Case Study: Norway

Merry Christmas!  

In my previous post I mentioned a lot of challenges for EVs. That’s not to say that they can’t be overcome, and one country that’s doing extremely well is Norway.

First, some facts and figures:

• 28% of all new cars sold in Norway during the first 7 months of 2016 were BEVs or PHEVs
• In Norway, in 2014, Tesla’s sales of their Model S EV were greater than Ford’s sales of any of their models.
• When the Tesla Model S was launched in Norway in 2013, drivers paid a premium to get them second-hand so they didn’t have to wait!
• In March 2014, Norway’s all time sales record of any car, was broken by an Electric Vehicle
• Norway has the highest number of EVs per capita in the world
• Norway was the first country in the world to have an EV as the most popular car sold

Self explanatory chart from Wikipedia- Nice Going Norway!

There’s even more good news – Norway has some of the lowest carbon electricity in the world with 98% of its electricity production coming from renewable sources. 

Great. Well done Norway!

But how have they achieved all this?

Incentives, incentives, incentives (Oh and a bit of infrastructure too!)

Let’s go through the incentives from start to finish:

To begin with, EV purchases are exempt from sales tax at 25%. You also don’t have to pay the registration tax which is an average of $12,500.

Now that you’ve got your EV, you’re exempt from pretty much all tolls. No paying road tolls or tunnel charges. If you want to take a ferry, you’ll have to pay as a passenger but your EV will travel free (whereas ICEVs have to pay a car carrying charge).

When you’re driving around you can use bus lanes to beat the traffic and when you get to your destination you can park for free. 

This experiment done by a Norwegian automotive journalism group showed that they were able to do a journey that would otherwise take 51 minutes, in 19 minutes using bus lanes in an EV

It’s also possible that you’ll need to charge up your EV whilst you’re parking, and you can do so, for free, at a number of charging points. Speaking of charging points, there are 2,030 of them but of course you may want one at home which would be subsidised.

As you can see, Norway is leading the charge with tax breaks and other ongoing incentives

In fact, the current drive to go electric (sorry for the multiple puns) has been so successful that the authorities have hit their target of 50,000 EVs by 2017 two years early. 

Just a few weeks ago, Norway registered their 10,000^th electric vehicle! The government has now announced that these ‘introductory’ incentives will be re-evaluated and in the future, as more EVs are registered (the aim is 400,000 by 2020) it will be necessary to remove some of the great incentives.

In fact, the current drive to go electric (sorry for the multiple puns) has been so successful that the authorities have hit their target of 50,000 EVs by 2017 two years early. Just a few weeks ago, Norway registered their 10,000^th electric vehicle! 

The government has now announced that these ‘introductory’ incentives will be re-evaluated and in the future, as more EVs are registered (the aim is 400,000 by 2020) it will be necessary to remove some of the great incentives.

This is all great, but where is the money coming from?

You might say that they were hoping that you’d never ask.

Norway is able to provide all these subsidies because it has a lot of income, in fact enough to give it the largest sovereign wealth fund in the world at 880 Billion USD. How come Norway has that much spare cash lying around?

OIL 👀

In fact, until 2006, the fund was known by its much more honest name of The Petroleum Fund of Norway. Today it’s known as the The Government Pension Fund Global but it’s still referred to as ‘The Oil Fund’.

Norway has got really lucky with the amount of fossil fuels its sitting on and is therefore able to extract. It’s Western Europe’s biggest oil producer and the third largest exporter of natural gas in the world.

Those sales give Norway the funds to ‘subsidise its green lifestyle’ as well as build up the oil fund (in fact, there’s been so much oil income that until this year, no withdrawals had been made.

This is the first year that Norway has had to tap into its Sovereign Wealth Fund. Is it sustainable for the future?

You might have noticed, there seem to be a few paradoxes here.

Norway, has earned money exporting fossil fuels and then uses the money to fund domestic fossil free initiatives. Martin Skancke a former government official and expert on the oil fund claimed in this interview that these green energy initiatives were commercially oriented investments and not simple subsidies but that’s not the issue here.

The process that I’ve just described may not sound like a problem but when you think about it, it becomes apparent that it’s not strictly true that all of Norway’s renewable energy is low-carbon.

Let’s think back for a moment… we agreed that shouldn’t consider an EV to be running on zero-carbon fuel if the electricity was produced in a manner that accounts for carbon emissions.  

The thing is, this is kind of the same.

If we consider Norway’s renewable energy projects as the EV, those low-emission power generation projects are only affordable as a result of Norway’s fossil fuel exports and therefore, the burning of fossil fuels.

