EVs: How clean is clean?
Across the several industrial revolutions, mankind has focused on improving efficiency in all aspects of life. With technological developments happening at an exponential rate, the leading minds of today’s world are divided between optimistic and apprehensive as a huge amount of our activities currently rely heavily on the burning of fossil fuels. In the space of a generation, we have gone from viewing climate change as a potential problem, to realising its true magnitude. Significant market and political changes have been and will be shaping our trajectory over the coming decades. To tackle a problem of this size, the response has been to target specific areas of the global economy that need the most encouragement. And at a whopping 33% in 2019, oil holds the lion’s share of the world’s energy mix by volume.
To put that into perspective, coal, gas, nuclear, hydropower, wind, solar, and other renewables, all squeeze into the remaining 67%. Of that oil, diesel was dominant (28%), followed closely by gasoline (25%), with these two fuels being used predominantly in transportation. It is no secret then, that to disrupt this sector with a climate-friendly alternative would be a huge step towards reaching international climate targets.
Enter the Electric Vehicle (or EV), emission-free driving on an (only recently) cost-competitive basis. Seemingly a blanket solution to the far-reaching destruction oil is having on our climate. But considering that all physical industries exist along a supply chain, how clean are EVs really?
To explore this, let’s start from the top. China, the world’s largest greenhouse gas emitter by far (29% of global emissions in 2019), has famously pledged a net-zero target by 2060. Yet on March 5th, 2021, Premier Li Keqiang announced its 5-year national development plan, in which there was a worrying absence of an energy consumption cap. Most importantly, a disturbing directive to increase ‘large capacity coal power units’ when it has already pledged to peak emissions by 2030 signals that China is not as serious as it wants to seem. The electricity for EVs has to come from somewhere, and the continuing growth of coal power in China does not bode well for climate progress. Considering that in 2019, 54% of all battery EVs globally were in China, and that — already — coal power generation is the most polluting segment of the Chinese economy (48% of total emissions), what are the effects of adding to this load? Will the substitution of combustion vehicles by EVs simply push emissions towards the power plants rather than directly eradicate them as intended? Alarming statistics to this effect is that despite the pandemic, China’s carbon emissions for 2020 show a 1.5% rise from 2019, and it put more coal power generation online in 2020 than the rest of the world shut down, offsetting global progress.
Among other large economies, this does not seem to be as much of an issue. In Germany and France, where EV uptake has risen by 263% and 202% respectively in 2020, emissions have fallen. In developed countries such as these, fossil fuel power generation comes mainly from gas rather than coal, where the latter is an average of 143% more polluting. In France, nuclear makes up 75% of the country’s energy, making it the world’s largest net exporter of electricity. Here, the uptake of EVs carries a much more positive connotation than it does in China. However, climate change by nature is global, so size does matter. For these countries that show a promising rate of progress, it is imperative to use any means at their disposal in order to persuade and encourage the larger polluters to change for the better.
A car’s operating costs are only one side of the story. For a complete picture, we must understand their production. And as battery demand increases, so does the demand for their constituent materials. In the ‘Sustainable Development’ scenario posed by the IEA, cars will account for 89% of battery demand in transport by 2030. At current rates of consumption, this drives up the demand for cobalt and lithium — 2 of the 4 main battery metals — over these next 10 years by 18x and 19x respectively. At the current global average, the manufacturing of EVs actually emits 77% more emissions than the manufacturing of a similar-sized combustion-engine vehicle, owing purely to the production of batteries. If the growth trajectories of cobalt and lithium are anything to go by, EV manufacturing is set to be an emissions-heavy business.
To solve this problem, considerable investment to electrify the entire value chain is required, in mining, materials refining, production, and recycling. At present though, these segments of the battery supply chain are dominated by none other than China. A net reduction in EV emissions only becomes visible when you consider it over the lifespan of the vehicle. Indeed, over a 10-year life of a mid-sized car, 80kWh EVs emit 18% less greenhouse gas emissions (28.2 vs 34.3 tCO2 equivalent basis) than their combustion engine counterparts. While this is definitely progress, it’s tame compared to the 25% emissions reduction target needed to limit global warming to 2°C, let alone the 1.5°C target provided by the Intergovernmental Panel on Climate Change (IPCC).
The main issue remains in electricity production, which accounts for 52% of an EVs lifetime emissions. The overarching question then becomes whether electricity generation can turn renewable at a fast enough pace to meet the rise in EV demand. In countries like Germany, France, and the UK, where renewables often make up the majority of electricity production, this is not so much a concern. Since size is of utmost importance however, the spotlight lies on China and the US — the first and second largest GHG emitters.
EVs are therefore cleaner in the longer term when upstream problems are addressed. The issue of mining and electricity production remains front of mind when talking about the revolution of EVs, and if they are not tackled through a combination of policy initiatives and market systems, the potential for EVs to change the world would be severely dampened. Let us bear these issues in mind as we enter a new industrial revolution; the age of digitalisation and climate change.
