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What Are the Implications of Electric Vehicles for the Environment and Business?

Last fall, Germany’s upper legislative chamber proposed to phase-out the gasoline-powered car by 2030. Is that possible and if so, what would the implications be for businesses and the environment?

The answers are that it depends on whom is doing the analysis and the variables that are being used. But businesses that use all-electric vehicles — or even plug-ins — may have to pay more up front for their cars but they will send positive vibes into the markets where they do business. And if government policy subsidizes the cost of making this transition, it could pay off.

What, though, are the variables to be used? The most conspicuous one is just what fuel is being used to create the electricity. Some argue that if the transition to electric vehicles is to pay off, the underlying fuel source needs to be derived from renewables. Others say that might be helpful but that it isn’t necessary, at least initially.

If you subscribe the former, then Germany’s latest moves mean that the country will need to rely more on coal and less on renewables. That’s because Chancellor Angela Merkel, had announced she would slow the expansion in new wind farms as too much intermittent renewable power was making the grid unstable, according to a Newsweek piece.

At the same time, Germany still has plans to retire its nuclear fleet — a response to the 2011 nuclear accident in Japan. In the short run, it will import more coal to take its place, although it does expect green energy to eventually become its dominant source of power.

“It’s certainly true that replacing internal combustion vehicles with electric ones would overnight lead to a huge reduction in Germany’s energy needs,” says the Newsweek story. “This is because electric cars are far more efficient.

“When petrol is burned, just 30 percent or less of the energy released is actually used to move the car forward—the rest goes into exhaust heat, water pumps and other inefficiencies,” it adds. “Electric cars do lose some energy through recharging their batteries, but overall at least 75 percent goes into actual movement.

“Each year, German vehicles burn around 572 terawatt-hour (TWh)’s worth of liquid fuels. Based on the above efficiency savings, a fully electrified road transport sector would use around 229 TWh. So Germany would use less energy overall (as petrol is a source of energy) but it would need an astonishing amount of new renewable or nuclear generation,” the story concludes.

That’s going to be hard to do if the government caps new solar and wind plants, it says, emphasizing that the same government ought to “delay” the closing of its nuclear facilities.

But technology is advancing.

As electric cars continue to improve, so do the efficiencies — or the ability to input a unit of energy and to realize more output. In fact, traditional cars running on an internal combustion engine have a 30% efficiency rate. The rest is lost to heat, sound and energy. Just refining a gallon of gasoline takes 7 kilowatts-hours per gallon, says Thor Hinckley, an electric vehicle and renewable energy expert with CLEAResult, a consulting specializing in energy efficiency.

But vehicles that run on electricity have an 80% efficiency rate, or they convert 80% of those Btus to energy, he explains. The efficiencies are greater because of the superiority of the electric motor over that of the internal combustion engine — not because one unit of energy is better than another.   

“With an efficiency difference that great, anything will be cleaner than burning gasoline,” says Hinckley. Obviously, burning a Btu of wind, solar or hydro is cleaner than burning the same unit of coal. But even if coal is used to generate the electricity to drive the car, he says that emissions are 20-30% less than a comparable vehicle running on petroleum. 

Meantime, the batteries that are so integral to the electric vehicle are improving. Today’s lithium-ion batteries are smaller and more energy dense, and be traced back to the development of laptop computing. Recharging can be done from home and the batteries have a relatively long life, says Hinckley, enabling many of today’s electric vehicles to travel at least 90 miles per charge.

Moreover, Bloomberg New Energy Finance is predicting that electric cars will be just as cost effective as traditional vehicles by 2022. The firm’s analysis assumes the price per barrel of oil is between $50-$70 a barrel. By 2040, it expects electric vehicles to make up 35% of the transportation market.

According to the Energy Information Administration, electric vehicles are now 1.6% of the overall car market. But that could increase in 2025 to 6%.

“If we think forward, the discussion moves to the price per mile,” says Hinckley. “The studies I’ve seen show that the price per mile is 30-50% less for an electric vehicle. This assumes the cars cost roughly the same amount of money.”

Electric cars would thus give business a leg up, eventually.

Photo Credit: City of Boulder, Colorado

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