So in other words, Norway utilises fossil fuel usage in other countries to facilitate clean energy usage at home.

Did somebody say carbon laundering?

Maybe I’m being too harsh on Norway though, there is always the argument that this slightly dubious short term strategy is necessary in order to facilitate a long term move towards green alternatives. 

Some challenges

Unfortunately, although EVs seem like a great solution so far, there are some inherent challenges that must be overcome in order to see their widespread adoption as a method of reducing resource consumption and CO₂ emissions. Some of these challenges apply wherever you are in the world whereas some are less of an issue depending on where you live.

In order to research these challenges, I spoke to dealerships, owners, EV forum users and of course I generally looked around on the internet. I’ve identified four main challenges as follows:

1. Purchasing Cost 
2. Range and Infrastructure
3. Electricity Infrastructure
4. It’s not globally viable at the moment

Let’s deal with them one at a time. 

Purchasing Cost

This one is pretty simple. At the moment, EVs are considered new-tech and like many new-tech products, manufacturers have to spend a lot on Research and Design. When the products go to market, they are often sold at a higher price than an equivalent ICE vehicle in order to recover these costs. Furthermore, the lithium batteries are extremely expensive to produce compared to an internal combustion engine.

This means that for some financially conscious buyers, unless they do enough driving to for the increased efficiency of EVs to reduce their operating cost, EVs maybe financially unviable. 

For example, the BMW i3 that I took for a test drive is available on the second-hand market for about £15,000. However, prices for a BMW 1-series, it’s ICE counterpart, are around £8,000 for a similar condition vehicle.

This becomes a vicious cycle- as there are fewer EVs purchased, the production cost remains high and manufacturers cannot benefit from economies of scale.

It’s not all bad news though, as the technology matures and production costs fall, EVs will become available to those with lower budgets. This will cause production costs to fall even further. 👍

Range and Infrastructure

Range and infrastructure go hand in hand. The range problem is that most electric cars today have a range that is far lower than most petrol cars (around 100 miles for the EV depending on how you drive it compared to 500 for many ICEVs, with the same caveat). 

The difference between an ICE vehicles and an EV though, is that you can stop at any petrol station and refill with a full tank in under 5 minutes. By comparison, with an EV you’d have to find an EV charging point and then wait for a minimum of 20 minutes to get you about 80% charged (those figures are for optimum conditions).

Here’s the thing, IF EV cars become the new norm we’d have a bit of an infrastructure problem as we couldn’t possibly create enough charging stations to accommodate them!

That being said, battery technology is improving all the time and therefore there are dramatic range improvements with every generation of electric vehicle. This should mean that we won’t need as many charging stations as batteries will be able to last the full day till the EVs are plugged in at night.

Electricity Infrastructure

Currently there are huge amounts of infrastructure dedicated to extracting and refining hydrocarbons for transportation needs. If we all started to use EVs overnight, we’d suddenly no longer need most of the petrol and diesel that we refine but would suddenly require a lot more electricity. 

As that demand currently doesn’t exist, there’s no infrastructure in place to generate and distribute this amount of electricity. That shift in generation from hydrocarbons to electricity can’t happen overnight and will need to be planned for and done over a period of time. 

It’s not globally viable at the moment

Once again, it comes down to infrastructure. As I discussed in my previous post, the amount of CO­₂ released from electricity generation for electric vehicles varies from location to location. The thing is, in a place like India, Wilson’s report estimated the amount of Carbon released to work out to 370 CO₂e/ km.

This chart shows the mpg of a petrol vehicle that accounted for the same carbon emissions as an EV powered by grid electricity in each country

 

The thing is, that sort of figure is equivalent to a petrol car that gets about 20 US MPG (24 UK MPG). That’s not actually very good, in fact it’s below average as can be seen on the chart above.

What that means, is that if you lived in any of the red nations in the map below, you’d actually be ‘responsible’ for a lower amount of Carbon emissions if you drove an efficient petrol vehicle than if you drove an electric car. Whilst there may of course be some other benefits such as lower direct pollution in cities, overall carbon emissions would be higher as a result of your choice to buy an EV. 

As the below map of the USA shows, even within a country there can be great variances in how your power is generated, and hence how efficient a petrol vehicle would need to be for its carbon emissions to be equivalent to an electric vehicle.

What that means is that it’s not a viable solution for all people in all places. In order for this to be the case, certain nations would need to overhaul their power generation methods and switch to some low-carbon options. Irrespective of that being a necessity for the viability of EVs, that’s just generally a good idea as it lowers the global CO₂ emissions!

