Course:ECON371/UBCO2010WT1/GROUP4/Article 6: Electric Cars Take Off, Quietly
Summary
Link to article: One in three B.C. vehicles could be electric within 20 years, says energy think-tank [1]
The article published in The Vancouver Sun, outlines how vehicles in British Columbia are making a transition from being gasoline-powered towards being completely powered by electricity. The article starts off by saying, “Imagine a future in which cars zip silently along city streets, cause no pollution, never need an oil change and cost as little as 60 cents to fill up.” It goes on to say that this could be the reality if electric cars take off in popularity the way some people predict.
One analyst, Katie Laufenberg mentions that as many as one million, or one in three, B.C. vehicles could be electric within 20 years. Why are they picking B.C? Primarily because B.C. has the highest gasoline prices and the lowest electricity prices in North America.
In terms of emission, a battery-powered electric vehicle will produce 80-percent fewer greenhouse gas emissions than a conventional vehicle over its lifetime. Furthermore, tailpipe emissions are completely eliminated. And because more than 93 percent of the electricity in B.C. comes from renewable sources like hydro power, the environmental impact of these vehicles will be even less.
Regarding pricing, to completely recharge one of these vehicles will cost about 60 cents. This will give you a range of approximately 120 kilometres. Charging would take around 30 minutes at a stand-alone station. The prices for the cars will be about 15 percent more than for gasoline vehicles. Several car manufactures are planning to release electric cars in 2011, including Toyota, Chevrolet and Nissan.
Analysis
Increasing Price of Electricity
With the current price of electricity, it will cost about 60 cents to completely recharge the vehicle. What if electricity becomes more expensive? How much will it cost then? Clearly, if B.C. along with many other provinces or even some states in the U.S. begins to drive only electric cars, the price of electricity will drastically go up. The demand for electricity would increase rapidly. As Fig 1 depicts, the future consumption of electricity will increase, quantity demanded will go up,and as a result price will increase as well. The demand will move from D1 towards D2. As long as the price of electricity is less than that of gasoline, people will continue to pay for it. In addition, as there are little emissions from the tail-pipe electric cars, maybe the government will add some kind of subsidy or incentive to buy these new and innovative cars. But as we consider the next issue, the total emissions as a result of electric vehicles may actually go up.
Total Emissions
Another interesting fact to note is that provinces and states that change towards electric vehicles may not actually be reducing TOTAL emissions. British Columbia relies primarily on hydro for its source of generating electricity. On the contrary, other regions are more dependent on fossil fuels to generate electricity. Therefore, these regions will become even more reliant on fossil fuels if electricity consumption increases. As a result, total emissions and marginal abatement costs will actually be more if people drive electric vehicles as opposed to gasoline ones. The source of emissions has just shifted from the tailpipe to another source.
Conclusion
Given the analysis of this situation, it will take some time for environmental economists, and other analysts to realize whether electric cars are really more efficient and produce fewer emissions than gasoline cars. Also, it will be interesting to observe whether, according to the article, the majority of the cars in B.C. really do become electric powered. Currently, without many electric cars in the market, this vision almost seems impossible. Although, if they do manage to overcome the obstacles listed in the analysis, this could be the start to a terrific change for all of the world.
Prof's Comments
There would certainly be a demand effect in the electricity market. It will drive the price up in the short run, or lead to rationing if the price is regulated. In the longer run, more generating capacity will have to be built, and as you suggest, this may not be emissions free. Whether burning coal to charge an electric car or burning gasoline in a car has a lower environmental impact is then the critical question.