1、Copyright 2022 APEC SecretariatPolicy Options for Decarbonizing Transportation in APECDaniel SperlingUniversity of California,Davis,USAAuto Dialogue 3613 September 2022Most important strategy to decarbonize economies is renewable electricity.Next most important strategy is vehicle electrificationby

2、far most important and effective transportation decarbonization strategy.Other strategies to decarbonize transport are important,but more compelling for other reasonsReduce vehicle use(VKT)Increase transit useLand use managementWalking and micromobilityRecent Announcements.The question regarding EVs

3、 is not if,but how and whenAutomakers All Phasing Out Combustion EnginesThanks to Continuing Reductions in Battery CostsExtraordinary Success Story(IEA,2022)IndiaChinaN AmericaEuropeBP Energy Outlook,2022Scenarios:New Momentum(NMS)Accelerated(ACC)Net Zero(NZ)Rapid Increase in Global EV Sales Expecte

4、dEVs reduce carbon and costs,as well as improve public healthVehicle CostsFuel CostsTotal Costs-25-20-15-10-50520030203520402045Cost Difference(billion$)Detailed Modeling for California Finds Net Cost Savings Starting in 8 yearsEVs Are Good for Economy(as well as Environment)Source:UC ITS

5、(Brown,Sperling et al,2021)Q:So why do we need government intervention for EVs,since they will soon be economically superior options(and already are in some applications)Buyers are“conservative”Concern over resale value,future price of energy,loss aversion,range anxietyVehicle fleets are a little di

6、fferent:fleet owners more likely to use TCO as decision variableIncentives will be needed for a long time-but some incentives are far more effective than othersand incentives dont need to be paid by taxpayers A:Consumers dont make decisions based on total cost of ownership(TCO)EV Policy Agenda1.Refo

7、rm Vehicle Supply Regulations.Sales mandates and vehicle performance standards are most effective at accelerating EV adoption.2.Vehicle Purchase Incentives.Necessary but some more effective than others 3.Vehicle Usage Incentives(monetary and non-monetary)4.Charging Infrastructure.Vast expansion of p

8、ublic and private investment needed,with large role by government.5.Educate,Inform,and Reach Out.Investments in education and awareness accelerates shift towards vehicle electrification.EVs=Battery EVs,PHEVs,Fuel Cell EVs(hydrogen),including 2-wheelers,3-wheelers,cars,trucks,and busesSupply-Side Reg

9、s Are Most Effective Policy to Accelerate ZEVsEU:CO2vehicle performance standards are so aggressive that automakers can comply only by selling large numbers of EVs Schedule to update standard to 0 g/km by 2035(by end of 2022)US:also has“CO2/GHG standards(equivalent to fuel economy standards),but muc

10、h weaker.New standards proposed by Biden Administration(but not yet adopted)would require automakers to sell some EVs by 2026(18%?)California:ZEV mandate requires increasing percentage of sales for each automaker to be“zero”2 weeks ago.California Adopted Rule Requiring 1/3 of sales to be ZEVs in 202

11、6,2/3 in 2030,and 100%in 2035 EU is Expected to Adopt Similar Requirements by End of This YearAlso a Truck MandateAlso a Truck MandateCalifornia Requires Most Trucks to be Zero Emissions by 2035 California Requires Most Trucks to be Zero Emissions by 2035 12Model Year(MY)Model Year(MY)(MY)(MY)Class

12、2bClass 2b-3 3Class 4Class 4-8 8Class 7Class 7-8 8TractorsTractors202420245%5%9%9%5%5%202520257%7%11%11%7%7%2026202610%10%13%13%10%10%2027202715%15%20%20%15%15%2028202820%20%30%30%20%20%2029202925%25%40%40%25%25%2030203030%30%50%50%30%30%2031203135%35%55%55%35%35%2032203240%40%60%60%40%40%2033203345

13、%45%65%65%40%40%2034203450%50%70%70%40%40%2035203555%55%75%75%40%40%Adopted June 2020,effective 2024 Applies to large truck manufacturers who sell trucks in California Credit trading allowed Applies to manufacturers with 500 annual California sales 100,000 ZEVs by 2030 300,000 ZEVs by 2035 Partial c

