[Scott] In this episode, we'll conclude our discussion of the benefits and challenges of electric cars.

- Electric vehicles are gonna be a really important part of the energy transition, but the way that we go about doing this matters.

Subsidies have unintended consequences that are completely predictable.

You know, what happens in the U.S., it matters, but we're a small share and shrinking share of global emissions.

- I think an electric future is one of the best options out there right now, but there's a lot that we could do differently.

Incentives should not be tied to range.

That is gonna be really challenging in our transition to electrification.

[Scott] Next on "Energy Switch," electric cars, pros and cons, part two.

[Narrator] Funding for "Energy Switch" was provided in part by the University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

And by EarthX, an international nonprofit working towards a more sustainable future.

See more at earthx.org.

[upbeat music] - I'm Scott Tinker, and I'm an energy scientist.

I work in the field, lead research, speak around the world, write articles, and make films about energy.

This show brings together leading experts on vital topics in energy and climate.

They may have different perspectives, but my goal is to learn, and illuminate, and bring diverging views together towards solutions.

Welcome to the "Energy Switch."

In part one of this episode, we talked about how electric cars have become popular, but with some issues regarding their subsidies.

The metals and minerals used to make their batteries and the electricity that runs them, which still comes largely from CO2-emitting sources.

In this episode, we'll talk about electric car mandates, upgrades to the grid required to charge more of them, and other technologies that could reduce emissions.

Again with, David Rapson, he's an energy economist for the Federal Reserve Bank of Dallas and the Chancellor's Leadership Professor of Economics at the University of California, Davis.

Beia Spiller is a fellow at Resources for the Future where she directs their transportation program.

Before that, she was lead senior economist at the Environmental Defense Fund.

On this episode of "Energy Switch," electric cars, pros and cons, part two.

- So let's talk about mandates a little bit.

Where are these mandates coming from in the U.S.?

- So in the U.S., we have state level mandates from California and New York that are requiring no new internal combustion engine vehicle sales after 2035.

At the federal level, there's some fleet mandates.

So the federal fleets vehicles need to go electric.

And then there's cities who are starting to mandate some of their fleets more on the medium, heavy duty vehicle side.

School buses, transit buses.

USPS, for example, is going all electric.

So there's a lot of movement at the big fleet level to go electric.

- Interesting.

And even California, you can't sell them, but you could still drive them.

[Beia] That's right.

- Or buy them in Nevada I guess.

- Yes, absolutely.

- Listen, mandates are not the way to go.

We know a lot about how to affect change.

And I think let's just look at Norway because I think this is a really nice model to consider here.

So, in Norway, they're not subsidizing, they're not banning.

What they're doing is they're taxing gasoline cars and they're exempting EVs from that.

And they've got over 90% market share of EVs in their new vehicle sales there.

And the subsidies are more along the lines of allowing free driving and HOV lanes and, you know, things like that.

- Perks.

- Yeah, they're perks.

The main financial incentive is the tax on gasoline cars, which by the way, this is exactly what we want.

The whole purpose of this is to reduce pollution and you do that by reducing the ownership and driving of gasoline cars.

Taxing them seems like a much better idea than subsidizing the alternative.

But you mentioned two important pressure relief valves.

And to the extent there are mandates that are being considered and any policy makers who are considering mandates, I'm looking at the camera, you know, we need pressure relief valves.

So, you know, maybe a high fee for selling a gasoline car, but not banning it outright, allowing imports from adjacent states, or, you know, allowing old gasoline cars to stay on the road.

Because if it's the case that the use case for gasoline is still strong in many cases, if you ban that, there's gonna be really a lot of dissatisfaction.

- And what I'm really concerned about is the distributional effects of this, and particularly, where will these old gasoline vehicles be driven?

Are we gonna see much more concentration of these gasoline vehicles in lower income, disadvantaged communities and continue to perpetuate the harm that transportation pollution has on these communities?

So I think that this is a challenge that we need to seriously think about and put our heads together to find a solution for.

- Absolutely, I mean, maybe you go to cities where EVs make a lot of sense and start to try to implement some of these programs with the benefits falling to those who can least afford it.

