Environmental impact has become a key metric for business ethics and governance. It’s also an issue that should concern everyone.
Duty calls for digging into the numbers.
Does recent data on electric vehicles (“EVs”) suggest that they will pull us back from the climate brink — or push us over it?
What Time Does the Doomsday Clock Read?
To paraphrase Mark Twain, for many thousands of years, reports that the end of the world is near have been greatly exaggerated.
Doomsday predictions don’t have a very good track record. Then again, they only have to be right once.
Many such predictions over the last 40 years focus on modern societies’ release of CO2 into the atmosphere, triggering catastrophic global warming a/k/a climate change.
These predictions speak of an irreversible tipping point or even foretell a “cascade of tipping points.”
How Rapid Adoption of EVs Might Actually Trigger A Tipping Point
Tipping points imply that when represents as critical a component of CO2-driven climate doom as how much.
We can’t afford to do too little, too late.
In such case, will rapid adoption of EVs help or hurt?
When Are EVs “Cleaner” Than Conventional Vehicles?
A recent Wall Street Journal article states that “EVs produce fewer emissions overall than their gas-powered counterparts, but there are caveats.”
Manufacturing a Tesla 3 generates 4.8 more tons of CO2 that a Toyota Rav 4. Much of this difference arises from the energy required to produce the Tesla’s batteries.
Once in operation, the Tesla generates less CO2. But, the Tesla doesn’t run on electricity; it runs on whatever generates that electricity, be it coal, natural gas, oil, or nuclear. And where the electricity has been generated by “renewables,” those renewables, whether solar panels or windmills, for example, generate CO2 in their manufacture, installation, and (to a lesser degree) operation.
Properly disposing of damaged or worn out batteries also generates CO2.
Making operating-life and safe-disposal comparisons quickly devolves into guesswork. The WSJ article estimates that CO2 emissions from the Toyota and Tesla equalize at approximately 21,000 miles. For the average electric car, equalization will therefore take place in about 2-3 years .
This estimate might be low, however. An independent comparison of the electric Nissan Leaf and the internal-combustion Mercedes cdi A160 found that CO2 emissions equivalence did not occur until 80,000-85,000 miles, or 8-12 years.
An EV’s production of CO2 is front loaded. This means that in the short to mid term, rapid adoption of EV’s might actually increase CO2 emissions. In theory, this could push us past a tipping point before EVs’ back-end CO2 savings kick in.
What are EVs’ CO2 Opportunity Costs?
Concerns over CO2 emissions have led to creation of offset markets for CO2. This means that those wishing to produce CO2 without net impact on the environment may purchase credits from those verifiably reducing (or foregoing) CO2 emissions by the same amount.
The cost of these credits varies. A fair current estimate may be 25 Euros (or $30) per ton of CO2.
At the same time, in recent years, governments have heavily subsidized EV production and sale. By one calculation, the U.S. federal government has been spending $7,500 per EV to prevent five tons of CO2 emissions that could have been offset by $210 worth of credits.
This gap represents the CO2 opportunity cost of EVs. In other words, that same $7,500 credit, if used to buy offsets, would have reduced CO2 emissions by 245 tons, rather than five tons.
Again, calculations like the above involve guesswork. So, assume the above calculations err by a factor of 10 (or offset-credit prices rise by 10x in light of increased demand for credits). Even so, for the same dollar, purchasing offset credits would yield five times the CO2 savings as subsidizing EVs.
Moreover, CO2 savings from offsets are front-loaded. The timing of savings matters if our climate nears a tipping point.
So, if one finds tipping-point predictions credible, shouldn’t governmental subsidies underwrite purchase of CO2 offset credits rather than production and operation of EVs?
Environmental quality matters. At the same time, business ethics and governance require that we dig through emotionally laden phrases to unearth practical content, context, and consequences.
This means looking at EV environmental impacts from beginning to end, both operationally and in terms of opportunity cost.
Otherwise, at the business or societal level, we cannot make sound decisions.