Untangling electric car policies

Amid global concerns about the environment and climate change, electric vehicles have come to the forefront of the car industry. From the introduction of modern electric-combustion engine hybrids in the 1990s to fully electric vehicles like Tesla growing more common today, the regulation of the car industry is a central part of the push for reducing greenhouse gas emissions worldwide. Due to prevalent emissions, both the federal government and state governments have worked to encourage electric vehicle adoption, but these actions interact with one another in interesting ways.

Jeremy Michalek, professor of engineering and public policy and mechanical engineering at Carnegie Mellon University, has recently published a paper analyzing federal and state policies on electric vehicles with Inês Azevedo, professor of engineering and public policy, and Alan Jenn (EPP ’14) of the University of California, Davis.

“A question that we have is ‘To what degree do these efforts succeed in reducing carbon emissions?’” says Michalek.

The federal government’s policy incentivizes electric vehicle adoption by allowing automakers selling electric vehicles to follow relaxed emissions standards on their overall fleet (including gasoline and diesel-fueled cars). At the state level, California leads several states mandating that if automakers want to sell vehicles in the state, a certain portion of them must be electric.

Both policies encourage the development of new technologies and incentivize the sale of more electric vehicles, but they interact in an counterintuitive way. The state policy pushes electric vehicles into the market and the federal policy gives automakers a break on emissions standards for traditional cars when more electric vehicles enter the market. This results in a “dirtier” overall fleet. This leads to a peculiar situation: people indirectly increase emissions when they buy an electric car.

The harder you push on electric vehicles, the dirtier the rest of the fleet gets. In this study, we try to understand that effect, that interaction, and see how big it is.

Jeremy Michalek, Professor, Mechanical Engineering and Engineering and Public Policy

“The harder you push on electric vehicles, the dirtier the rest of the fleet gets,” Michalek said. “In this study, we try to understand that effect, that interaction, and see how big it is.”

Michalek and his colleagues considered the full life cycle of vehicles, taking into account emissions of everything from the tailpipe to the power plant that provides electricity and upstream emissions like those from producing and transporting natural gas for a power plant. They also considered the emissions that come from producing the battery and the vehicle itself. 

“We added up the emissions under alternative policy scenarios,” Michalek said. “What if the state government was mandating electric vehicle sales but the federal government did not have incentives? Or the other way around, what if the federal government had incentives, but not the state government? And then, what if they both do? What we find is when both go together, the overall emissions of the fleet increase.”

In recent years, federal emissions regulations have been in flux. In 2018, the Trump administration announced plans to roll back the federal policy and relax emissions standards. The potential loosening of restrictions will likely lead to a legal battle between the federal government and California, which is permitted to have its own emissions regulations because the state already had regulations in place prior to the federal Clean Air Act of 1970. 

Michalek expects a determination on what the standards will be sometime later this year. Michalek’s main policy recommendation from these research results is to let the alternative fuel vehicle incentives in current federal policy expire.

“I think they should be left to expire, and we should use different mechanisms for encouraging alternative fuel vehicle adoption,” he said.

Michalek continues research on the implications of different policies that try to encourage electric vehicle adoption. One ongoing project aims to understand how the California policy might drive down the cost of the technology and potentially allow the government to set tighter standards in the future.

“Our study shows that state efforts to encourage electric vehicle adoption end up increasing fleet emissions in the near term because of the way federal standards are designed,” Michalek said. “But now we’re asking, what about in the long-term? Might these efforts lower technology costs enough to provide a benefit in the long-run despite the near term emissions? We’re working to find out.”