Do we alter the electricity infrastructure to increase electric vehicle market penetration or promote the adoption of electric vehicles in order to reach net zero emissions?
The Paris Agreement at COP21 highlighted that despite the reductions in carbon emissions recorded in other sectors, carbon emissions recorded in the transport sector had steadily increased, trending toward a 50% increase by 2030 . Globally, the transport sector is still heavily dependent on fossil fuels: the transport sector accounts for around 17% of the world’s emissions. Thus, the topic of electric vehicles (EVs) has been the focal point of discussions in decarbonising the transport sector. However, there have been many critiques about the plausibility of transitioning to EVs and whether we should (1) change the electricity generation grid or (2) facilitate the transition to EVs by dismissing the emissions of the unchanged electricity generation mix? Will the transition be of environmental benefit? And what comes first: introducing large-scale EV adoption to facilitate decarbonisation through fiscal policies, or changing the infrastructure to stimulate the adoption of electric vehicles?
Therefore, the chicken and the egg problem applies to the issue of electric vehicle adoption. Policy and decision-makers currently working on promoting ‘clean’ transport alternatives are stumped with this problem.
Policy and decision-makers currently working on promoting the diffusion of EV are stumped with the “chicken and egg” problem: the promotion of infrastructure-dependent technologies such as electric vehicle charging stations.
This chicken and egg dilemma can prohibit the successful dissemination of EVs, hindering the efforts of decarbonising the transport sector by prolonging the time required to achieve Paris Agreement emission targets.
So, do we change the grid or increase the market penetration to promote the decarbonisation of the grid?
Electric vehicles are known to produce no tailpipe emissions, making them an ideal alternative to conventional vehicles to achieve net zero emissions. However, we often do not understand the idea that the electricity generation grid that powers EVs is often composed of ‘dirty’ energy sources that are still continuously producing carbon dioxide . Approximately, 61% of our current electricity mix comprises of oil, gas and coal and 91% of our transport sector is fueled by fossil fuels .
This represents the ‘chicken’ aspect of the argument: the question becomes whether we should change our electricity generation grid for better renewable energy source integration to power our EVs to achieve net neutrality in the transport sector .
If the intention to transition to EVs is for the purpose of decarbonising the transport sector to reach the Paris Agreement goal, it is vital to approach transport decarbonisation from the source, not from the end product.
The fear of economic upheaval caused by an abandoning of coal prompted India to change a clause’s wording from “phase out” to the “phase down” of coal, causing great controversy at the COP26 . Ultimately, this reflects the incongruity between the reality for developing countries and the pace expected of them.
The Fear of the Unknown – Consumer Attitude and More
One of the main fears surrounding adoption of EVs is the charging location and fear of stranded assets. With any situation, the farther something is from our space of convenience, the less likely you would be incentivised to use it.
The lack of EV uptake from consumers has been surveyed extensively, and the main reasons for the low uptake are the anxiety about range and insufficient charging facilities in close proximity to people’s households .
Therefore, to increase the market penetration of EVs, the support of increased charging facilities is required to combat the range anxiety and facilitate the transitioning towards decarbonising the transport sector. Paradoxically, local and government bodies in many nations such as Australia and Belgium failed to address consumer concerns regarding charging infrastructure, resulting in poor uptake of EV. This leaves high-emitting nations unable to effectively decarbonise their transport sectors .
Consumer confidence has drawn out the dilemma further as it often acts as a barrier in implementing succinct changes to transition to electric vehicles. Therefore, it is necessary to understand whether having more accessible charging points is an incentive for consumers to purchase an electric vehicle and allow their respective regions to transition.
Poor Policy Intervention
Now, the “egg” appears in this dilemma. Do we promote the importance of having greater involvement from public stakeholders to diffuse such risks and increase the adoption of electric vehicles in order to facilitate decarbonisation in the road vehicle fleet? .
Invisible Policy Absent EV policy is a major barrier to escalating the diffusion of electric vehicles and eventually meeting emission reduction targets. Additionally, a lack of incentives to promote the proliferation of renewable energy sources prohibits EVs from being purely net zero.
Policymakers often attempt to overcome this situation by proposing subsidies. However, these policymakers often forget to account for the importance of consumer purchases (i.e., EV purchasing) with respect to infrastructure alterations . For example, in the United States of America, the federal government spent billions of dollars on tax incentives to increase the market penetration of EVs and their respective charging stations. However, without altering the grid, the emission reduction was quite minimal, and the main type of EV purchased was hybrids—EVs powered by an internal combustion engine and electric motor, whereby the battery is charged through the excess kinetic energy from braking . These types of EVs are independent from the grid; therefore, it does not help increase the spread of adequate recharging infrastructure, nor does it encourage policymakers to decarbonise the electricity generation grid .
Countries as well as companies have struggled to assist in decarbonising their transport fleet due to such circumstances . Without the support of adequate policy, leading companies such as Shell are hindered from assisting nations to switch to EVs and eventually reach net zero levels within their target period.
Case Study – Shell Regarding EV charging worldwide, Shell has set a target of operating over 500,000 EV charging stations by 2025, with 80,000 currently functioning as of this writing for households and firms. For the UK, Shell has planned to install 50,000 by 2025 in collaboration with Ubricity. According to the International Energy Association, more than 10 million EVs were on the roads worldwide, with the greatest growth in China—enabling Shell to capitalise on the rise of EVs in China by supporting infrastructure .
Despite many regions being a new space of opportunity for this infrastructure, the Oceania region, including New Zealand and Australia, are threats to this initiative. The concept of range anxiety is highly prevalent due to households having greater road time than European nations, making consumers reluctant to tap into the EV market . Additionally, due to the premium cost of EVs—and without the support of fiscal incentives to purchase electric vehicles—the adoption rate will be minimal, counteracting the actions of rolling out charging stations. Therefore, diffusing EV charging infrastructure may result in a loss, and it may eventually be a threat to Shell’s bottom line and their efforts to reach carbon neutrality .
If the electricity generation grid does not become less emission-intensive, regarding both CO2 and CO2 equivalents, the role of EVs as an environmental alternative is insignificant.
The potency of local pollutants such as sulphur dioxide, methane, and particulate matter can often exceed the greenhouse potency of CO2, which is not often regulated. Therefore, the technology and infrastructure of electrification must be altered to research the threshold of having the potential to both increase the uptake of electric vehicles and decarbonise the transport sector. Without a doubt, this transition to EVs requires the mobilisation of large funds to achieve successful market penetration, and it differs from region to region; however, the core principle remains regardless of the location. EVs cannot be a singular solution—it requires a strategic and multi-dimensional approach that accounts for consumer confidence, choices, infrastructure necessities, and fiscal initiatives.
Therefore, what comes first? Transformation of our infrastructure or transformation of our policy?
Given these choices and perspectives, it is evident that both the ‘chicken’ and the ‘egg’ needs additional focus; however, this discussion highlights the importance of comprehensive policy tapping into consumer preferences to accelerate this transition. This refers to the ‘egg’ perspective.
Without solving the policy perspective, it will inhibit further progress in decarbonising our grid and increasing the adoption rate of electric vehicles. In turn, the focus on policy will unlock other opportunities to facilitate this transition, thus diffusing the chicken and egg dilemma .
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Basundhara Dutta is a MSc Energy Management student at École Supérieure de Commerce de Paris Business School interested in the world of energy transitioning, decarbonising transport and the electricity grid as well as assisting companies in converting their barriers and challenges in regards to net zero objectives into innovative and sustainable solutions.