N.B. There is one thing that the aforementioned studies seem to have skipped over. The statements I’ve made assume that you’re sourcing your electricity from the national grid. If you generate your own electricity (using renewable methods such as solar panels on the roof of your home), then it’s a whole different ball game as ‘your’ electricity generation resulted in virtually no carbon emissions (apart from the manufacturing emissions of the solar panels). 

This is something that we should think about for the future- I have a great mental image of a rural outback community in Australia where the electricity is carbon-high being able to be self-sufficient for their own transportation needs instead of relying on road delivered petrol!

Is Electricity a Zero-Carbon Fuel? Are electric cars carbon free? Are they renewable?

So far in this blog I’ve explained how cars account for more than you might think of the globe’s anthropogenic Carbon emissions. I’ve also pointed out that traditional petrol and diesel vehicles make use of a non-renewable resource (oil).

Hopefully by now it’s obvious that if we are to keep driving cars, it would be beneficial to move away from traditional petrol and diesel vehicles with internal combustion engines that emit carbon from the exhaust. 10 years ago, Joe Romm (‘The Web's most influential climate-change blogger’ – Time [talk about setting the bar high!]) advised that ‘Ultimately, we will need to replace gasoline with a zero-carbon fuel’ and I believe that now, more than ever, his words still ring true. 

Whilst it’s true that electric vehicles do not directly, individually, emit any carbon, today I will try to examine whether: 1. Electricity is a zero-carbon fuel and 2. Whether we can say that electric cars carbon-free and use renewable resources.

As far as being a fuel for cars goes, it seems quite simple. Unlike an engined vehicle, there is no carbon by-product of propulsion in an EV so switching to EVs would result in no carbon being emitted by the vehicle. So no direct pollution. To rephrase that, a normal car ‘burning petrol’ releases Carbon Dioxide but an electric car ‘using electricity’ doesn’t. 

Does that mean that it’s a zero carbon fuel though?

The simple answer, is it depends.

Specifically, it depends how you generated that electricity in the first place.

In areas where coal is used to generate electricity, then CO₂ emissions from the generation process are substantially higher than methods such as tidal / wind or solar power. That’s pretty basic and may seem pretty obvious to some. All this is based on the assumption that one charges one’s EV from the national grid supply. So I guess the answer is that electricity can be a zero-carbon fuel (if we forgo the manufacturing and installation carbon emissions of the generator- for example, a wind turbine or solar farm) but it can also be a carbon heavy fuel as explained above. 

Armed with this knowledge, we can realise that when thinking about whether electric cars are carbon free, it really depends on where the electricity comes from. This report by Lindsay Wilson for the research group, Shrink  that Footprint has a great figure that demonstrated this perfectly. 

This chart shows the carbon emissions of an electric vehicle for different countries. For countries that use coal and other fossil fuels for their electricity generation, each electron is responsible for a higher amount of carbon.

We can see that when using available data on power generation from a variety of countries, an imaginary electric car running on electricity generated in India would effectively account for the emission of 370 g CO₂e/ km (based on assumptions of efficiency and manufacturing emissions, explained on page 5 of the report). 

By comparison, the very same vehicle running on electricity generated in Iceland or Paraguay would effectively account for the emission of 70 g CO₂e/ km.

The reason that this figure is not 0 g CO₂e/km is that the research estimates the carbon emitted during the manufacturing process of the vehicle (10.5 t CO₂e) and then divides it by the estimated lifespan of the vehicle (150,000KM) which gives a driving estimate of 70 g CO₂e/ km.

 In other words, 70 g CO₂e/ km is the lowest possible figure and indicates that the process of generating the electricity resulted in zero carbon emitted.

Therefore, whilst the electricity used in EVs can be ‘carbon free electricity’, there’s carbon that is emitted in the manufacturing process which means that EVs themselves cannot be seen as truly ‘carbon free’.

On the note of manufacture, it is true that more carbon is emitted during the manufacturing process of an EV vs an ICE car at 10.5 t CO₂e compared to 8 t CO₂e, of which battery manufacture is the main culprit, accounting for an estimated 4 t CO₂e.

However, over the same lifetime, these manufacturing emissions translate to 53.3 g CO₂e / km for an ICEV. That difference of 17 g CO₂e / km (remember it's 70 g CO₂e / km for an EV) is easily covered by the decreased carbon emissions from EVs, except in certain cases which I will explain in my next post on some of the challenges facing the widespread adoption of EVs as a solution.

So I guess the answer is that electric cars aren't completely carbon free as a result of carbon emitted during their manufacture, HOWEVER, they are 'carbon free-er' than ICEVs. 

Finally, do electric cars use renewable resources? 

