Colm McCarthy: counting the cost of cutting carbon emissions

As the world gets around to cutting carbon emissions, the costs need to be minimised. The changes in behaviour, especially in consumption patterns, need to be those which reduce consumer welfare the least, and the alternative technologies need to be the most effective.

The debate is regularly hijacked by commercial interests, seeking subsidies for their products or favourable regulatory treatment. A particularly prominent example has been the electric vehicle industry, which has secured favourable tax treatment in many countries and oceans of free publicity.

Existing vehicles do not have to be written off either – cars last 10 or 12 years, planes and ships perhaps twice as long, so the existing fleet will phase itself out painlessly if new additions are powered without burning fossil fuels

Cars produce lots of greenhouse gases and their numbers are growing dramatically as poorer countries join the consumer society. Aircraft and ships burn fossil fuels too. Is it feasible to convert the world’s fleet of transport vehicles to electrical propulsion and will this make a serious difference?

Existing vehicles do not have to be written off either – cars last 10 or 12 years, planes and ships perhaps twice as long, so the existing fleet will phase itself out painlessly if new additions are powered without burning fossil fuels.

Electric aeroplanes are a long shot – the batteries would simply be too heavy to permit viable payloads, but nuclear-powered ships are already in service (naval vessels and ice-breakers), and electric road vehicles are available at your local showroom. There is a snag.

These vehicles use electricity and the electricity generation industry uses fossil fuels in power stations. There is not much point converting the vehicle fleet if the power industry will simply replace whatever emissions are saved.

Energy use

A study from the IFO research institute in Munich last month was the latest to remind everybody of this obvious point. The authors wrote: “Considering Germany’s current energy mix and the amount of energy used in battery production, the CO2 emissions of battery-electric vehicles are, in the best case, slightly higher than those of a diesel engine.”

Germany has a heavy reliance on coal for power generation and the picture is better elsewhere – countries with more nuclear, hydro, solar or wind generation would see genuine emission savings from electric cars.

In any event, what matters is not the current fuel mix in power plants, but the future mix and coal plants, the worst offenders after peat, are being phased out in Europe.

Reporting last February, the Irish Academy of Engineering, while generally supportive of the switch to electric cars in this country, flagged some important limits on what is feasible.

Electric future in Ireland

Ireland has already de-carbonised its electricity generation to a substantial degree, and both the coal station at Moneypoint and the peat stations in the midlands will close over the next decade. But extra power demands for vehicles, or home heating will have to be met from somewhere and there will never be a system reliant solely on interruptible low-carbon electricity.

It will be necessary to rely in the long-term on gas-fired stations to some degree and the security of gas imports is a concern.

There will be a large bill from ESB Networks if everyone opts for electric road vehicles

They also point out that electric car batteries will have to be powered up overnight and the Irish low-voltage distribution network was not designed for the huge increase in loads which will arise.

There will be a large bill from ESB Networks if everyone opts for electric road vehicles.

There is another snag. Power supplies in rural Ireland, delivered through overhead wires, are vulnerable to disruption in bad weather and climate change is making extreme weather events more frequent.

The engineers think that many rural families will be reluctant to put all their eggs in the electric basket and might want to hold on to at least one petrol or diesel vehicle. Sales of electric cars are still miniscule despite the generous tax inducements and the Government’s targets for fleet conversion, bearing in mind the long lives of existing vehicles, may be too optimistic.

If the Government succeeds in persuading everyone to go electric, there will be a collapse in tax revenue, and it will have to be made up in some other way

One of the attractions of buying an electric car is that the fuel cannot be used as the medium for collecting tax revenue to pay for the costs of the road system.

Non-automotive diesel is dyed green and pays very little tax, but it is not possible to dye electricity.

If the Government succeeds in persuading everyone to go electric, there will be a collapse in tax revenue, and it will have to be made up in some other way.

This most probably means some form of direct charging for the use of road infrastructure.

The technology, through GPS and wireless communication, is already available and will facilitate the scrapping of today’s automotive taxes, including purchase taxes and the annual licence fee. The ultimate outcome could be their replacement with charges based on mileage travelled, with surcharges at peak times and on congested urban routes.

There is already such a system in Singapore, while several European cities have (old-technology) cordon charges, and Dublin could eventually be a candidate.

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