The Electric Vehicle Debate at COP2601 November 2021
On the eve of COP26, the United Nations Climate Change Conference which starts next week, the conversation about net zero targets, zero-emission vehicles, and the "right" way to decarbonize transport is gearing up. At the heart of this talk is the move from cars with internal combustion engines (ICEs) to electric vehicles (EVs).
This narrative, mostly coming from countries in the Global North, portrays EVs as a transformative opportunity for all countries, and one with few negative consequences. But behind this captivating message are two hard questions:
First, are EVs adequate for all countries? Will the world's poorest countries transition to e-mobility, or will they be left behind?
Second, if EVS become popular in in high-income countries, what does that mean for the poorest countries in terms of natural resource extraction, fossil fuel exports, and/or country indebtedness?
These questions are key, especially given the growing green divide between high- and low-income countries. High-income countries are historically responsible for most global emissions. The G20 countries contribute four-fifths of global emissions and want a high-tech solution to transport decarbonization. The world's poorest countries are the least responsible for climate change. They are most impacted by climate change and could be left behind in the drive for high-tech transport.
The Sustainable Mobility for All (SuM4All) partnership-in conjunction with the UK Foreign, Commonwealth and Development Office and the Climate Compatible Growth program-is looking at these questions from the perspective of the world's poorest countries, and will present them in a discussion paper at COP26.
The discussion paper presents six key considerations for assessing whether a country is ready to move toward electrifying road transport.
Countries with a low-carbon, universal, and reliable electricity supply, and with access to finance, are best suited to an electric transition. Where two- and three-wheelers are common, little new grid investment is needed, and where cars dominate, chargers and some grid strengthening are required. Where grid strengthening is necessary, there is an opportunity to reduce emissions in the transport sector and improve economic and business models.
Countries in the Global South are diverse. In countries with weak electricity supplies, a fleet of EVs could strain the grid and drain electricity from industries and households. However, with coordinated action, EVs can underpin demand that de-risks new renewable energy investment. EV battery integration could also help stabilize unreliable grids. But without careful planning, a move to EVs could potentially cause deep economic damage.
Fossil fuels are associated with taxes and subsidies, which present a challenge and an opportunity. For instance, most sub-Saharan African countries subsidize fossil fuels to protect consumers- at a huge fiscal cost. EVs will reduce this consumption, freeing those subsidies to be spent elsewhere. Tax flows on fossil fuels need to be repackaged into new systems that replace lost taxes by other means, such as road pricing.
The high demand for fossil fuels for transport is expensive and feeds energy insecurity, because of the need to import fuels. Electromobility offers savings from cuts in oil imports, which will often more than pay for investment in new vehicles, charging systems, electricity grid strengthening, and renewable electricity supply systems. It will also lower the lifecycle cost of ownership.
However, even with lower fuel imports and longer lifecycle business models, finance remains a barrier. Upfront investment costs in electricity systems and EVs are relatively high, although they are much lower than the lifetime costs of ICE vehicles and oil imports. This is problematic, because neither (micro-level) operators nor (macro-level) governments have the financial access to invest simultaneously in both power supplies and EVs. The right kind of instruments and support are critical, as is packaging it appropriately, so that developing countries can get access to the financing needed to move to zero emissions.
Transport affordability, passenger safety, and better access to facilities all need to be considered in the EV model. A careful roll out of electromobility will result in better economic, business, and societal outcomes.
However, if the transition to EVs in the Global North continues as now, old ICE cars will simply be shipped to the Global South. This may meet short-term needs, but it will lock in high fuel costs, accelerate emissions, and slow the collective action needed for the transition to climate-smart mobility in the Global South.
A successful transition to EVs demands management across agencies. New, integrated supply chains (for electricity, maintenance, etc.) will need to be set up, and no single policy can bring about the systemic change required. Such a change will require new regulations and policies, as well as strong government leadership.
It is important to think about the most useful policies and regulations and how best to strengthen institutions. Effective policies and strong institutions are needed to promote business on the demand side and secure investments on the supply side. Underlying this is an appropriate enabling environment. In many countries, weak regulations exacerbate past problems. Capacity-building and support for national environmental management agencies and ministries, and strong vehicle emission standards, will encourage the adoption of new EVs.
Electromobility requires new materials, including batteries, charging infrastructure, new electricity generation and distribution infrastructure, and more. An inability to source critical materials delays uptake. Countries will need different sources for supplies-both materials and labor-to put all the moving parts together. If skills and materials are not well managed, the Global North may inadvertently monopolize scarce skills or materials and lock the Global South out of the transition to EVs. Or the North could create demands in the South that do not simultaneously support the investment needed for clean materials supply and processing, which could slow modernization. If well managed, though, new extractive industries in the South, part of a global EV transition, could be a basis for clean industrial growth.
The discussion paper with the research findings will be released at COP26 in Glasgow on Wednesday, November 3. The paper is the culmination of a year of research and discussions between academics and practitioners from the SuM4All partnership, supported by consultation with low-income countries. We invite you to join us in this conversation by registering for the launch event.
(Nancy Vandycke is Program Manager, Sustainable Mobility for All (SuM4All) and Lead Economist, World Bank and Mark Howells is Professor of Systems Analysis for Sustainable Development, Loughborough