Because you go up, you know, from $2.50 a gallon to $3 a gallon for gasoline and it hurts people who can't afford that.

- Absolutely.

These distributional issues, they're very important.

I think it's something that we always struggle with, whether it's in the context of climate policy or electric vehicles or just in general when thinking about the well-being of society, but I think we need to figure out how to do a better job.

And I don't think that that should stop us from doing what's right for the environment.

- Could that money effort be spent on other technologies?

Could it be done differently for a similar effect on the emissions?

- So I think one type of technology, which I really would've liked to see advance more, is just the improvement of the least efficient vehicles.

So taking a 10-mile-per-gallon vehicle, replacing with a 15-mile-per-gallon vehicle will get you more gasoline savings than replacing a 25-mile- per-gallon vehicle with a 100-mile-per-gallon vehicle.

- Yeah, yeah.

- The efficiency standards set by the EPA, they have differing standards for different vehicles.

So they have much more stringent standards for the small cars that are much more efficient.

It should be the opposite, and yet, what's happening within the manufacturers, because they're going electric, they're not taking those efforts to actually improve the bottom.

They're relying upon EVs to get to that efficiency standard average.

- Same money and effort, different technologies.

- Hydrogen is one area where we need to continue to innovate.

And I think the other main area is in carbon capture.

I mean, how great would it be if we could suck carbon outta the atmosphere?

Currently, there are pilots that are doing this at a few hundred dollars per, you know, ton of CO2.

And a lot of the policies we're implementing, you know, that are indirect costs a lot more than that.

So, you know, if we can scale carbon capture, that just frees us from so many of the challenges, not least of which is the collective action problem of getting the rest of the world to do this.

But, yeah, we need to continue to innovate and we can't allow the electrification aspirations to reduce the amount of innovation that's happening elsewhere because I think there are risks that are undervalued here and we're gonna need these other technologies.

- Yeah.

And I think that we need to take a multi-prong approach.

There isn't just one silver bullet that's going to fix everything.

We need to make sure that public transit is accessible and fast for disadvantaged communities.

We need to be promoting the use of electric bikes and just bicycling, walking, making cities more walkable.

And that will have, you know, distributional benefits as well as reduced emissions.

- Right, right.

Dave, you've mentioned a couple times the cheap gasoline tank.

I mean, does the hybrid make sense?

Some of both on the same car?

- Oh, absolutely.

I think that the hybrid is a great option in particular where there's cold weather and where the grid is dirty, both from a performance perspective and also from an emissions perspective.

I think hybrids can play a real role.

- Well I think what's promising about plug-in hybrids is the ability to be able to switch back and forth.

Couldn't we envision an electric vehicle that has more range, but then has a very small gasoline tank?

So that range anxiety is gone.

You run out of electricity.

You can just, you know, use that extra gallon of gasoline.

Rather, the plug-in hybrids right now are set up that it's mostly gasoline and they're mainly driven with gasoline.

And I think that's the challenge.

And then you have this 25 mile range.

So will we see more innovation about what types of plug-in hybrids are being developed?

I really hope so.

- And you can shift some of the weight, too.

I mean, a little less weight in the battery, gasoline.

So that brings this kind of to this range discussion, right?

Most people don't really need as much range as they think they need.

So why are we so focused on that?

- I think early on, there was some survey evidence that came out about range anxiety and then that became adopted as the narrative.

But, yeah, I mean, it has led to subsidy programs being linked to battery size, and, you know, you're only eligible for a subsidy if your EV car's battery is big enough.

I think that's unfortunate because one of the things we wanna be promoting is, you know, smaller, less expensive EVs for people who don't need big, long range trips.

- I fully agree with you on that point and I think there needs to be more variety.

I'd like to go and be able to purchase a slightly cheaper car that has a lower range.

Give me those options.

But if those subsidies are forcing manufacturers to make the batteries longer and longer range, I'm not gonna have that opportunity for price savings.

- That makes sense.

- And, also, the charging station investments.

You know, if we have charging stations in many places, just as many as we have gasoline fueling stations, that range anxiety should go down.

- Yeah.

How do we start to see this network grow?

Should the people benefiting from EVs pay for it or should this be a federally paid for thing?

