Navigant Research Blog

Climate Change Discourse Ignores Immediate Impacts

— February 4, 2014

In President Obama’s State of the Union address, he delivered a passionate statement on climate change: “The debate is settled.  Climate change is a fact.  And when our children’s children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.”

Political discussions on the scientific legitimacy of climate change tend to ignore the enormous short-term consequences of relying on fossil fuels for the majority of our energy consumption.  According to a recent study by the Massachusetts Institute of Technology (MIT), air pollution causes 200,000 premature deaths each year in the United States.  Vehicle emissions were found to be the biggest contributor to these early deaths (53,000), with power generation following closely behind (52,000).  Surprisingly, statistics like these are largely absent in the public discourse on climate change.  Controversies, such as Obama’s ordering the EPA to curb coal power plant emissions, and outdated arguments over the scientific merits of climate change obscure the immediate public health and air pollution impacts of fossil fuels.

Clearing the Air

Perhaps the second most surprising element of the MIT study, behind the sheer amount of pollution-related deaths that occur every year, is that road transportation caused more emissions-related premature deaths than electricity generation.   The fact that cars and trucks tend to travel within more populated areas, thus releasing tailpipe emissions in and around densely populated areas, is a potential explanation.  This is another reason why electric vehicles (EVs) offer so much promise.  With no local vehicle emissions, the increased use of EVs can improve local air quality in urban areas.   An EV emits roughly half the amount of carbon pollution per mile as the average new internal combustion engine (ICE) vehicle, based on the United States’ 2012 electricity mix.  In states with higher percentages of renewable energy generation, such as California, EVs emit only one-quarter as much.  According to Navigant Research’s report Electric Vehicle Market Forecasts, the United States will remain the largest light duty plug-in electric vehicle (PEV) market in the world, with forecast sales of 467,000 vehicles in 2022 (compared to 129,098 for 2014).

This growth will help alleviate dangerous local emissions that contribute to the high level of premature deaths outlined in the MIT report.  Whether you question the science of climate change or not, 200,000 untimely deaths per year from air pollution should be enough to support action on emissions reductions and promote the adoption of clean energy and clean transportation technologies.


Timely Launches Fuel EV Market

— January 29, 2014

According to Navigant Research’s free white paper Electric Vehicles: 10 Predictions for 2014,  the global electric vehicle (EV) industry is poised to grow by 86% this year, surpassing 346,000 new vehicles sold.  Additionally, our report Electric Vehicle Market Forecasts  predicts compound annual growth rates (CAGRs) for hybrid electric vehicles (HEVs) (9.6%), plug-in hybrid electric vehicles (PHEVs) (28.5%), and battery electric vehicles (BEVs) (29.3%).  In order to achieve these growth rates, new EV model releases will have to closely align with market expectations.  Unfortunately, in the past many EV makers have not had a stellar record of launching new models on time.

Let’s take a look at 2013 (model year 2014) and see what EV models were released as scheduled in North America.  All EVs that were expected to be released in 2013 are currently available, with the exception of the 2014 Nissan Altima Hybrid.  BEVs such as the Chevrolet E-Spark, Fiat 500e, and smart fortwo; PHEVs such as the Ford Fusion Energi, Honda Accord, VIA SUV, VIA Pickup, and VIA Van; and HEVs such as the Ford Fusion, VW Jetta, Lexus ES 300h, and the Acura ILX were all released as expected.  The recent pattern of releasing new models in a timely fashion will play an important role in the healthy growth of the EV industry.

In the luxury EV space in particular, new model releases will stiffen the competition like never before.  Tesla’s highly successful Model S will be challenged by BMW’s i8 and i3, the Cadillac ELR, the Audi A3 e-tron, the Mercedes B-Class Electric Drive, and the Porsche Panamera S E-Hybrid, assuming that they are launched on time.  Reliable model releases will encourage better competition and increase consumer confidence, hopefully leading to better products, lower prices, and overall more robust EV markets.

Expected HEV, PHEV, and BEV Releases, North America: 2014

(Source: Navigant Research)


EIA Foresees Fossil-Fueled Future for Transportation

— December 20, 2013

The U.S. Energy Information Administration (EIA) released an early version of its Annual Energy Outlook (AEO) for 2014, depicting an energy future overwhelmingly shaped by the development of new oil and natural gas reserves.  Cumulative production of natural gas from 2012 to 2040 in the AEO2014 report is about 11% higher than in AEO2013, reflecting the continued growth in shale gas production from increased horizontal drilling and hydraulic fracturing.

