Should Electric Cars be Subsidized?

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With new electric car models appearing not at just at every motor show but front and center of every car makers’ stand and buyers being bombarded with the “green credentials of hybrid and electric cars we could be forgiven for feeling guilty at buying a petrol engine powered automobile. Surely we should all be putting deposits down for new zero emission electric cars and doing our bit to save the planet is what our conscience is asking. Well an article in the Economist last week asks how logical this trend really is and suggests that actually electric cars are not as green as they at first sight seem. True no Co2 comes out of the tail pipe but there is still a substantial CO2 debt incurred from the generation of that electricity. Each 100 mile trip assuming you are not using the a/c, heater, or overly heavily laden, in which case you may drain down sooner than 100 miles requires some 6-8 hours of recharging. How that electricity is generated will vary from country to country and even from state to state in the US. Coal, natural gas and even oil still feature prominently as fuel sources around the world. Taken as a whole, electricity is generated globally for fuel sources as follows in this graph from based on IEA data.

But in many countries the reliance on coal is higher. In the US, it’s 49%, in Australia it’s 77%, in China 79%, in Poland 92% and in South Africa it’s a near total reliance at 93%. In Britain it is less than the US but the Economist estimates that an electric car in Britain produces only around 20% less Co2 emissions than a car with a petrol engine (one assumes this must be an efficient petrol engine but no figures are quoted).

Well some would argue that as the mix of fuel sources changes, with more nuclear, more renewable such as wind, solar and bio-fuels, then Co2 emissions per Kw/hr will decrease, and that is true but at what cost? Electric cars are already heavily subsidized. In the UK, there is a taxpayer funded £5000 ($8000) subsidy and in the US up to $7,500. Electricity generated from renewable sources is also heavily subsidized via increased tariffs –   generators are allowed to charge consumers to fund renewable projects. The Economist asks the question is subsidy a good use of public money? Looking at just the subsidy on the purchase price of an electric car, to replace all of Britain’s cars with electric cars would cost taxpayers £150bn ($240bn) and with Britain’s current fuel mix that would only cut Co2 emissions by about 2%. For the same money, Britain could replace its entire power generation base with solar cells (or more reliably with nuclear) and cut its total emissions by a third.

The numbers will vary from country to country but nearly all countries offer some kind of inducement to buy. The more the country relies on CO2 emitting coal, oil or even gas for electricity, the worse the economics become. Switching power generation should be much more of a priority.

–Stuart Burns

Comments (2)

  1. Phil says:

    Well lets face it, all of this is very altruistic. The tax payers will not pay of something that’s not tangible. If it’s in front of me, I will think about it. If not, out of sight out of mind. The electric car is something we can touch but the back end power is something we don’t see.

    Beside we all want to be do gooders. How can we be so if the energy farm is doing all the good.

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