Back to the future: A strong electric vehicle benchmark can cut transport emissions and help modernise Europe’s electricity grid
Over a century ago, electric vehicles (EVs) were the best-selling cars on the market. In 1900, 28 percent of cars on the road in the U.S. were electric. If the competing combustion engine technology had not taken over, today’s policymakers would likely face a much smaller challenging in cutting greenhouse gas emissions and air pollution in the transport sector. Cars alone account for 12 percent of the EU’s overall greenhouse gas emissions. And road transportation emissions, unlike any other sector in Europe, are still increasing.
What’s more, Europe’s clean energy transition is not progressing as quickly as it should, and the Intergovernmental Panel on Climate Change (IPCC) report published in October served as a grave reminder of the urgency of reducing carbon across sectors.
Bringing EVs back on today’s roads will not only help to decarbonise transport, but the energy sector, too, with wider benefits for society. By charging even an increasing number of EVs when the costs for producing and delivering electricity are low, EVs can help to smooth the load curve, contain the overall grid costs, and make better use of existing assets, thereby bring down the costs for all electricity consumers, not just EV drivers. One way to drive this change is through a strong sales benchmark.
Decarbonising transport and energy must go hand in hand
The European institutions are currently debating the introduction of a zero- and low-emission vehicles sales incentive, as part of the future CO2 targets for automakers. This offers an important opportunity to clean up vehicle emissions EU-wide. Member States favour a voluntary sales “benchmark” in 2025 and 2030 that would offer CO2 credits for carmakers whose sales exceed the target. More ambitious is the European Parliament’s suggestion that, along with this bonus, a “malus” should apply that increases carmakers’ carbon reduction obligation if they fail to meet their sales goal. This would turn the voluntary benchmark into a de facto mandatory target and become the key driver for the rapid uptake of EVs.
More EVs on the road by 2025 will reduce costs for consumers, modernise the power system, provide investment security across several sectors, and promote renewable energy.
Often absent from this discussion, however, are the far-reaching energy policy benefits that would stem from an EV sales benchmark, in particular a mandatory one. More EVs on the road by 2025 will reduce costs for consumers, modernise the power system, provide investment security across several sectors, and promote renewable energy. Simply put, the more certainty this regulation can provide regarding the expected number of EVs in use in the next decade, the better stakeholders can plan to reap their benefits. Needless to say, these benefits are much greater if the regulation favours pure electric vehicles over plug-in hybrids, and applies across all European auto markets equally.
More certainty about the timing of increasing market shares of EVs would allow the electricity industry to consider the grid potential of EVs in energy resource planning. In turn, a reliable number of EVs also provides investment security for utilities and network operators, carmakers and suppliers, as well as charge point operators and other innovative market players. This chain of effects supports the energy transition envisioned in the Clean Energy for all Europeans package. Europe now has the opportunity to accelerate the energy and the transport transitions—or to fall behind in both.
Charged smartly, more EVs help modernise the grid and lower costs for all consumers
While we repeatedly hear attempts to spread scepticism about the grid’s ability to integrate EVs, evidence suggests that more EVs does not automatically mean costly, new infrastructure. Europe’s electricity industry found that even if all of today’s vehicles were electric, the investment needed for new capacity would be very modest. EV integration can be managed through more efficient use of existing systems. Based on case studies from Germany and France, RAP research found that today’s electricity distribution networks are significantly underutilised. EVs, as flexible loads, could leverage this unused capacity. In other words, existing infrastructure can largely, if not entirely, accommodate the take-up of EVs, while benefiting all consumers by making better use of it.
A growing number of utilities support the integration of EVs and offer EV-friendly tariffs such as time-of-use pricing to meet owners’ needs and incentivize smart charging. In general, evidence suggests that consumers react to variable pricing with flexibility, such as charging their cars at off-peak hours. For example, a Minnesota utility in the U.S.—where the energy sector has developed many time-of-use pricing schemes to support EV-uptake—finds that 90 to 95 percent of customers switch significant amounts of their consumption to off‑peak hours, when the off-peak price is five times lower than the on-peak price.
Some network companies, for example in Germany, offer free grid connections and smart technology, such as meters or wall boxes, to EV owners who help optimise charging by plugging in the car when not in use and automatically charging when electricity is cheapest. Analyses from the U.S. and EU countries such as the UK and France suggest that controlled charging significantly reduces EVs’ contribution to peak load, even assuming a high penetration of EVs.
While we don’t know whether the next best-selling electric vehicle will even be a private passenger car (in fact, it’s not likely to be), we do know how to ensure that it can be charged beneficially for the environment, the grid, and all consumers.
Electromobility is a competitive choice for Europe’s transport and energy sector
The world’s leading EV market, China, has placed a competitive bet on EVs, helping the country to cut air pollution amidst growing mobility demand while securing growth for its battery and electric industry. California, to which the U.S. owes its global second place in terms of sales, has promoted transport electrification at the same time as electricity market reforms. This big-picture approach demonstrates how the state was able to accommodate additional EVs as flexible loads onto the grid, creating a win-win situation for both transport and energy sector decarbonisation, each making the other less expensive and easier to achieve.
If Europe seeks to defend its leadership as a renewable economy and reap the benefits enumerated above, establishing strong policy incentives to make EVs once again the best-selling vehicle choice is low-hanging fruit. Just as important, it would help policymakers put road transport on the more sustainable track it deviated from over 100 years ago—and help achieve the EU’s low-carbon future.
A version of this blog post first appeared in Euractiv.