- Well, right now, there's a huge amount of federal funds to expand the charging network.

There's $6.5 billion between the Inflation Reduction Act and the infrastructure bill.

- So that's a everybody pays model?

Taxes.

- Yeah.

I mean, so it comes out of taxes.

And obviously, you know, back to your point about whether or not taxes are regressive, well, we can have higher taxes on the wealthy to be able to subsidize this.

It doesn't have to be a flat tax across everybody.

- I think we're getting way ahead of ourselves on the infrastructure piece.

I think we should not be subsidizing massive rollout of EV charging stations, and it's for two reasons.

One, I think the market is gonna be really good at providing those when they're needed.

And right now, if we're building out a lot of charging stations where there aren't a lot of EVs, that just doesn't make sense.

- You're such an economist.

[group laughing] - Guilty as charged.

- Market.

- No, I disagree with that statement.

Right now, we're facing a chicken and egg problem, right?

Which comes first, the vehicle or the charging station?

And so if you don't have charging stations in many locations where people don't have a garage, think about New York City.

The majority of us who have cars do not have anywhere to charge it.

- You're right.

Why wouldn't a company just build out a monopoly charging station network in Manhattan?

They could make a lot of money if you're right.

You know, there's no reason the government needs to be involved in that.

- Well, I mean, one of the concerns really has to do with interoperability, right?

So for example, the Tesla supercharging stations that were only available to Tesla drivers.

- Except for now.

- Except for now, right?

They opened it up to everybody, which I think is huge.

That's so beneficial because could you imagine like going to a gas station and you, oh, you have the square plug instead of the rectangular plug?

- But it's a fascinating dialogue we probably shouldn't dive too deeply into, but Elon took a big risk, spent a lot of money, built a system.

Now he's being essentially told after a trip to DC, you gotta open it up to everybody.

- Well, he should!

There's no reason-- - It's a company, it's a private sector.

- Yes, but there is no reason, there's no way we would allow gasoline stations to have plugs that are specific to a certain type of vehicle, and yet we're allowing this monopoly to happen.

- But those weren't by the government.

- Well.

- When we switched from the horse to the car, there were no gasoline stations.

- Right.

- It took about 15 years 'cause the product was so much better.

Is it so much better?

Is the EV so much better than a gasoline car?

- So people are advocating for complete electrification have in the back of their mind this S-curve of adoption where, you know, right now you've got these early adopters and we're at this inflection point where maybe it's gonna hit the mass market, and in a few years or whenever, it's gonna be up at 100%.

But that model works when the product dominates.

So we saw that in flat screen televisions, we saw that in smartphones.

Do EVs dominate gasoline cars?

I don't think so.

They're more expensive.

You've got, I mean, Beia has mentioned a whole bunch of different obstacles, which I agree with.

And so I think we should be open to the idea that we're gonna be encountering, we're gonna be learning about the costs and maybe we get to 50% or 70%, or, you know, who knows, but there's a good chance we're not gonna get to 100%.

- I actually do believe that EVs are a better car.

They're more agile, they're zippier, they're more fun to drive, they don't make any noise, and they don't have those terrible fumes.

Now, the question is, is there currently on the market enough vehicles that have the characteristics that we want?

I would say no.

But that will come.

And so if we compare two identical vehicles, one which is electric and one that is not, the electric one dominates.

Now, is it more expensive?

Yes, it's more expensive.

But that doesn't mean that it's not a better product.

- Well that means it doesn't dominate.

- How do we say it's a better product?

- Dominate means it's better in every dimension.

And EVs are not.

- Well, I disagree.

- Right now, residential, you know, commercial, industrial are the big demands on our grid.

If we add a transportation component to that, another big wedge to that, how do we do that?

How do we integrate that into the grid, create another big source of electricity needed for this?

- There's two different things that we have to talk about here.

One is the distribution grid, the wires, the poles, the transformers, all of that equipment that brings the electricity to your home.

That's one area that we're gonna have to be doing massive investments in.

Even a few electric vehicles charging at the same time within one specific location might require upgrades to that area.

The second area is, of course, on the generation side of things.

And then the question there is really, how do we bring more renewables onto the grid to allow for that charging to be clean?

