Weighing Transportation Alternatives for Reducing Emissions – Light Duty Vehicles

Transportation emissions represent 14% of global carbon dioxide (CO₂) emissions, 45% of which come from ground transportation systems. Existing policy focus, as well as analysis, predominantly deem electrification as the primary means of reducing light duty vehicle (LDV) carbon pollution, which has in effect diminished attention to alternative viable emissions reduction pathways. Subsidies, mandates for electric vehicle (EV) adoption, and bans on the sale of new internal combustion engine (ICE) vehicles – all fixtures of the current policy discourse – imply an overly simplistic picture of LDV emission mitigation opportunities that may understate potential barriers to EV adoption at the scale projected in net-zero emission pathways. 

In this paper, we note that much of the existing literature on emission mitigation that is used to inform policymakers presumes vehicle electrification is an easy and low-cost abatement opportunity. However, analysis of these studies shows that they do not adequately consider potential constraints to EV adoption, including, but not limited to: 

• Mineral scarcity. Multiple studies estimate greater than 100% of global reserves are needed for both lithium and cobalt to meet global EV adoption targets outlined in zero-emission pathways. 
• Rising costs of material inputs. Prominent projections of future EV adoption presume that battery costs will fall, even though recent data as well as conventional economic analysis suggests that lithium prices – without significant technological breakthroughs – will increase and may delay EV cost-parity with internal combustion engine vehicles (ICEVs).
• Overly optimistic mobility demand expectations. Net-zero emission pathway analyses assume that developing nations will achieve vehicle saturation and satisfy mobility needs with far fewer vehicles per capita than developed nations. The Energy Information Administration (EIA) expects that developing nations will only reach one third of the vehicles per capita of developed nations by 2050. If projections of future vehicle needs are even 10% too low, an additional 198 million EVs would be needed to reach net-zero emissions. 
• Battery replacement needs are not always considered. Prominent net-zero emission pathway analyses assume EVs as equal substitutes to ICEVs in practicality and cost. But typically these analyses do not account for battery replacement, which can significantly affect the total cost of vehicle ownership, decisions to retire EVs prematurely, total mineral needs, and the cost of EVs in second-hand markets.
• Heterogeneity of vehicle consumers. Currently, satisfied EV owners in the United States are predominantly wealthy homeowners in developed areas with access to at-home charging and often an ICEV as an alternative or even primary vehicle. However, charging inconvenience has resulted in 18-20% of EV owners reverting to ICEVs, and global EV adoption would require that the large number of global households living in communal housing have convenient access to public charging. It is not yet clear to what extent charging inconvenience may deter EV uptake. 

In general, these studies implicitly assume technological breakthroughs required for EV battery cost reductions and charging convenience will occur, even though this is uncertain. While we are optimistic that innovation in EV design and batteries will improve efficiency, as well as result in substitutes for strategic minerals and inputs, we are more skeptical that hurdles to achieving the envisioned scale of EV global market penetration can be easily addressed. 

Given the array of variables that may stymie or outright prevent EV adoption to the extent that net-zero emission pathway analyses typically prescribe, this paper notes that policymakers should focus on emission mitigation policies more broadly, rather than restrictive policies that overly focus on EV purchases. 

In this paper, we note several non-EV opportunities to reduce LDV transportation emissions. These include: 

• Reforming subsidies to focus on substitution of ICEV mileage with tech-neutral lower carbon transportation, which could come from EVs, hybrids (HEVs), or other vehicle types. Current policy frameworks presuppose EVs are the least carbon-intensive option.
• A focus on innovation policy for advanced liquid fuels such as advanced biofuels, e-fuels, and solar fuels which can operate with existing infrastructure, and may be more practical for developing nations for whom EV charging infrastructure may be impractical. 
• Expanded usage of carbon capture, either for enhanced oil recovery (EOR) or other forms of sequestration, which could reduce the life-cycle emissions of currently used petroleum fuels and allow for emission mitigation from consumers without requiring new vehicle purchases or fueling infrastructure.

Overall, we note that the life-cycle emissions of LDVs are highly sensitive to fuel type and method of fuel production. EVs have emission advantages compared to ICEVs using conventional fuels today at 53% lower emissions, but when comparing future low-emission electricity-powered EVs to hydrogen fuel cell vehicles and hybrids utilizing low-carbon fuels, we find that the emission advantage of EVs narrows considerably, with only a 4% advantage over a hybrid powered by advanced biofuels. 

Given the array of competing LDV emission abatement opportunities, policymakers should ensure that their policies do not obstruct effective emission mitigation opportunities from the market.  

Additionally, an overemphasis on EV adoption as a sole solution to reducing LDV emissions could create national security challenges. Recent analysis noted that EVs are exceptionally dependent on mineral supply chains that are controlled by China, and international security scholars expect Beijing to exploit this advantage to achieve its strategic objectives. As we have seen with the Russia-Ukraine War, U.S. and Western climate policymakers should acknowledge the risk posed by a future conflict of interest with China, which could drive a stark shift away from Chinese-controlled EV supply chains. The lesson is that an approach to reducing transportation emissions that emphasizes multiple technology pathways and platforms is in the national interest. 

Broadly, we lay out three policy recommendations to reduce LDV emissions that do not rely exclusively on vehicle electrification. They are: 

1. Replace current EV mandates and subsidies with policies that reward emission abatement instead of EV purchases. This would end subsidizing EVs that are underutilized and/or fail to replace any ICEV emissions, providing certainty that only vehicles that reliably replace polluting travel—pursuant to a lifecycle analysis—are rewarded. The best emission outcomes are achieved when all emission abatement is evaluated agnostically and rewarded equally, but current subsidy structures ignore emission outcomes, instead simply rewarding EV purchases. 
2. Broaden the potential emission mitigation opportunities that are considered in the transportation sector. California’s Low-Carbon Fuel Standard (LCFS) allows for biofuels produced in other states to count towards compliance, which incentivizes pollution reductions beyond the borders of the policy and on a life-cycle basis. Similarly, any new policies aimed at reducing emissions should allow for the consideration of less costly mitigation measures adopted by fuel producers and passed down to consumers, such as steps to offset emissions through carbon dioxide removal or sequestration. 
3. Ensure that any environmental provisions of international trade deals focus on life-cycle emissions, rather than vague undefined political priorities. Many EV policies currently incentivize vehicle production in China, which has substantially more emission-intensive manufacturing than in the United States.¹⁰ Given the growing interest in merging climate and trade policy, Washington should acknowledge the heterogeneity of emission intensity of producers of vehicles and fuel and develop trade policies that encourage innovation that reward the cleanest producer, which is likely to be American. 

This analysis does not assess aspects of U.S. public policy and investments that are focused on producing a stronger domestic auto industry (including its current focus on EVs) for national interest reasons, but only the emissions benefits of such policies. Overall, this paper finds that conventional discourse on mitigating transportation emissions frequently fails to consider challenges to vehicle electrification and highlights that alternative vehicle and fuel mix outcomes in the future can yield comparable, if not greater, emission benefits, particularly if they can compete on a lifecycle emission basis and are deployed as part of a global strategy. Policymakers must accept that there are constraints to their preferred political outcomes, and instead pursue policies that reward emission mitigation in an agnostic manner.