International Transportation (67) 2 | 2015 24 The environmental impact of-electric vehicles in China A climate-friendly solution or an exacerbation of-the-problem? Climate impact, environmental policy, market incentives, lifecycle assessment Monetary purchasing subsidies, super credits, tax exemptions and local incentives for industry and consumers: China is sparing no efforts in its drive towards market expansion for e-mobility. The motives of China’s industrial policy are straightforward, yet environmental protection as a driver is not equally unambiguous. Prevalent coal-fired electricity production is sparking doubts whether an electrification of motorized individual mobility will have a positive impact on the climate. A Sino-German cooperation project 1 addresses these issues by assessing the environmental impact of electric vehicles in China. Authors: Frederik Strompen, Christian Hochfeld, Ye Wu A s an important economic driver in China, the automotive sector is a significant provider of employment and shapes technological innovation. It has significantly contributed to China’s unprecedented economic growth over the past decades. Conversely, daunting climate and environmental concerns have cast a shadow on this development. Air pollution, noise, accidents, congestion - the list of very tangible, negative external effects of transport is long. Less perceptible, but significant effects are the greenhouse gas emissions released by countless internal combustion engines burning fossil fuels. The associated negative social, environmental and climatic impacts create a real dilemma: Implementing environmental policies in the transport sector that are conducive to trade, personal mobility and economic development while preventing negative external effects such as climate change, is a challenging yet inescapable mission for Chinese policy makers. With its 12th five-year plan (2011-2015), the Chinese Government identified the promotion of electric vehicles (EV) as a key to addressing this challenge. Catching up with other industrialized nations through a technological leapfrog in Photo: Vogel BEST PRACTICE E-Mobility International Transportation (67) 2 | 2015 25 E-Mobility BEST PRACTICE automotive engineering while reducing the dependency on oil imports, mitigating tailpipe and greenhouse gas emissions would be an economic and environmental win-win situation for China. Yet, the EV market has not met the Government’s expectations in terms of overall sales numbers - as is the case in many other countries in the industrialized world, including Germany. Just short of 110,000 EVs were registered in China by the end of 2014. The sales target of 500,000 vehicles by the end of 2015 is barely reachable. The trend, however, is promising. With 83,900 vehicles sold in 2014 alone, the market really started to advance last year. In July 2015 alone, Chinese vehicle manufacturers produced a total of 20,000 EVs - 3.5 times as many than in the same month of the previous year. In contrast to the conventional vehicle market that is dominated by foreign manufacturers, domestic producers like BYD and the BAIC currently dominate the national EV market. This dominance is partly caused by the design of the promotional regulatory framework, which most strongly benefits EVs produced in China. To what extent EVs alleviate the environmentally harmful effects of motorized transport depends on a number of influencing factors. When driven (in purely electric mode), EVs produce neither air pollutants nor greenhouse gases at the tailpipe. The environmental impact of EVs really depends on upstream emissions such as the emissions caused by electric power generation as well as the vehicle manufacturing and recycling process. Whether the electricity is generated from renewable energy or from fossil fuels is a key question in this regard. Additional factors play an important role. These include: the number of EVs in the market, vehicle kilometers travelled (VKT) and their real-world power consumption, the resource efficiency of the production/ recycling process and the type of vehicles they replace. Electric vehicle policy in China The Chinese State Council is currently aiming for a target of five million EVs registered by 2020, with one million EVs to be produced by Chinese manufacturers. A number of fiscal and non-monetary policies have been put in place to reach this goal. Building on the experiences from earlier programs in China, monetary incentives have been put in place: The benefits are dependent on the electric range of the vehicle (see table 1) and will gradually decline from 2016 to 2020. To comply with the recently published fuel economy standards, the automotive industry has to lower the average corporate fleet consumption to 5.0 liters per 100 kilometers by 2020. To encourage EV sales, socalled super credits are awarded. Each (plug-in) EV sold is credited with a multiplier as a zero-emission vehicle (the multiplier gradually decreases from the factor 5 in 2016 to the factor 2 in 2020). Financial subsidies for the development of charging infrastructure are channeled from the national government to the municipalities in proportion to the number of locally registered EVs. Also, obligatory procurement guidelines to increase the share of EVs in public fleets have been released. National efforts are complemented through promotional policies on a municipal level. A total of 88 nationally approved pilot cities are currently implementing a wide range of local EV policies that aim to curb local protectionism, expand charging infrastructure and increase the share of EVs in municipal and private fleets. Cities compete for the status as a pilot city and the associated budget allocation. Available national sales subsidies can be doubled by municipalities. To encourage EV ownership beyond that, the Beijing municipality has introduced a special quota in the number plate lottery exclusively for EVs. This leaves the consumer with an 88 % chance of receiving a number plate for an EV and a 0.5 % chance for a conventional combustion engine. Moreover, the city of Shenzhen includes bus and taxi operators in the emission trading scheme to encourage the procurement of “zero-emission vehicles” while Shanghai excludes EVs from its vehicle auction (equaling a monetary value of 80,000 RMB). Still, a crucial question remains unanswered: Are these