Now the Inflation Reduction Act has many production and investment tax credits targeted towards wind and solar.

So we will expect that generation will increase just naturally because of all these in investments in renewables there.

- Well, I think the distinction that really needs to be understood here is between intermittent sources of supply, like wind and solar that we can't control when they're producing, and dispatchable sources of supply, which we can turn up when we need more energy and turn down when we need less.

And so right now, you know, frankly, the best part of decarbonizing the grid so far has been switching from coal and natural gas, but we're trying to integrate more intermittent renewables.

And as we do that, I think the value of having more dispatchable load is gonna be very high.

And there, we're basically talking natural gas, we're talking maybe nuclear, and we're talking batteries.

The selection is not huge for what can meet that need.

- And natural gas would need carbon capture.

- Well, to be zero carbon, it would.

- We also have geothermal, right?

[Scott] Yes, absolutely.

- Geothermal and hydro, although hydro has its issues with methane.

- So you've mentioned a couple times, Beia, that when you charge matters.

Is that a problem, opportunity?

How do you see that?

- One of the great things about electric vehicles is that the charging needs is really flexible.

Most vehicles are not utilized for the large majority of the day.

So you could imagine having the vehicle plugged in, but not charging, and then turning on and off as grid conditions change.

Then this will require coordination 'cause one of the things that happened is some of these vehicles, they came with a default setting to only turn on the charging at midnight.

So if you plugged it in at 6:00 PM, it would wait until midnight to charge, which on its face was an idea that let's charge when demand is low, but then all of a sudden, you have this pile up, this new peak at midnight.

And I think that's really problematic.

So it does require coordination in terms of, can we stagger when these vehicles are being turned on?

And there's a role for automated software to help us do that, but also for third party aggregators to help coordinate across different vehicle owners.

- Right.

Let's kind of get some closing thoughts here.

Should we mandate EVs, subsidize them to encourage their adoption, or if we were gonna do it differently, how would we do that.

Closing thoughts as you think about wrapping that up, Beia.

- I would say that I'm very excited about the future.

I think an electric future is one of the best options out there right now for reducing tailpipe emissions, for reducing-- improving air quality, particularly in disadvantaged communities.

But there's a lot that we could do differently, right?

For example, let's get scrappage programs.

Some of these scrappage programs have been shown to be somewhat ineffective.

Let's structure them better.

And so as we bring more EVs in, let's get those dirtiest gasoline vehicles off the road.

And I agree with Dave in that we need to remove any sort of incentive for manufacturers to increase that battery size.

Incentive should not be tied to range of the battery.

That is gonna be really challenging in our transition to electrification.

- So quit making it bigger when what we need is really smaller, lighter.

- I think that's right.

[Scott] Shorter.

- Or at least variety.

Allow people to choose the battery size that they want.

Don't force everybody to have a 500 mile range.

- Yeah, yeah, interesting.

Same question.

- Yeah, electric vehicles are gonna be a really important part of the energy transition.

There's no question about that.

They are currently the most promising technology, but the way that we go about doing this matters and it doesn't work too well to force Americans to adopt something they don't want.

Subsidies have unintended consequences that are completely predictable, right?

If all we're doing is subsidizing, we're not creating the incentive to burn less gasoline, which is the main point of it.

And finally, you know, what happens in the U.S., it matters, but we're a small share and shrinking share of global emissions.

And we could decarbonize entirely and we wouldn't have even, you know, started to fix the problem globally of temperatures rising because the developing world is now burning a lot of energy there.

We're bringing people out of poverty, which is great, and they're demanding energy services.

We need to figure out how to get them clean energy.

And I would just ask the question, do we think that this electrification vision that we're pursuing here in, you know, the wealthiest country in the world is gonna be suitable for African nations that, you know, are doubling in size?

I think the answer there is pretty clearly no with current technologies.

We need to really take that seriously.

- That's interesting.

So I'm old so I can't put a goal out there too far, but let's say 2035, I hope I'm still alive then, what do you see?

Percentage of EVs, or hybrids even, in the U.S. in 2035 and percentage globally?

- Are you asking market share or are you asking fleet?

- Fleet.

