Are policy priorities correct?
Lifecycle carbon dioxide (CO2) modelling of battery electric vehicles (BEVs) typically relies on the critical assumption that the battery lasts the lifetime of the vehicle, which is around 14 years. However, we know that battery capacity declines over time, and manufacturer battery warranties tend only to cover the first eight years. What if battery packs last a shorter time than expected, requiring replacement during the vehicle lifetime or even leading to early scrapping of the vehicle? How would that affect the lifecycle CO2 of BEVs and impact, at the overall car parc level, our ability to achieve ambitious climate change goals.
Almost two-thirds, typically, of CO2 emissions in the manufacture of a BEV are associated with the battery , including sourcing raw materials. For an internal combustion engine (ICE) vehicle, even a mildly hybridised one, that fraction is less than 5%. Therefore, the life expectancy of the BEV battery pack is clearly crucial to the vehicle’s overall CO2 footprint – and residual valuation – in a way that is not true for primarily combustion cars.
Emissions Analytics has previously reasoned that the best route to decarbonisation for at least the next decade is to pursue a path of mass hybridisation. This is primarily due to the scarcity and cost of battery materials, which is now being seen as a result of accelerating demand and supply chain constraints. A further reason is the risk around consumer acceptance of BEVs at retail prices that are profitable for manufacturers. The argument is set out in more detail in a previous newsletter. The analysis uses a proprietary lifecycle model created by Emissions Analytics, based on a meta study of academic literature and information from manufacturers. The key input assumptions are set out in that previous newsletter – of note is that it is assumed that the grid is decarbonised by 50% from 2030, but manufacturing emissions remain constant. Battery life is assumed at eight years by default for our purposes here, reflecting manufacturer confidence levels as revealed by warranty durations.
In this newsletter, we compare three different vehicle sales scenarios: an ‘ICE baseline’ scenario with 50% gasoline and 50% diesel vehicles; a ‘BEV transition’ model with 75% BEVs in 2031 and 100% in 2035; and a ‘Hybrid strategy’ with 100% full hybrids (FHEVs) throughout.
The clear conclusion is that, in 2050, the deadline for net zero emissions for many countries including the UK, the cumulative CO2 emissions from the manufacture and usage of vehicles is similar whether we go for the direct BEV transition or the Hybrid strategy, as shown in the chart below.
Compared to the ICE baseline, the direct BEV transition reduces CO2 by 1% more than the Hybrid approach. The chart makes it clear how important electrification, generically, is to reducing CO2 from transport, but it raises the question whether the additional gains from the pure BEV model warrant the investment required – that investment not just being subsidies, tax incentives and government infrastructure investment, but also by the car buyers themselves due to higher purchase prices. This timespan, however, does not bring out the longer-term benefits of BEVs, which can be seen if we look at annual, rather than cumulative, reductions in CO2, as shown in the chart below.
As a result, after 2050, the cumulative advantage from the BEV transition gradually widens as old ICE vehicles drop out of the parc and the lower in-use CO2 of BEVs comes to the fore. By 2070, the lead in cumulative CO2 emissions of BEVs has reached 9% over the Hybrid strategy, and a full 34% compared to sticking entirely with ICE vehicles. This is a significant reduction, but 49.2 megatonnes of CO2 still come from an entirely BEV parc in one year – hardly “zero emission.”
If the assumption around an eight-year battery life is then flexed, we can see that it has a significant impact on the end result of electrification. If, in practice, batteries last on average as long as the chassis – 14 years – then by 2050 the BEV transition scenario would deliver 13% points more CO2 reduction than with eight-year battery life, a figure that rises to 16% points by 2070, as shown in the chart below. So, in 2070, the 9% CO2 reduction from faster BEV penetration over the Hybrid scenario is dominated by an additional 16% that could come from better battery life.
So, we conclude that, as long as we urgently electrify – whether BEV, PHEV or FHEV – we will achieve significant, and similar, CO2 reduction by 2050. Additional penetration of BEVs delivers extra CO2 reduction only after 2050, and it comes at a cost and with execution risk. Improving the lifespan of batteries makes a bigger difference to CO2 emissions in particular by 2050. Therefore, this suggests that policy needs to be more attentive to the quality of the current generation of BEV products than simply the number on the road.
In a pessimistic scenario where batteries only last on average of six years – which would be costly both in terms of CO2 and to the underwriters of manufacturer warranties – the Hybrid strategy would be 10% better in 2050 than the BEV transition, and still be better, by 6%, in 2070, as the constant renewing of batteries outweighed the lower in-use emissions of BEVs. This is not a likely scenario, but makes plain the sensitivity of our decarbonisation policy to a complex and opaque piece of engineering produced by the private sector.
It could be argued that recycling batteries would mitigate the problem of poor durability, and shift the evaluation more in favour of BEVs. While this might become true in the future, the recycling infrastructure does not yet exist at scale and the energy required to separate the chemical components, clean them up and then assemble into a new pack is also significant. It is currently unclear whether the saved mining emissions is greater than the CO2 overhead of the recycling. A further criticism of this analysis might be that the CO2 in manufacturing both the car and battery does not reduce over time in the model. This may happen, but is not certain. Equally, no benefit from reducing emissions from liquid fuel production, or the use of biofuels or synthetic fuels has been assumed.
So often, when talking of decarbonisation, the dates mentioned seem far in the future. Using the same model as above, we can make the numbers real and immediate by tracking the CO2 reductions since the start of 2020. Emissions Analytics compiles its “CO2 totaliser”, which compares the cumulative CO2 emitted by cars sold since January 2020 under our current BEV transition policy against the two alternative scenarios. The first comparison is to a car market that remains 50% diesel and 50% gasoline ICE. The second is to a market completely made up of FHEVs. The early moves by the UK into BEVs has currently led to more CO2 emissions than on both these alternative scenarios
The 3.3 million vehicles sold in the UK since January 2020 emitted in total 6.153 megatonnes more CO2 than would have been the case if all vehicles sold had been full hybrids, which typically have batteries between 1.5 and 5.0 kWh in capacity, and 2.360 megatonnes more than if all vehicles had an ICE. This is not surprising as BEVs – with batteries typically between 60 and 100 kWh – have much higher emissions from the manufacture, which is then offset by lower emissions during use. This makes plain that calling BEVs ‘zero emission’, solely because they have no tailpipe, is a nonsense. The surplus CO2 is even greater compared to a market made up only of FHEVs, because they have manufacturing emissions only slightly higher than ICE vehicles, but around 30% lower in-use emissions.
The annual CO2 budget for the UK is approximately 700 megatonnes, based on consumption emissions and including aviation¹. This value contrasts with territorial emissions, which only measure CO2 arising from activity in the UK – this is particularly relevant where a high proportion of vehicles are manufactured overseas. Around 27% of total emissions are from transport² and, therefore, the 6.153 megatonnes excess accounts for around 1.6% of total transport emissions.
In summary, with shoulders firmly to wheel of BEV rollout, lubricated with a flow of taxpayer subsidy, it would be right to tally up whether the approach is leading, or will lead, to significantly reduced emissions. In a market dominated by BEVs, we must be conscious that the dominant element of CO2 emissions is likely to become the replacement of batteries rather than the energy required to propel the vehicle. This supports the idea that policy should perhaps focus more on the longevity and durability of these batteries, rather than a singular focus on BEV market share. We have consciously simplified the options to illustrate this underlying point, including not factoring in the potential for PHEVs due to the sensitivity of their emissions to user behaviour.
After all, the aim is surely to reduce CO2 emissions and slow global warming, rather than to promote BEVs as inherently better products – if they were so superior, they would not require subsidy at all.