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What Are the Climate, Air Pollution, and Health Benefits of Electric Vehicles?

Author

Listed:
  • Linn, Joshua

    (Resources for the Future)

  • Robson, Sally

    (Resources for the Future)

  • Russell, Ethan

    (Resources for the Future)

  • Shawhan, Daniel

    (Resources for the Future)

  • Witkin, Steven
  • Funke, Christoph

Abstract

The transportation sector accounts for 27 percent of US greenhouse gas (GHG) emissions, more than any other sector of the economy. Passenger cars and light trucks emit most of the transportation sector’s GHGs, and they are also major contributors to local air quality problems; at least 125 million US residents live in areas that violate air quality standards. See https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions for GHG emissions by sector and https://www3.epa.gov/airquality/greenbook/popexp.html for the population living in areas that violate National Ambient Air Quality Standards.Public and media attention has focused on the potential for plug-in electric vehicles (PEVs), which include electric vehicles like the Tesla Model 3 and plug-in hybrids like the Chevrolet Volt, to substantially reduce pollution from passenger vehicles. PEV subsidies in the 2022 Inflation Reduction Act are intended to help achieve the Biden administration’s GHG emissions goals. The Biden administration and many states have set economy-wide GHG emissions targets for the coming decades, and the larger the environmental benefits of PEVs, the more that purchase subsidies and other policies contribute to achieving those targets. The efficacy of the PEV subsidies depends on their environmental benefits. Standard economic theory indicates that emissions taxes are economically efficient in the absence of other market failures. Because taxes may not be politically feasible, subsidies may be cost-effective among available options. Other market failures also affect the economically efficient subsidy. For example, learning spillovers in battery production would provide economic justification for subsidizing PEVs (Linn and McConnell 2019).The environmental benefits of PEVs remain uncertain, however. Compared with gasoline- and diesel-powered vehicles, PEVs reduce emissions from vehicle fuel combustion but increase emissions from electricity generation. Many consumers state that environmental concerns affect decisions to buy PEVs, yet one-quarter of US consumers think PEVs have little or no environmental benefit, and another quarter think those benefits are moderate (Krosnick and MacInnis 2020). Use of fossil fuels for power generation varies temporally and spatially; at most times and locations, electricity generation for PEV charging increases emissions of CO2 and local air pollutants, such as sulfur dioxide (SO2) (Yuksel et al. 2016; Holland et al. 2019). Some research indicates that, given the current reliance on fossil fuel use in the electricity sector, on average PEVs reduce carbon dioxide (CO2) emissions. Research that accounts for the expected shift away from fossil fuels for electricity generation over the coming decades tends to conclude that PEVs will reduce emissions, but under certain assumptions, PEVs may increase emissions (Babaee et al. 2014).Several shortcomings in the literature have contributed to the confusion about the emissions benefits of PEVs. First, when someone buys a PEV, environmental benefits depend on what the consumer would otherwise have done. For example, buying a PEV instead of a large sport utility vehicle has greater environmental benefits than buying a PEV instead of a fuel-efficient hybrid. Much research has assumed that PEVs replace fuel-efficient hybrids, which may be a reasonable assumption for some consumers but not all (Xing et al. 2021). Different policies that promote PEV sales have different effects on the sales and use of other vehicles. Those effects must be estimated in order to estimate the effects of the different policies. Second, environmental benefits of PEVs also depend on electricity sector emissions. Much of the literature makes simplifications, such as using average current emissions rates, and most studies ignore temporal and spatial variation in emissions rates. The emissions effect of additional electric vehicles may differ from the average emissions rate of electric power generation because incremental or marginal emissions rates are a more appropriate measure than average emissions rates and because PEVs are not charged uniformly across time and space—that is, temporal correlation between PEV charging and fossil generator utilization as well as transmission constraints can cause marginal emissions rates to vary spatially. Also, some studies estimate electricity sector emissions for a single (usually historical) year, but consumers and policymakers care about future benefits over lifetimes of the vehicles. Nearly all the literature fails to account for how PEV adoption will affect the mix of generators in the electricity system and the utilization of those generators. For estimates of regional variation in emissions, see Holland et al. (2016). Third, nearly all research has focused on emissions outcomes, but the optimal PEV subsidies depend on the monetary value of the avoided climate and health damages.Policymakers need a clear understanding of the environmental benefits of PEVs. In this paper, we estimate the environmental and human health benefits for 2022 to 2035. We address the shortcomings of prior research by combining three models: (a) an economic model of passenger vehicle purchases and driving; (b) an