Not aspirational.

What do you actually think it'll be?

- I think it's still probably gonna be pretty small.

- Do you?

- Yeah.

Because even if we get all new vehicle sales to be electric, that doesn't mean anything for the existing fleet that we have.

- They last 20 years.

- Absolutely.

So we have to be thinking forward 40 years ahead when we do actually transition all those gasoline vehicles off the road and create the new used vehicle market that's all electric.

- Same?

- Yeah, I would really be going out on a limb to put a number out there, but I will.

I mean, if we get to 20% of the global fleet by then, it would be just an absolute miracle.

I mean, we're talking about, you know, tens, you know, in the teens or 10% of the global fleet being electric by 2035.

And, yeah, I mean, hopefully that's gonna have a lot of the positive benefits that particularly Beia's been outlining in terms of innovation and economies of scale.

And even more importantly, I think we're gonna learn about some of the, you know, risks that currently we just need to see what happens before we know the extent of them and then we have to be able to pivot, you know, if necessary.

- And led by China, the EU and the U.S., that's where the big growth is.

And good.

You know, we are the biggest emitters.

So, let's do that.

Any thoughts that we haven't touched on, Beia, that you'd like to share?

Any final things?

Any topic?

- Yeah, I guess one of the things that I wanted to mention is the ability for EVs to be a really big resource just because of the batteries, right?

Imagine if we were able to coordinate all of the electric vehicles that are sitting in the garage that are plugged in and we can use them for voltage regulation, for grid reliability, for renewables integration.

I mean, basically, what we're talking about is a massive distributed battery stock.

And if we can really leverage that, I think we could get a lot out of having these vehicles in the garages.

That does require significant changes in terms of how the vehicles are allowed to inject back into the grid, this is vehicle to grid technology, and a lot of warranties are actually voided if you inject... - If you allow that.

- Yeah.

If you do what's called V to G or vehicle to grid, your battery warranty is voided.

And so that is changing now.

But understanding how we can leverage these vehicles to really be able to have this massive distributed battery that can help us get to a renewable future I think is gonna be a key factor in making the transition to electric much more efficient.

- Interesting.

Any final thoughts?

Something we missed or?

- I wanna zoom out a little bit.

One of the trends in recent years is the onshoring and reshoring of economic activity.

Beia mentioned it in the context of needing domestic battery production, but we're seeing this in many areas of the economy.

And I just wanna flag this as something that I think is gonna be increasingly important over the next, you know, decade or even longer until this trend reverses.

We have benefited for the last 50 to 70 years of integrating women into the workforce, the Chinese labor force in the workforce, expanding trade flows so that we're sourcing our materials from the cheapest places.

We're backpedaling on that now and it's going to affect the EV transition, it's gonna affect the energy transition.

I think we just need to keep an eye on that.

- And when I travel around the world, which is often, I often hear, man, if the U.S. and China can't get along, we're all stuffed, you know?

And that's such a big piece of things.

Well, look, Scott Tinker, "Energy Switch."

Thank you both.

This was terrific.

- Thank you for having me.

- I really appreciate your candor, your dialogue.

- Thanks, Scott.

- And your knowledge.

So thanks for sharing it with us.

Some U.S. states now have or are considering mandates that all new cars must be electric by a certain date, but our guests felt that mandates could have unintended consequences.

Instead, they suggested other options to reduce CO2 emissions, such as higher fuel efficiency standards and/or taxing gasoline cars to reduce their use, incentives for public transport, plug-in hybrids, fuel cells, and CNG.

They'd like to see more affordable electric cars, even if that meant lower range.

More charging stations could alleviate range anxiety, though they disagreed whether the government should subsidize them.

Both think we'll need to upgrade the electric grid to handle more home charging and reduce electricity generation emissions if electric cars are to fulfill their emissions reduction potential.

Surprisingly, both guests thought that global electric car penetration will still be low in 10 years, less than 20%.

But progress could bring improved technology and economies of scale.

♪ ♪ ♪ ♪ ♪ ♪ [Narrator] Funding for "Energy Switch" was provided in part by the University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

And by EarthX, an international nonprofit working towards a more sustainable future.

See more at earthx.org.