U.S. Consumers Need Balance, Choice in Transportation Policy
Posted May 18, 2021
With President Biden in Michigan promoting his $174 billion government plan to boost electric vehicles and charging stations, let’s be clear on three things:
- The natural gas and oil industry doesn’t oppose electric vehicles (EVs). To the contrary, a number of API members are involved in developing technologies and infrastructure that support EV adoption.
- In the U.S. free-market economy the government shouldn’t push the market and consumers toward a specific policy outcome, with mandates that limit Americans’ transportation choices.
- It’s unfair to hit up taxpayers to publicly fund EVs and their charging infrastructure – without regard to whether they own an EV.
Rather, our industry supports the concept that different vehicle technologies that reduce greenhouse gas emissions should be allowed to compete equally for consumer and market acceptance and growth. A hallmark of the U.S. economic system is fair competition, that is determined by the ability of a technology or product to meet consumer needs affordably and reliably. API President and CEO Mike Sommers wrote earlier this year:
To be clear, there is room on our roads for every type of powertrain – including EVs. But we should be careful to avoid government interventions that disrupt the marketplace, limit consumer choice and produce unintended results.
As the U.S. balances vehicle production with consumer preferences – and climate solutions with infrastructure demands – lawmakers should support fuel- and technology-neutral policies that will reduce greenhouse gas emissions without resorting to the seemingly simple solution of choosing a single technology. American consumers are the best people to determine what vehicles they want to drive; they don’t want lawmakers making that choice for them. Government policies should work for all Americans, and the road to a stronger and more sustainable transportation future begins with consumer choice and fairness.
A big part of sound transportation sector policy is being responsible to taxpayers in terms of benefit returned. Recent analysis by OnLocation for API, which calculated then-candidate Joe Biden’s transportation policy proposals, found that billions of dollars could be spent yet would generate relatively little environmental gain. The analysis said that electrifying the federal vehicle fleet could cost as much as $88 billion, but only reduce transportation sector carbon dioxide emissions 0.06%. If President Biden’s infrastructure plan to build 500,000 EV chargers moves forward, the additional cost would between $7 billion and $23 billion – the president’s plan is to spend $15 billion – with potentially no impact on EV sales and emissions.
So, as the president visits Michigan, here’s a look at some recent news headlines, official testimony, research and other content that suggest tapping the brakes on the administration’s headlong rush toward transportation sector electrification.
Importance of Policy Neutrality in Decarbonizing Transportation
This ConservAmerica review of existing scientific research found that when the full lifecycle of a vehicle and its energy source is taken into account — including GHG emissions during fuel production, manufacturing, operation, and disposal stages — advanced internal combustion engine vehicles (ICEVs) and hybrid electric vehicles (HEVs) are capable of achieving comparable reductions in GHG emissions as similarly equipped, full battery electric vehicles (BEVs). Other points from the review:
- Policies that only examine a vehicle’s tailpipe emissions significantly distort the fact that BEVs emit GHGs during their manufacturing based on the mix of energy sources used for electricity generation.
- Focusing on a single technology like BEVs discourages competition and the development of other technologies that could have a more significant impact on GHG emissions in the nearer term, and at a lower cost to consumers.
- If the ultimate goal is to decrease carbon emissions, mandating vehicle electrification and subsidizing electric vehicles may end up being among the most expensive and inefficient policies to adopt.
EV Jobs Impact
For TriplePundit.com, Greg Heilers writes that even with retraining of workers who build combustion-powered vehicles, this might not help with autoworker displacement. Heilers cites a Congressional Research Service (CRS) report noting that nearly of the 590,000 U.S. workers engaged in motor vehicle parts manufacturing about one-quarter of those workers make parts for internal combustion powertrains, which have more moving parts than electric powertrains. Heilers:
One contributor to the CRS report, vehicle-industry analyst Bill Canis, warned of the effects of switching to an electric powertrain: Fewer parts means less labor. While Canis advocates using the Workforce Innovation and Opportunity Act to retrain workers, there may not be enough work to go around.
See also this report from the United Auto Workers Research Department.
Minerals and Costs
Baker Institute for Public Policy fellow Michelle Michot Foss, Ph.D., testified before a U.S. House committee on the different considerations as the U.S. attempts to electrify the transportation sector. Some highlights:
- Challenges in manufacturing, costs of raw materials, labor, access and costs of recharging, consumer behavior and other factors could mean transitioning the U.S. and global fleets could take 150 years or much longer.
- Batteries and other components of alternative energy schemes “will add to waste volumes much more rapidly than we can build capacity for handling end of life.”
- In terms of costs of materials, no research or outlooks “accommodate the extent of a worldwide policy to vastly accelerate, in short time frames, BEVs, batteries, wind and solar, power grids and any number of other technologies and devices.”
- The cost of electricity needed for electrification of transportation and other sectors is at least as unreliable as other commodities.
Wind and solar resources are often thought of as “free” but, in fact, considerable expense is entailed in capturing and utilizing them. Beyond wind turbines and solar photovoltaics (PV) the cost of backup – usually natural gas generation – and/or alternative storage – usually grid-scale stationary batteries – are rarely, if ever, included in price quotes to customers. Yet all of these costs for system integration, backup, storage and so on are incurred and must be paid with allocation always, eventually to the customer.