Once again, it depends. 

This time it’s pretty simple though. Electric vehicles use electricity. If that electricity was regenerated using a renewable resource such as the sun, wind or wave power, then your EV uses renewable resources. 

On the other hand, if the electricity that you charge your EV with is generated through burning fossil fuels, then no, your electric car is using non-renewable resources. 

Why do people buy EVs?

I hope I’ve been able to demonstrate how EVs are clearly better for the environment and lead to a lower carbon footprint for individuals than ICE vehicles. Therefore, it is important to understand the reasons for people to take the environmentally-positive action of purchasing an EV.

Let’s return to the poll I created a while ago. At the time of writing this post it has received exactly 100 responses and by clicking ‘see results’ we can see that ‘Environmental Reasons’ and ‘The Driving Experience’ are significantly more important for the respondents than financial factors at 38% and 40% respectively. 

survey software

Whilst I did expect that the driving experience would rank highly, I thought that cost would be equally important. This would complement the study by Lane and Potter that identifies these two factors as outranking environmental reasons, as discussed in a prior post. However, I realise that different groups of people will have different motivation.

Given that I shared the poll with members of EV forums (thank you for voting!), it is likely that those who are engaged with their electric vehicles to the point that they are present on electric vehicle forums are likely to be genuinely interested in environmental issues and the driving experience of their vehicles.

Nearly a decade ago, Lane and Potter mentioned that common characteristics of EV adopters include: ‘high educational levels and incomes, are urban dwellers, and are interested in technology’. It seems that this still stands true today. 

From my interactions and personal engagement with EV owners on the various forums that I have visited whilst researching for my blog, they take pride in being early adopters of green technology and are interested in much of the technology and science behind their vehicles and in many cases have opted for more expensive EVs rather than simply focussing on saving as much money as possible.

In order to obtain a different perspective, I visited a local automotive garage that specialises in hybrid vehicles such as the Toyota Prius. From speaking to owners and employees, it became clear that many of the customers were private taxi drivers and companies who purchased the vehicles solely for their reduced costs per-mile compared to ICE vehicles and exemption from the London congestion charge.

When I learnt about the value-action gap in adopting ‘green products’ in my second year of university, I was also introduced to the concept of ‘inadvertent environmentalism’ These people who are incentivised by reduced expenditure can be seen as what Russel Hitchings et al. refer to as ‘Inadvertent Environmentalists’. 

For these individuals, it seems that although they are likely to in principle support taking environmentally friendly actions, these environmental values are not enough to instigate the relevant action, in this case, buying an electric car, so a ‘value-action gap’ is created. 

However, Hitchings et al. point out that what is first identified as a value-action gap may also reveal what they describe as an ‘action-value opportunity’. 

In essence, instead of fighting to increase environmental consciousness and reduce the gap, we can instead acknowledge the positive action being taken, and reward it (for example, through providing congestion charge exemptions) and in doing so begin to instil new environmental values. 

Hitchings et al. describe this approach to mitigating the value-action gap as simply a chance to ‘celebrate hitherto unacknowledged environmentalism’! 

So next time you get into your uber-summoned Prius, give the driver a pat on the back for being an [inadvertent] environmentalist!

The ‘Everything Else’ Argument: Incentives and Costs

Let’s talk about money. 

I think I’ve outlined a pretty good case for EVs so far and it seems that a lot of governments and authorities agree with me. For example, in the UK, if you purchase an electric car you get a grant of 35% of the vehicle’s cost up to £4,500. Furthermore, you’ll be exempt from paying the congestion charge in London and can effectively get preferential parking within the city.

When thinking about the cost of car ownership, it’s not just the capital expenditure but also the running costs and other ongoing costs that must be considered. To this end, EVs are an attractive proposition as the price-per-mile tends to be lower than that of ICE vehicles. 

To put it another way, in the main, it costs less to recharge a day’s electric driving than it does refill a day’s petrol or diesel driving. 

Whilst the cost of new batteries is significant, general maintenance on an electric motor is less costly than a traditional engine vehicle as there are fewer moving parts, less heat is generated and fewer fluids (such as oil and coolant) are required for EVs.

So as far as reasons to buy an EV go, it’s clear that there are financial benefits to doing so!

 It should be noted that if EVs ever do become the norm, it’s likely that there will be fewer reward-type incentives as these are generally aimed at early-adopters for whom it is recognised that there is perhaps increased uncertainty and a greater sense of financial risk as buyers are dealing with a new technology and must place faith more faith in the assertions of others than their own experience. 

So if you’re in the market, buy one now before the early-adopter rewards go away!