Some of the highlights for transportation-specific forecasts from AEO2014 include:

  • Light-duty vehicle (LDV) energy consumption will decline sharply through 2040, due to slow growth in vehicle miles traveled (VMT) and accelerated improvement in fuel efficiency.
  • Energy consumption in the transportation sector overall will decline from 26.7 quadrillion Btu in 2012 to 25.5 quadrillion Btu in 2040.
  • Electric vehicles, including battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and hybrid electric vehicles (HEVs), will account for just 7% of total vehicle sales in 2040 (This sharply contrasts with Navigant Research’s report, Electric Vehicle Market Forecasts, which forecasts the same 7% penetration being reached by 2020).
  • LDVs powered by gasoline will remain the dominant vehicle type, retaining a 78% share of new LDV sales in 2040, down just 4% from an 82% share in 2012.

It is important to note that this reference case scenario released by the EIA is limited because it assumes current laws and regulations will remain generally unchanged through 2040, which is a shortsighted assumption.  For example, even major U.S. oil companies, such as ExxonMobil and ConocoPhillips, are already including a price on carbon emissions in current business planning.  Exxon reported that it anticipates a cost of $60 per metric ton of carbon by 2030.

Additionally, we have seen the rapid development of California’s zero-emission vehicles (ZEVs) mandates in recent years, which is pushing the automotive market toward 1.5 million ZEVs in California by 2025.  With nine other states expected to follow California’s lead, there’s no telling how much these mandates and a potential carbon tax will increase the market for electric vehicles – but there’s no doubt that it will have a significant impact that is largely unaccounted for in the EIA’s Outlook.

Finally, the EIA’s less than bullish outlook for clean transportation technologies is based largely on its assessment of future gasoline prices.  The EIA predicts that the real end-use price of motor gasoline in the United States will decline to $3.03 per gallon (2012 dollars) in 2017, then will rise to just $3.90 per gallon in 2040.  This conservative forecast may be underestimating the increasing difficulty and financial cost of drilling for unconventional oil sources, such as oil sands and extra heavy oil, as conventional oil reserves, which are generally easier and cheaper to produce, continue to diminish.  While the world is certainly not running out of oil, it is running out of oil that can be produced easily and cheaply.


EVs Driving on Sunshine

— December 2, 2013

The renewable energy and automobile industries have traditionally operated in distinct, separate markets.  However, the future may see the increasing convergence of the two industries.  According to Navigant Research’s 2012 Energy & Environment Consumer Survey, 85% of consumers who are interested in purchasing an electric vehicle (EV) have either favorable or very favorable views toward solar energy.  The potential for overlap between the two industries is high, given the shared interests and values of their target customers.  Consumers that have solar panels installed on their roof likely have a garage where they could set up an EV charging station as well, and vice versa.

Interesting symbiotic relationships between the industries are already starting to emerge.  Envision Solar, for example, recently deployed the first and only fully autonomous, fully mobile, fully renewable, standalone solar EV charging station at the San Diego International Airport.  REC Solar has partnered with General Electric (GE) to distribute solar EV charging systems, and SolarCity has teamed up with Tesla Motors to conduct research on solar energy battery storage.

Cleaner Fuel = Cleaner Cars

Using renewable energy, such as solar, to charge EVs makes a huge difference in the total emissions of EVs, compared to traditional internal combustion engine (ICE) vehicles.  The resurgent interest in EVs has drawn some attention and criticism to the issue of whether charging an EV with electricity that is largely derived from fossil fuels really derives any environmental benefits at all.  However, according to the Natural Resources Defense Council (NRDC), even with the 2012 electricity mix of the United States, which is predominantly generated from fossil fuels (37% coal, 30% natural gas, 19% nuclear, 12% renewables, remaining 2% petroleum and other gases), an electric car only emits about half the amount of carbon pollution per mile as the average new ICE vehicle.  In states with higher percentages of renewable energy generation, such as California, EVs emit only a quarter as much.  The Environmental Protection Agency’s (EPA) Beyond Tailpipe Emissions calculator allows users to input their zip code and type of EV to assess the level of greenhouse gas emissions their car releases based on the electricity generation mix in their area.

According to Navigant Research’s report, Solar and Electric Vehicle Cross-Marketing Strategies, approximately 250,000 homes are equipped with solar photovoltaic (PV) systems in the United States, and about 52,000 plug-in cars were sold in 2012 alone.  Combining solar energy with EVs not only presents a great market opportunity for both industries; it will demonstrably expand the economic and environmental benefits of EV ownership.


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