engineering and economic model of the electricity sector; and (c) an air pollution fate-and-transport model that yields monetary valuation of the emissions. In the passenger vehicle model, policies, consumer preferences, and vehicle manufacturer strategies determine pollution from on-road vehicles. Consumers choose vehicles to maximize subjective well-being, and vehicle manufacturers choose prices and attributes to maximize profits. Manufacturers comply with the zero-emissions vehicle (ZEV) requirements in California and 12 other states where the ZEV program essentially requires manufacturers to meet PEV sales targets. Manufacturers also choose whether to introduce new electric vehicles to the market based on expected profitability of entry. Households choose whether to scrap or sell their older vehicles and how much to drive their vehicles. The model estimates emissions of CO2, SO2, nitrogen oxides (NOx), and fine particulate matter (PM2.5) from production and consumption of gasoline and diesel fuel through 2035.The power sector model is the Engineering, Economic, and Environmental Electricity Simulation Tool (E4ST) model of the United States and Canada. Drivers charge PEVs according to historical charging patterns, and the electricity system operator dispatches generators and electricity storage devices to minimize costs. Firms build and retire generators based on anticipated profitability. We include electricity sector policies adopted as of 2021. The power sector model estimates emissions of the same pollutants as the transportation model by year, county, and smokestack effective height category.We use the Co-Benefits Risk Assessment Health Impacts Screening and Mapping Tool (COBRA; EPA n.d.), which is an air pollution fate-and-transport model. For each scenario, COBRA projects each county’s ground-level airborne PM2.5 concentration based on projected emissions. PM2.5 accounts for most of the damage from poor air quality (Institute of Medicine 2011). The concentrations include directly-emitted PM2.5 as well as PM2.5 that forms from NOx and SO2. We project vehicle and power sector emissions from both fuel production and combustion. The model estimates the premature deaths and illness in each scenario and calculates the monetary value of these effects.To estimate environmental benefits of PEVs between 2022 and 2035, we compare a baseline scenario with scenarios that reduce battery costs, increase gasoline prices, tighten ZEV requirements, increase PEV subsidies, and a combination of all these changes simultaneously. We also consider the sensitivity of the results to assumptions about electricity sector environmental policy and PEV charging profiles. In each scenario, the vehicle model predicts how policies and market conditions affect vehicle purchases, driving, and tailpipe emissions. The additional PEV charging affects electricity demand in the E4ST model, which predicts the retirement, construction, and operation of generators, and the consequent emissions. The COBRA model projects the resulting changes in PM2.5 air pollution concentrations, mortality and illness from that air pollution, and the monetary values those health changes in the US.Across the scenarios, PEV market shares range from 3 to 15 percent and PEVs account for 2 to 8 percent of on-road vehicle miles traveled (VMT) by 2035. The scenarios other than the baseline scenario all have higher PEV sales. Here is a preview of the main results:For vehicles sold in 2022, across the scenarios, the estimated net lifetime climate benefits vary from $3,100 to $34,000 per additional PEV. The lifetime US health benefits vary from $690 to $3,300 per additonal PEV. These estimates use 2022 as a case study. They are estimates of the effects of the additional PEV sales that would have occurred in 2022 if the alternative scenarios had been in effect in 2022.Across the scenarios, benefits depend on where and when consumers buy PEVs, the fuel economy of the gasoline-powered vehicles they would otherwise have purchased, and how much they drive their vehicles.Higher gasoline prices produce the largest benefits per additional PEV, followed by higher ZEV requirements.PEV benefits decline between 2025 and 2035 because gasoline vehicle emissions decrease over time as new, lower-emitting vehicles replace older, higher-emitting vehicles. In our modeling results, incremental emission rates in the electric sector do not decline fast enough to counteract this, although we conducted our modeling before the passage of the Inflation Reduction Act, so our results do not reflect its strong clean generation incentives.Emissions rates of the incremental generation for PEV charging differ substantially from the average emissions rates of generation.An electricity sector policy that reduces the average emissions rate of electricity generation may considerably increase PEV benefits, depending on the policy’s design and other circumstances.The remainder of the paper summarizes the modeling framework, describes the scenarios, and presents the results. The analysis includes gasoline- and diesel-fueled vehicles. For brevity, we refer to them together as “gasoline” vehicles because diesels accounted for less than 0.4% of light-duty vehicle sales in the US in 2021 (EIA 2022).

Suggested Citation

  • Linn, Joshua & Robson, Sally & Russell, Ethan & Shawhan, Daniel & Witkin, Steven & Funke, Christoph, 2023. "What Are the Climate, Air Pollution, and Health Benefits of Electric Vehicles?," RFF Working Paper Series 23-01, Resources for the Future.
  • Handle: RePEc:rff:dpaper:dp-23-01
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