Not everyone is enamored with electric vehicles (EVs). They are currently more expensive than internal combustion engines (ICEs), people are worried about limited range and there aren’t enough charging stations when and where you need them. And it can take a long time to recharge an EV battery.
Why bother, especially when we already have such an extensive network of petrol stations the world over, people say. The energy density of a gallon or liter of gasoline is hard to beat, and – let’s face it – it is not expensive, even if polluting. So why bother with EVs?
Good question. The most compelling reason is that ICEs – and the transport sector that depends on them – are among the biggest sources of carbon emissions in many economies, especially those who have already invested heavily to clean up their electricity generation mix away from fossil fuels.
In the case of California, emissions from the transport sector amount to 41% of statewide emissions, exceeding those from all other sectors of the economy.
If the aim is to move towards net zero emissions at some point, the transport sector must be electrified – with the electricity generated from carbon-free sources. That is good enough for an answer.
But how expensive would it be to make the transition to EVs? Wouldn’t it be horrendously expensive, and wouldn’t it lead to loss of jobs and employment?
Apparently not. Clean Transportation: An Economic Assessment of More Inclusive Vehicle Electrification in California, recently released by Berkeley Economic Advising and Research (BEAR) concludes that the electrification of light-duty vehicles in California could be a potent catalyst for economic growth over the next 10 years with many side benefits.
The study, which looks at California’s ambitious EV targets for 2030 and 2050 says that even under relatively conservative assumptions – such as no improvements in EV costs in the coming 10 years – EV adoption could result in significant economic benefits by stimulating the overall economy, reducing harmful pollution, and improving public health.
Making more realistic assumptions, such as considering anticipated drops in price of EVs and improved performance results in even greater gains.
Among the study’s main findings:
Meeting California’s 2030 GHG reduction goals with increased EV adoption modeled in the study would create more than 390,000 new jobs under a relatively conservative scenario — and more than half a million when using more realistic assumptions;
By 2030, California’s Gross State Product (GSP) would increase somewhere between $82- 142 billion, depending on the scenario; and
Real income is projected to increase between $311-357 billion by 2030.
Looking out to 2050, the economic benefits increase somewhere between 7 to 8 times those in 2030. Even under a relatively conservative estimate, California’s GSP stands to increase by about 5% by 2050; twice as much under a scenario that reflect more likely vehicle cost reductions over time.
The report notes that the manufacturing of fuel-efficient vehicles has already created 14,776 jobs in California — and more indirect employment could be generated through increased demand for charging infrastructure and utility load.
The projected job growth and economic benefits noted in the study come from avoided fuel costs alone and do not include the environmental or health benefits of non-polluting EVs. What is there not to like?
California based Tesla already has a market capitalisation that exceeds that of most other car companies many times its size. Perhaps Elon Musk really knew what he was getting into when he started the company – as described in the following article. And apparently what is good for Tesla is also good for California.
Fereidoon Sioshansi writes the EEInformer newsletter and is President, Menlo Energy Economics