Economy, Not Environment, No. 1 Reason Why Nations Push EVs
Many of the world’s most powerful nations promote the manufacture and sale of electric vehicles primarily for reasons of economic development — notably job creation — not because of their potential to improve the environment through decreased air pollution and oil consumption, according to a study.
Researchers at the Indiana University Bloomington School of Public and Environmental Affairs and the University of Kansas analyzed policies related to EVs in California, China, the European Union, France, Germany and the US — political jurisdictions with significant automotive industries and markets for EVs.
Government Promotion of the Electric Car: Risk Management or Industrial Policy?, an article about this research, appears in the current edition of the European Journal of Risk Regulation.
Examining each jurisdiction’s use of risk-management policies (for example, those designed to reduce environmental and security risks due to oil dependence) or industrial policies (such as those designed to boost fortunes of a specific technology or sector and increase market competitiveness) indicated the entire lifecycle of making and using EVs is viewed by policy makers mainly as an economic development opportunity, the study says.
No carbon price has been established in China, where electricity is generated by high-carbon sources and fuel prices are relatively low; thus, its EV policies are geared toward establishing a competitive position in an emerging global EV industry, the study says.
As with China, the US has no carbon price and relatively low fuel prices, so policies lean toward boosting market competitiveness, and massive economic-recovery investments have been made across the EV supply chain. But rapid growth in EV sales in the US will not necessarily bring environmental progress, which is partly why EV policy in the US is not seen as risk-management policy, the study says.
The least committed to EVs of the jurisdictions studied, Germany is nonetheless engaging in an industrial policy of hedging to protect the market share and viability of its premium car industry should electric propulsion gain a foothold in the worldwide premium car market, according to the study.
The only entity studied that acts as a supranational regulatory state, the EU is also the only one where pure risk management related to EVs occurs. This may be because it lacks direct authority over any one country or because of potential political pressure from some member states to introduce policies that will benefit some states at the expense of others, the study says.
California is the largest market for motor vehicles in North America, with 40 million residents and limited mass transit. In addition, its considerable pollution problems, created largely from the automobiles in the 1960s and ’70s and particularly acute relative to other US locations, make it an ideal market for EVs, according to the study. Thus, it is motivated to promote EVs by a substantial blend of industrial policy and risk management.
France takes the same approach as California, according to the study. Additionally, France already has a large amount of “green” energy from domestic nuclear production — about 70 percent of its domestic production share. Also, France and California are both home to significant players in the EV industry, including investors, who will benefit from a vibrant global EV industry. Thus, France and California see EVs as a technology that can foster economic development and environmental progress.
Policies that improve the energy efficiency of urban transportation systems could help save as much as $70 trillion in spending on vehicles, fuel and transportation infrastructure between now and 2050, according to a report from the International Energy Agency published this week.
Photo Credit: Oregon Department of Transportation via Flickr
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