Published on March 4th, 2019 | by The Beam
March 4th, 2019 by The Beam
This article was published in The Beam #7 — Subscribe now for more on the topic.
It will soon be possible to get almost anywhere in the world powered entirely by the sun, the wind and the rain. This is the promise of the electric vehicle (EV) revolution now underway.
In parts of China, France, Germany, Norway, as well as the US, driving an EV powered 100% by renewable energy is already possible and the trend is spreading rapidly.
Not only do electric vehicles offer emissions-free travel and far lower operating costs, they are quieter, faster and better adapted to the kind of driving that most people do most of the time: namely, driving to and from work, school, the gym, or the grocery store.
As concerns over range anxiety are gradually overcome by better charging infrastructure and improved battery performance, the momentum behind the growth of EVs is likely to become unstoppable. Forecasts suggesting EVs will represent 33% of the global vehicle fleet by 2040 may well prove conservative.
Surveying the landscape of the global mobility industry, there is little doubt that the future is bright for electric vehicles. Jurisdictions from around the world are developing an ever-wider range of EV policies as cities, states, and national governments start to realize the many benefits of an all-electric future.
And although numerous challenges remain, the overall direction of travel is clear: more ambitious forecasts suggest that when car sharing and other ‘shared mobility’ solutions are added in, by 2050 approximately 75% of kilometers traveled will be electric, according to the International Renewable Energy Agency’s (IRENA) 2018 Global Energy Transformation report.
Equally as important, a related shift is underway toward providing mobility-as-a-service, on a pay-as-you-go basis, enabling citizens even on the lowest of incomes to access electric mobility at a cost far lower than traditional means. In fact, with car sharing, using an electric vehicle can already beat public transit on price, as short trips under five kilometers can cost less than a metro ticket.
Despite these positive developments, nurturing a thriving EV ecosystem will require concerted government action, including common industry standards.
So what are the most common policies in use around the world to scale EVs today?
Upfront cash incentives: Direct upfront cash incentives offered for the purchase of an electric vehicle or a plug-in hybrid can help to bridge the cost gap between EVs and conventional vehicles and drive consumer adoption.
Fiscal incentives: This approach uses the tax code to tilt the playing field toward greater adoption of EVs. This includes measures like increasing the taxes on conventional, or fossil fuel-powered vehicles (as is done in Denmark and the Netherlands), or reducing the levies on EVs. Such fiscal incentives stand to be particularly impactful when targeted at owners of vehicle fleets like car sharing companies, or taxi operators. A related approach is to offer differentiated vehicle registration charges depending on the type of vehicle that is used, with lower fees being requested for cleaner vehicle registrations, as is done in China.
Sweeteners: This covers the broad array of policies including free access to ‘fast track’ lanes in traffic, free parking, free use of public transit such as ferries (popular in Norway, which is marbled with fjords). Another sweetener common in many places is free charging, where users do not have to pay to dock their car and fill up, along with free passage through road tolls. London, for instance, has already implemented an exemption to its Congestion Charge for EVs and is planning to introduce an ‘Ultra Low Emissions Zone’ that will extend similar exemptions to electric vehicles, including motorcycles and other means of transport.
Mandates: Mandates involve imposing an obligation, either on car manufacturers or auto retailers (e.g. dealerships) to sell a certain volume of EVs by a certain date, or to reach certain sales targets as a percentage of overall sales. Mandates could also be used to require that certain establishments (grocery stores, shopping centers) above a certain floor space (e.g. 300 m2) be required to offer charging facilities on the premises.
Direct Investment: This approach, although often overlooked, is arguably one of the most critical, and it involves investing directly in the sector either through procurement policies that favor EVs, or by investing public funds in charging infrastructure. A good example of this is the Government of British Columbia’s efforts to roll out EV charging stations across the province.
Bans and phase-outs: This category is one that is generating among the most heated battles, particularly in countries like Germany, as a number of cities are mulling the introduction of bans on diesel cars in urban centers. Paris, London, and Mexico City have already announced their intention to ban diesels in their urban centers and more cities are joining every week.
Research, Development and Demonstration (RD&D): A growing number of countries are allocating RD&D money toward EVs, including in advanced battery technologies, advanced materials, and improved charging platforms.
One of the challenges in the years ahead will be to maintain a stable policy and regulatory environment for EVs, particularly as policies and supports come under attack. In recent years, a number of jurisdictions have chosen to roll back their incentives, introducing turmoil and uncertainty both for car dealers and for car buyers.
As the battle over EV policy rages on, there are a few key areas that can help avoid boom and bust cycles.
Enable smart charging: Ensuring that charging can be done in a coordinated and time-flexible way in order to avoid putting unnecessary strain on grid infrastructure will be critical. Managing peak demand in the early evening hours is already one of the major challenges for power utilities around the world: adding millions of EVs plugging in at home between 5 to 8 PM to that mix is going to create significant additional strain on distribution infrastructure and could even in some cases contribute to localized disruptions to power reliability. If this starts to happen at scale, utilities and other actors ultimately responsible for maintaining system reliability will act quickly to control or restrict EV adoption and EV charging. Charging that is responsive to grid constraints, and that can even be calibrated to renewable energy output (e.g. when there is an excess of solar or wind power on the system), represent cost-effective ways of ensuring a better optimized EV deployment.
In short, smart charging should not be thought of as a ‘nice to have’ — it’s a ‘must have’ for the successful roll-out of EVs.
Lead by example: Public procurement and leading by example are among the most effective short-term measures that governments (in particular local governments) can take.
Ensure Transparency, Longevity and Certainty (TLC): Much like in renewable energy policy, investors (in this case, mainly car owners and car manufacturers) dislike uncertainty. Ensure that EV policy efforts are coordinated, clearly communicated, and that they set out a clear vision for the long-term. Reducing subsidies is part of the process, but policymakers can make sure that changes are gradual, and reduce the risk of boom and bust cycles.
Support the development of fully-electric car sharing: Most car trips are short. Putting particular effort and resources in supporting EV-based car sharing platforms is one clear way to deliver on multiple objectives simultaneously, while supporting the evolution away from single-owner car ownership models toward more shared mobility. As many teenagers realized when borrowing their parents’ cars, the cheapest way to own a car is not to own one at all.
As electric vehicles become increasingly widespread, particularly in urban centers around the world, a new generation is being born that will only ever drive electric, powered to and from work, school and the grocery store by the sun, the wind and the rain.
By Toby D. Couture, Founder and Director of E3 Analytics, a consultancy based in Berlin working on the transition to a clean, sustainable, low-carbon future.
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