Minimal Environmental Benefits in the Infrastructure Plan’s Spending Spree on Electric Vehicles

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As discussed in a previous post, the $174 billion for electric vehicles (EVs) in the Biden administration’s recently proposed $2.3 trillion dollar infrastructure package is unlikely to make them more popular than gasoline-powered vehicles. But even if it did, there are reasons to doubt whether the environmental gains justify the costs.

As discussed in a November 2020 study, the relative environmental merits of EVs versus gasoline-powered internal combustion engine vehicles are not as black and white as many claim. To be sure, EVs have no tailpipe and no tailpipe emissions of air pollutants and carbon dioxide. However, EVs require much more mined materials to make—including cobalt, lithium, rare earths, graphite, and nickel—than comparable conventional vehicles. Most of these materials are mined and processed in nations like China and Congo and Chile with relatively lax environmental safeguards.

Another strike against EVs is that they require more energy to manufacture than gasoline-powered vehicles. From a climate change standpoint, this means that EVs create a relative carbon debt before they are driven their first mile. The debt eventually gets repaid by using (presumably) lower-carbon electricity rather than gasoline. By one estimate, an EV pulls even with a comparable gasoline powered car on carbon emissions at about 20,000 miles and saves on emissions thereafter.

However, these calculations depend on assumptions about the source of electricity used to charge EVs. EVs only look good compared to gasoline vehicles if the 60 percent of electricity generated from coal and natural gas were to be substantially replaced by wind and other renewables with much lower carbon emissions. To that end, the infrastructure plan promises at least another $100 billion for “clean electricity,” including generation, transmission, and storage.

However, as with comparisons of EVs versus gasoline vehicles, the environmental benefits from renewables substantially replacing conventional electricity are not as clear as advertised. For example, tens of thousands of square miles, much of it pristine, would have to be covered with new wind turbines. In addition, upwards of 200,000 miles of new high-voltage transmission lines would need to be cut through the nation’s terrain. There are also questions regarding how much baseload power can be supplanted by intermittent renewables without creating reliability issues and likely necessitating a multi-trillion dollar investment in stationary battery storage.

Given the astronomical costs of replacing the majority of gasoline vehicles with EVs powered by renewable electricity, and the rather modest environmental gains in doing so, there are serious doubts whether it is all worth it. One study estimates the costs per ton of carbon equivalent avoided at $550 to $640, which would make EV subsidies considerably less cost effective than many other policy choices, including ethanol subsidies (up to $310 per ton), reforestation (up to $10 per ton), biodiesel subsidies (up to $250 per ton), weatherization assistance (up to $350 per ton), or even a gasoline tax hike (up to $47 per ton).

All things considered, the measures in the infrastructure plan for EVs may be among the administration’s least cost-effective climate policy tools, though they do have a lot of competition.