David Kelly, academic director of the Master of Science in Sustainable Business Program, believes electric vehicles will help the environment but may not be the most efficient solution.
Several years ago the idea of city streets filled entirely with electric vehicles might have seemed far-fetched. Today, mass proliferation of these automobiles has shifted from fantasy to reality. A growing number of them are crossing intersections, and several governments, like the U.K. and France, have already pledged to phase out traditional combustion engines.
Last month, California Gov. Gavin Newsom went a step further. He signed an executive order that said all new cars and trucks sold in the state must be zero-emission by 2035. In the weeks leading up to the announcement, dozens of unprecedented wildfires tore through California, pushing the state to the frontlines of the battle against a warming climate. Newsom said he was “advancing a strategy to address [the climate crisis] head on.”
While 15 years may seem like plenty of time, there are still many obstacles and outstanding questions before the future of transportation goes fully green.
One of those outstanding questions is: Does an electric vehicle mandate actually help address a warming climate? David Kelly, professor of economics at the University of Miami Patti and Allan Herbert Business School, said that official order is probably not the most efficient solution for addressing climate change.
Kelly, who is academic director of the Master of Science in Sustainable Business Program, researches environmental economics and policy—and he drives a Tesla.
“You have to think about what is the lowest cost way to get where we want to go,” Kelly said. “So, if the goal is to reduce carbon emissions or other pollutants, then electric vehicles are unlikely to be that.”
Exactly how effective electric vehicles are in reducing greenhouse gas emissions lacks a definitive answer. They produce less CO₂ emissions than gas-powered vehicles, but how much less remains unclear. There are no direct emissions spewing from the back of Kelly’s Tesla, but his car still produces life-cycle emissions. Unlike direct emissions, which come from the vehicle itself, life-cycle emissions vary depending on multiple factors. The energy and machinery used to produce and sustain electric vehicles produce greenhouse gas emissions, which constitute the car’s overall life-cycle emissions. For example, coal-fired plants often provide the energy to power electric vehicles.
Kelly proposed an alternative approach to reducing emissions, like a tax on coal, or even a tax on carbon.
“A carbon tax doesn’t pick any winners,” he said. “It just says if you use carbon you pay a penalty, and it’s up to you to find the cheapest way around that.”
Such a tax would incentivize both consumers and producers to avoid emitting elements that are detrimental to the environment. “Everyone can find their own cheapest way to comply, and that keeps the cost of regulation down,” Kelly remarked.
There are other problems with an electric vehicle mandate according to Kelly, like the high price. “The mandate would fall mostly on the poor,” Kelly said. “You have to consider the equity effects of making people spend tens of thousands of dollars more on vehicles.”
There are currently government subsidies in place to make electric vehicles more affordable—specifically a $7,500 tax credit for every vehicle sold. But Kelly noted that the subsidies fall short. Tesla, for instance, raised its prices $2,000 when it received the subsidy. So, the consumer only received $5,500 of that subsidy, and, according to Kelly, that money often went to consumers who did not need it.
“It was a little bit of a subsidy for the rich in the sense that mostly wealthy people right now are buying electric vehicles anyway,” said Kelly.
Additionally, these subsidies phase out after 200,000 cars are sold. As these manufacturers reach this threshold, prices could increase even more, making it difficult for lower-income earners to purchase the automobiles.
This is why Kelly prefers taxes on carbon, gasoline, or coal over subsidies. “You can rebate some of the money from taxes back to the poor, so they’re not as economically disadvantaged by rising electricity prices,” Kelly said. “You can’t do that with a subsidy.”
Along with high prices, the lack of widespread infrastructure also discourages buyers by removing incentives. The amount of operational charging stations varies per state—some, like California, have tens of thousands, and others, like North Dakota or Alaska, have less than 40. While drivers can charge their cars at home, the low number of charging stations in many places limits the automobiles to short commutes. The deployment of charging infrastructure is ticking upward but the question remains whether it will match the expected growth of the market.
Kelly said one efficient way to promote infrastructure and a proliferation of electric vehicles in a city is by converting the city’s fleet. That means converting city buses, school buses, and delivery and work transportation to electric. Building out the infrastructure would still be expensive, but it would promote more equity.
“City governments aren’t exactly flushed with cash, but at least they can spread the cost out over many taxpayers as opposed to forcing it on one group of people,” Kelly explained.
The more infrastructures available, the easier it will be for households to purchase electric vehicles, according to Kelly. Similarly, as the number of these automobiles continues to increase, prices are expected to decrease. That is no longer a question of if, but when.
“You can probably afford to do nothing and there will still be a pretty high percentage of electric vehicles by 2050,” Kelly said.
There are already incentives in place, besides subsidies, that promote electric vehicles, among them the National Highway Traffic Safety Administration’s Corporate Average Fuel Economy (CAFE) standards, which regulate the fuel economy, or minimum mileage per gallon, of vehicles produced in the United States. CAFE standards penalize automakers for inefficiency and reward them for efficiency.
If the CAFE standard is 35 miles per gallon (mpg) but an automaker produces a fleet with 38 mpg average fuel economy, then the automaker receives credit which they can sell to other companies with less efficient vehicles. Those manufacturers can use the credits to comply with the law.
Regardless of mandates, incentives, taxes, subsidies, or overall effect on climate change, it seems the future of transportation is heading toward electric vehicles, one way or another. Kelly pointed out that it may come down to one factor: performance.
“I think the electric vehicle is the superior vehicle,” Kelly said. “That is going to be incentive enough for car companies to scale them up and bring the cost down.”