14、redits allowed for PHEVs(based on all-electric miles)Max:50%of compliance obligation#2:Vehicle Purchase IncentivesEffective at motivating consumers to purchase EVs Many caveats and lessons learned Much more effective if offered at point of sale(3:1)More effective if limited to less expensive EVs and

15、 less affluent buyersFeebates(fees+rebates)Compelling because can be zero cost to taxpayers Adopted in France,Italy,Germany,SwedenUS Purchase Incentives(through 2032)(law signed 16 August 2022)New Vehicles:Up to$7500/vehVehicle must be assembled in North America,40%of critical minerals and 50%of bat

16、tery must come from North America or countries with free trade agreements(20 countries)(with 40%ratio increasing to 80%in 2027)One credit per vehicle:not based on size of batteryIncome limited to$150k/$300kMSRP$80k for LDTs,$55k for carsPoint of sale(based on dealer disclosures)Used Vehicle Credit:U

17、p to$4000/veh30%of value of used EV with$4,000 cap;vehicle price$25k2+years oldNo requirements for“made in USA”No EVs will get full rebates for many years;Automakers(and many countries)unhappySame 2022 IRA Law(US)Incentives for Automotive,Battery,Mining,and Recycling Industries More Impactful Than C

18、onsumer Incentives?Tax credit of$35/kWh for each U.S.-produced battery cell(35%of cost)Tax credit of$10/kWh for U.S.-produced battery modules(1/3 cost of assembling battery pack)10%tax credit for critical materials and minerals produced in U.S.$2 billion in grants to retool existing auto plants to m

19、ake clean vehicles Up to$20 billion in loans to build new factories.Reflects“new”approach where incentives go to industry,and less to consumersChina Purchase IncentivesBased on range,battery energy density,and fuel consumption.Range of 300 to 400 km receive$2,250+/-adjustments based on battery densi

20、ty or fuel consumption.Shanghai allows EV buyers to avoid lottery for vehicle license(valued at US$15,000)Beijing allows EV buyers to avoid a lottery for vehicle licence#3:Vehicle Usage Incentives(monetary and non-monetary)Free parkingFree use of toll roads and carpool lanesUse of bus-only lanesEffe

21、ctive in early years of transition#4:Charging InfrastructureAlmost impossible to make profit selling electricity to vehiclesThus,need policy intervention,but many possible strategies Subsidies for charging infrastructure installation?Per kwh?Per use?For uptime and reliability?PPP(public private part

22、nership)?Build-own-and-operate(BOO)Build-and-transfer(BT)Build-lease-and-transfer(BLT)Build-operate-and-transfer(BOT)Build-transfer-and-operate(BTO)#5:Educate,Inform and Reach OutConsumer awareness and understanding of EVs is necessary preconditionInvestments in education and awareness programmes an

23、d campaigns will accelerate EV salesCause for ConcernRising Prices and Supply Shortfalls for Minerals/Metals Will Market Forces Overcome Sustainability Concerns and NIMBYism?IEA,2022Cause for ConcernElectricity Grid Capacity and Resilience30%more electricity demand But little or no increase in capac

24、ity is needed because charging can be mostly off-peakSlow pace of expanding capacity,off-peak storage,building transmission linesOverloading local transformers and distribution systemCause for ConcernWill Enough Public Charging Infrastructure Be Built Fast Enough?Need is not urgent for next 5 or so

25、years,but then becomes criticalGovt funding neededConcern:permitting,reliability of chargers,accountability of operators of chargersCopyright 2022 APEC SecretariatRecommendations for APEC Policy Makers 1.Reform Vehicle Supply Regulations.Sales mandates and vehicle performance standards are most effe

26、ctive at accelerating EV adoption2.Vehicle Purchase Incentives.Important,but some more effective than others 3.Vehicle Usage Incentives(monetary and non-monetary)4.Charging Infrastructure.Vast expansion of public and private investment needed,with large role by government.5.Educate,Inform,and Reach Out.Necessary precondition for potential buyersCopyright 2022 APEC SecretariatAcknowledgementsCopyright 2022 APEC Secretariat“We can not solve our problems with the same thinking and institutions and research we used when we created them.”-Albert EinsteinDaniel SperlingUC Davisdsperlingucdavis.edu