Researchers suggest subsidies and policies targeting plug-ins with small battery packs would produce more benefits at lower cost
25 July 2012
Federal subsidies and policies to encourage plug-in vehicle adoption would produce more benefits at lower cost by targeting the purchase of vehicles with small battery packs, according to Jeremy J. Michalek, an associate professor at Carnegie Mellon University and his colleagues Mikhail Chester, an assistant professor at Arizona State University; and Constantine Samaras, an engineer at the RAND Corporation.
Their paper, to be published in the summer issue of the journal Issues in Science and Technology, is based on their earlier study that found that 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. (Earlier post.)
The electrification of passenger vehicles has the potential to address three of the most critical challenges of our time: Plug-in vehicles may produce fewer greenhouse gas emissions when powered by electricity instead of gasoline, depending on the electricity source; reduce and displace tailpipe emissions, which affect people and the environment; and reduce gasoline consumption, helping to diminish dependence on imported oil and diversify transportation energy sources.
...existing and proposed subsidies provide larger payments for vehicles with larger battery packs. Larger battery packs enable vehicles to displace more gasoline, so at first glance one might think that subsidizing larger battery packs is better for the environment and for oil security. But large battery packs are also expensive; the added weight reduces efficiency; they are underused when the battery capacity is larger than needed for a typical trip; they have greater charging infrastructure requirements; and they produce more emissions during manufacturing. Whether larger battery packs offer more benefits on balance depends on their net impacts from cradle to grave.—Michalek et al. (2012)
In their earlier study, published in the Proceedings of the National Academy of Sciences (PNAS), Michalek and his colleagues quantified lifetime externality costs, including greenhouse gases, human health effects, agricultural losses, and infrastructure degradation, caused by air emissions from conventional and electrified vehicles.
They found thousands of dollars of damages per vehicle (gasoline or electric) paid by the overall population rather than only by the emitters. They also found that plug-in vehicles could only modestly reduce those costs—an amount much lower than the $7,500 federal tax credit and small compared to ownership costs. This, they explained, is because the damages caused over the lifecycle of a vehicle are caused not only by gasoline consumption, but also by emissions from battery and electricity production, which are increased with plug-in vehicles.
Current federal policy is weighted toward plug-in with larger battery packs. The Chevrolet Volt with a 16 kWh pack and ~35 mile electric range receives a $7,500 credit. The Toyota Prius Plug-in Hybrid with a 4.4 kWh pack and ~11 miles electric range receives $2,500.
At first glance, tripling the subsidy may seem justified because the electric range is tripled. But tripling the range does not mean tripling the amount of gasoline displaced or emissions reduced: Increasing battery size has diminishing returns. In fact, when we consider US driving patterns (many short trips, where the larger battery is only dead weight), US average emissions from battery and electricity production, and the other factors described above, the small 4.4-kWh battery actually has more net benefits than the larger 16-kWh battery.
Even in the most optimistic scenarios where vehicles are charged with zero-emission electricity, the larger battery packs offer only comparable or slightly greater net benefits, not double or triple. Public funds are limited, and because today’s policy consumes more resources when subsidizing large-battery vehicles, fewer of them can be supported under a fixed budget. Allocating a fixed budget to a flat $2,500 subsidy for all plug-in vehicles would more than triple the potential air-emissions and oil-displacement benefits of the subsidized vehicles as compared to subsidizing one-third as many large-battery vehicles at $7,500 each.—Michalek et al.
Advances in batteries may allow future large battery packs might be able to offer the largest benefits at the lowest costs, the note, adding that policies supporting R&D for battery improvements and large emissions reductions from electricity generation can help move the country in this direction. This may take decades to realize, however, and is uncertain, they argue.
In the near term, they suggest, HEVs and PHEVs with small battery packs are more robust, offering more air-emission and oil-displacement benefits per dollar spent.
We should not forget that the most efficient policies would target externalities directly, through mechanisms such as an economy-wide carbon price, cap-and-trade policies, and gasoline taxes. Such policies are generally understood to be far more efficient than technology-specific subsidies, and we should consider subsidies as an inferior substitute given the political difficulties of implementing efficient market-based policies that address the problem directly. In the absence of such policies, federal subsidies and policies designed to encourage electrified vehicle adoption would produce more benefit at lower cost for the foreseeable future by targeting the purchase of vehicles with small battery packs.—Michalek et al.
Issues in Science & Technology is a forum for discussion of public policy related to science, engineering, and medicine. Issues is a publication of the National Academy of Sciences, the National Academy of Engineering, the Institute of Medicine and the University of Texas at Dallas.
Jeremy J. Michalek, Mikhail Chester, Constantine Samaras (2012) Getting the Most Out of Electric Vehicle Subsidies. Issues in Science and Technology
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
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