In fact, a recent International Energy Agency report, “The Role of Critical Minerals in Clean Energy Transitions,” emphasizes that the mineral requirements of an energy system powered by clean energy technologies are profoundly different from one that runs on natural gas and oil: “A typical electric car requires six times the mineral inputs of a conventional car, and an onshore wind plant requires nine times more mineral resources than a similarly sized gas-fired power plant.”
EVs and the Environment
This E&E News article analyzes how President Biden’s plan to expand EV use could bump into environmental protection priorities, specifically, improving the sustainability of the mineral and metals sector:
Much of that tension has to do with soaring demand worldwide for the rare earth elements used to make low-carbon goods, as well as the short amount of time the United States has set to reduce its carbon footprint. … To cut emissions in half by 2030 from their 2005 level, the United States must transition its top two polluting sectors — power and transportation — toward cleaner low-carbon sources. That will mean greater demand for the minerals and materials that go into solar panels, EVs and battery storage.
This raises issues with mining of materials for batteries and recycling and reusing those materials. The International Energy Agency’s 2020 Global EV Outlook says material demand for batteries in EVs sold in 2019 was estimated at about 19 kilotons (kt) for cobalt, 17 kt for lithium, 22 kt for manganese and 65 kt for nickel. E&E News:
Under a projected scenario that incorporates existing government policies — where demand for EV batteries increases from 170 gigawatt-hours today to 1.5 terawatt-hours by 2030 — demand for cobalt would expand to about 180 kt per year in 2030, lithium to around 185 kt/year, manganese to 177 kt/year and Class I nickel to 925 kt/year. If projected demand is in line with the goals of the Paris climate agreement and includes a target where EVs make up 30% of global sales, material demand would more than double.
Unfortunately, for the U.S. and others wanting to rapidly transition to electrification, critical materials for batteries, solar panels and other needed products come from China, Congo or other places with dubious environmental safety records. Also, a special grade of graphite is needed for EV batteries. China has 65% of that production, with Mozambique in second place, and China processes 100% of the spherical graphite that is used to manufacture the battery, according to Benchmark Mineral Intelligence. Of the 35 rare earth elements used in clean energy technologies, the U.S. is completely dependent on imports for 14 and 17 others are at least 50% imported, reports the U.S. Geological Survey.
Toyotas and Gasoline ... in 2030
Most of Toyota’s vehicles would still run on gasoline a decade from now because the company has concerns over EV price points and consumer confidence, according to a report in the Wall Street Journal.
The company believes hybrid vehicles, powered by gasoline but that also have an electric motor, will be more attractive to consumers. The Journal:
Toyota’s leaders have said customers don’t necessarily want pure electric vehicles and those cars aren’t necessarily better for the environment. They cite the carbon emissions associated with generating electricity and producing battery materials such as cobalt and lithium. Toyota’s chief digital officer, James Kuffner, gave himself as an example of a customer who wouldn’t find an EV convenient, saying his apartment in Tokyo doesn’t have a charging station. “The goal is not electric vehicles, the goal is carbon neutrality, and even if we have the best technology, if it’s not chosen by customers, it will not have the impact of reducing emissions.”
Automakers Explore Options
Vehicle manufacturers have recognized that EVs may not satisfy the full spectrum of consumer mobility needs. A number – including BMW, Toyota, Honda, Hyundai and Jaguar Land Rover – are continuing to research, explore and develop hydrogen-powered fuel cell applications for light-duty vehicles. This also is why there’s greater interest by several manufacturers in pursuing hydrogen fuel cell (as opposed to battery electric) applications for heavy-duty trucks and buses. This from Toyota last week:
Toyota is committed to carbon neutrality; for everybody – not only for selected groups or regions. For the automotive industry, carbon neutrality means achieving zero CO2 emissions in all processes throughout the lifecycle of manufacturing, transporting, operating, fueling or charging, and recycling or disposing of vehicles.
Some people believe that concentrating resources, only one solution will achieve the goal of carbon neutrality faster. However, Toyota believes that investing carefully in multiple technologies will be a quicker and more inclusive way to achieve carbon neutrality around the world.
Conventional Engines Improved and Improving
The fuel economy of new cars, trucks, and SUVs with conventional gasoline-fueled engines has increased 29% since 2004, and their related CO2 emissions have dropped 24% – largely because of increased auto industry investment in lightweight vehicle technologies. Vehicles are lighter now relative to their size thanks to these technologies. Research anticipates the continuation of these gains and by 2025, engine efficiency will improve by an additional 30% and by up to 78% in 2050.
All of this information underscores the need for a balanced approach in the transportation sector and clean energy transition – one that takes a holistic view of benefits and costs to best serve U.S. consumers and taxpayers. Unfortunately, that doesn’t appear to be the Biden administration’s plan.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and six grandchildren.
- Actions to Reduce Emissions Continue to be Led by Natural Gas
- Mr. Putin’s Energy Bet
- The Energy Infrastructure Opportunity
- Summer Driving Season – Questions and Answers
- Co-Fueling Power Plants With Natural Gas Can Rapidly Cut GHG Emissions
Stay informed: Sign-up for our weekly newsletter