CMU study finds that HEVs and PHEVs with small battery packs offer more emissions and oil displacement benefits per dollar spent than large pack PHEVs and BEVs; policy implications
27 September 2011
|Value of life-cycle emissions externality damages and oil premium costs from vehicles in 2010 $. Michalek et al. Click to enlarge.|
Strategies to promote adoption of hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) with small battery packs offer more social benefits (i.e., air emissions and oil displacement benefits) in the near term per dollar spent than PHEVs and battery-electric vehicles (BEVs) with large battery packs providing longer electric range, according to a new study by Carnegie Mellon University’s Jeremy J. Michalek and colleagues.
A paper presenting the results of the group’s latest year-long study on the lifecycle air emissions and oil displacement benefits of plug-in vehicles was published this week in the Proceedings of the National Academy of Sciences.
In this study we assess, under a wide range of scenarios, how much externality damage reduction plug-in vehicles can offer in the US and at what cost. To answer this question, we gathered data on (i) the quantity and location of emissions released from tailpipes and from upstream processes to produce and operate vehicles, (ii) the externality costs of damages caused by the release of these emissions, and (iii) estimates of externalities and other costs to the US associated with oil consumption. We compare externality and oil consumption costs to the costs of owning and operating these vehicles and to subsidies designed to encourage their adoption.—Michalek et al.
|Net present value of lifetime private ownership cost, emissions externality damages, and oil premium costs in 2010 $. Michalek et al. Click to enlarge.|
Michalek et al. estimated lifecycle emissions damages for comparable new mid-size vehicles, including a conventional vehicle (CV), an HEV, PHEVs with battery packs sized for storing 20 km/12 miles (PHEV20) or 60 km/37 miles (PHEV60) of grid electricity (with the remainder powered by gasoline), and a battery electric vehicle (BEV) with a 240-km/149-mile pack (and no gasoline engine).
They estimate location-specific externality damages for releases of CO; NOx; particulate matter (PM); SO2; and volatile organic compounds (VOCs) using data from a 2010 National Research Council (NRC) study. They also examined a range of estimates for damages from GHG emissions. They then combined these externality values with data on US driving patterns from the 2009 National Household Travel Survey (NHTS) and data on manufacturing, fuel cycle, and operation emissions from Argonne National Laboratory (ANL) to estimate US lifecycle damages for each vehicle.
In our base case, we assume average US values for emissions and damage valuation of electricity generation, oil refining, vehicle and battery production, driving location, and upstream supply chain emissions, we use a medium global valuation for GHG emissions, and we assume the battery will last the life of the vehicle. Although gasoline production and combustion produce significant emissions, battery and electricity production emissions are also substantial. We find that, in the base case, plug-in vehicles (PHEVs and BEVs) may produce more damage on average than today’s HEVs. This fact is due in large part to SO2 and GHG emissions from coal-fired power plants.
...Although the costs of damages from vehicle-associated emissions are significant, the damage reductions that can be gained through electrification are small compared to the total cost of owning and operating a vehicle.—Michalek et al.
Under an optimistic scenario, plug-in vehicles with large battery packs could offer lower damage at lower lifetime cost, the researchers found. Conversely, in a pessimistic scenario using low gasoline prices, shorter battery life, coal-powered charging, and ANL 2015 cost estimates, plug-in vehicles could produce more damages at substantially higher cost.
Although large battery packs offer the largest emissions and oil consumption reductions at lowest cost in the most optimistic scenarios, they result in high costs and increased damages if not all of the right factors fall into place, including high gasoline prices and achievement of low battery costs, long battery life, and low electricity production emissions. In contrast, HEVs and PHEVs with small packs are robust, providing emissions reductions and oil displacement benefits at low cost with less infrastructure investment and lower uncertainty.
...In the future, if there are sufficient decreases in battery costs and increases in gasoline prices, the market may drive adoption of vehicles with larger battery packs. Until then, US policy would produce more benefit per dollar spent by supporting research on battery cost reduction, enforcing air emission reductions in power generation and transportation, and encouraging adoption of HEVs and small-capacity PHEVs (and potentially advanced conventional vehicles, not studied here).—Michalek et al.
US policy has been pushing the auto industry to investigate alternatives to fossil fuels; the American Recovery and Reinvestment Act of 2009 provides up to $7,500 in tax credits for up to 200,000 plug-in vehicles. These subsidies of up to $7,500 for vehicles with large battery packs are far larger than the optimistic estimates of externality benefits and represent GHG abatement costs well over $100∕t in the base case, according to the authors.
Subsidies would produce greater reductions of emissions damages and oil premium costs per tax dollar spent if targeted to HEVs and PHEVs with small battery packs. For example, in our base case, the current subsidy of up to $7,500 for up to 200,000 plug-in vehicles, implying a maximum total subsidy of $1.5 billion, could pay the purchase premium for 390,000 HEVs or 290,000 PHEV20s, reducing emissions externality damages and oil premium costs by $350 million or $330 million, respectively, compared to conventional vehicles.
In contrast, $1.5 billion could pay the purchase premium for only 130,000 PHEV60s or 51,000 BEV240s, reducing damages and premium costs by $86 million or $7 million, respectively (lifetime fuel costs also vary). As battery technology improves, gasoline prices rise, the electricity grid improves, and constraints on GHG emissions become stringent, BEVs and PHEVs with large battery packs may become more cost effective at reducing damages. But today’s HEVs and PHEVs with small battery packs offer more emissions reduction and petroleum displacement per dollar spent with less of a need for new infrastructure and with lower uncertainty about future costs and life-cycle implications.—Michalek et al.
Michalek recently received a $400,000 grant from the National Science Foundation (NSF) to analyze how public policy could help determine the types of vehicles built in coming years and how consumers might respond to these vehicles.
Michalek, J.J., M. Chester, P. Jaramillo, C. Samaras, C.-S. N. Shiau, and L. Lave (2011) “Valuation of life cycle air emissions and oil displacement benefits of plug-in vehicles,” Proceedings of the National Academy of Sciences of the United States of America, DOI: 10.1073/pnas.1104473108
CMU policy brief: Air Emissions and Oil Displacement Benefits from Plug-in Vehicles
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