaluating electrical and conventional cars, people are comparing the costs and benefits of these sources of energy and of oil, which powers conventional cars. Among these three fuels, coal is the one that produces the most emissions, while natural gas is the cleanest.

In order to assess the benefits and risks of electric and conventional cars, the authors focus on the different kinds of externalities of each type of vehicle. For example, conventional vehicles emit pollution from their tailpipes, which largely remains in the area where it is produced. On the other hand, pollution from the energy that powers electric vehicles is emitted from smokestacks one hundred feet above the surface and can spread easily to other areas. The extent of this air pollution depends on how cleanly electricity is generated in different areas of the country where electric cars are used.

Moreover, emissions will have different effects in different areas depending on conditions such as population density and the intensity of the agricultural and forestry industries. For example, California has relatively clean electricity production based on natural gas and renewable sources, but it also has a high population density. On the other hand, in North Dakota, damages are not that extreme, due to a small population, even though electricity is generated mainly by coal, a major producer of greenhouse gases and other pollutants. Therefore, the electricity generation grid trades off with state-level factors, resulting in mixed conclusions for the environmental effects of electric cars within these areas.

Another important insight is the effort of the authors to differentiate between local and global pollution. For instance, they study the case of driving two equivalent cars in Fulton, Georgia. The footprint of a conventional car, in terms of small particle pollution (PM_2.5)—which may cause anything from eye irritation to premature death in people with heart or lung disease—only spreads to nearby counties; it does not extend by a great amount to other states. However, due to the relatively polluted Southeast electrical grid, an equivalent electric car would spread PM_2.5 throughout the eastern US. On average, an electric car spreads 91 percent of the pollution it produces to other states, versus 18 percent from a conventional vehicle. This figure may explain the measures that some states have enacted in favor of electric cars, such as additional purchase subsidies or parking benefits. But, such measures leave behind a more comprehensive analysis of damage to the environment throughout the entire country.

The authors conclude that the proper subsidy for electric cars varies substantially across states, and can even be negative. That means that, in some states, such as some in the Upper Midwest, the proper policy should be a tax, rather than a subsidy. The paper states that, even with the current low share of electric vehicles on the roads, federal subsidies actually generate a social loss compared to the scenario of no subsidies at all. That $7,500 grant could be causing more people to drive electric cars in areas where a conventional vehicle would lead to less pollution.

However, it is not all bad news for this new type of vehicle. The study recognizes that further improvements in the electric car’s technology, or a cleaner electricity grid, can enhance its benefits. Additional benefits, such as innovation spillovers from technological development and network economies (charging points), are not considered. Such design and grid improvements, as well as a better calculation of appropriate subsidies—based on actual car use, and taking into account local characteristics—could lead to a better mechanism for decreasing the emissions produced by driving any type of car.

 

Article Source: Environmental benefits from driving electric vehicles? Holland, S., Mansur, E., Muller, N. and Yates, A. NBER Working Paper No. 21291. June 2015

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