significant promotion policies justified from an environmental standpoint? Lifecycle assessment (LCA) of electric vehicles The best (LCA) tool and dataset that is available in China (see figure 1) was applied to look into this question. The model com- Subsidy criteria Phase III: 2016-2020 (EUR) Subsidy criteria Phase II: 2013-2015 (EUR) Vehicle type: 2016 - 2020 Range (km)/ Length (m) 2019-2020 (-40 %) 2017-2018 (-20 %) 2016 (Baseline) 2013-2015 Range (km)/ Length (m) 2015 (-10 %) 2014 (-5 %) 2013 (Baseline) Battery electric passenger vehicles 100-150 km 15,000 20,000 25,000 80-150 km 31,500 33,250 35,000 150-250 km 27,000 36,000 45,000 150-250 km 45,000 47,500 50,000 250 km and more 33,000 44,000 55,000 250 km and more 54,000 57,000 60,000 Plug-in hybrid electric passenger vehicles 50 km and more 18,000 24,000 30,000 50 km and more 31,500 33,250 35,000 Battery electric busses Subsidy based on: energy efficiency weight length Up to: Up to: Up to: 6-8 m 270,000 285,000 300,000 360,000 480,000 600,000 8-10 m 360,000 380,000 400,000 10 m and longer 450,000 475,000 500,000 Plug-in hybrid electric busses Subsidy based on: energy efficiency weight length Up to: Up to: Up to: 10 m and longer 225,000 237,500 250,000 180,000 240,000 300,000 Table 1: National EV subsidies in China from 2013-2020 Source: Ministry of Science and Technology International Transportation (67) 2 | 2015 26 BEST PRACTICE E-Mobility pares the energy consumption, greenhouse gas and critical air pollutant emissions of various types of EVs with those of conventional gasoline vehicles. The full LCA includes the fuel cycle and the vehicle cycle: • The fuel cycle can be broken down into the well-to-tank (WTT) and the tank-towheel (TTW) analysis. Energy consumption and emissions during the WTT stage are a result of resource extraction, its transportation and storage. Crucial influencing factors are generating efficiency, electricity mix and filter technologies. During the TTW stage, emissions and energy consumption during vehicle operation are considered. The fuel economy and vehicle kilometers traveled (VKT) are the crucial determinants. • The vehicle cycle calculates the overall energy consumption and emissions across the product life by assessing the elements of mining, refining and processing of raw ore; vehicle production processes; waste treatment and recycling. Where does the electricity come-from? Limited domestic fossil fuel reserves, serious environmental pollution and increasing public concern have initiated a turn-around in Chinese transport energy and environmental policies. According to current governmental plans, the share of coal in total energy production shall decline from a current 79 % to less than 62 % by 2030 [1], which is even more ambitious than assumed in this study (see scenarios in figure 2). These ambitious plans have already found their way into policy implementation: China is leading worldwide investments in renewable energies, having poured the equivalent of 75- billion EUR into this area in 2014 [2] - twice as much as the USA as the runner-up. Despite this, the major sources of electric power are coal, natural gas and hydropower.-In the study’s baseline year 2010, the coal power share was 79 %, followed by hydropower at 16 %. However, regional differences in China are immense. The Pearl River Delta with the megacities Shenzhen, Guangzhou and Hong Kong source already about one third of their energy from hydropower. Electric vehicle market uptake Aside from the issue of power sources, the share of EVs in the vehicle population is a crucial determinant for the environmental impact of the overall fleet. The projection of light-duty vehicle stock development is determined by gross domestic product, population growth, population density and vehicle control policies. Based on the input data (China’s population is estimated to grow between 10.8 and 12.9 % in the next 15 years) the light-duty vehicle population could possibly grow to up to 453 or 560 million vehicles in 2030. For the projection of EV numbers, the study relied on user acceptance derived from hundreds of interviews in China, and on relevant national Coal Natural gas Hydro Nuclear Others National average a) 2010 1% 1% 1% 1% 79% 71% 60% 63% 55% 44% 8% 8% 10% 10% 10% 2% 5% 6% 2% 3% 4% 6% 6% 16% 28% 30% 32% 12% 13% 15% b) 2030 (conservative) c) 2030 (ambitious) Pearl-River- Delta Region Figure 2: Two electricity mix scenarios for 2030 (conservative, ambitious): The national average and the Pearl-River-Delta Region (South Grid) serve as an example for the six regional grids under study. Fuel cycle well-to-wheel Vehicle cycle Well-to-tank Resource extraction Resource transportation & storage Fuel production Fuel transportation storage & distribution Vehicle operation Refining & processing of raw ore Refueling Waste treatment & recycling Mining Vehicle production Tank-to-wheels Figure 1: Methodological framework for the LCA Source: GIZ International Transportation (67) 2 | 2015 27 E-Mobility BEST PRACTICE market development plans. Scenario 1 focuses on the expected development of plug-in hybrid EVs with a market share of 18 % by 2030 (see figure 3). Scenario 2 stresses the development of battery-operated EVs reaching 8.6 % market share in 2030. Greenhouse gas mitigation potential promising in the mid-term The lifecycle CO 2 emissions were of special interest in the study. The results are shown in figure 3. In the baseline year 2010 the lifecycle CO 2 emissions of an EV exceeded the emissions of an internal combustion engine vehicle (ICEV) (when using the national grid mix), not least due to significant energy demand in the vehicle cycle. This value decreases in 2015 and is expected to continue to do so in subsequent years due to the higher share of renewable energies and cleaner coal-production technologies. By 2030 EVs are expected to produce 27 % lower emissions over their full lifecycle compared to ICEVs. Feeding the LCA emission results into the two described vehicle population growth scenarios shows that the CO 2 emissions of the overall vehicle population in China are set to continue to increase rapidly this decade (see figure 4). Without an increased market penetration of alternative propulsion technologies, the road transport sector could reach an emission level of 794 million tonnes of CO 2 by 2030. The percentage reduction in respect to CO 2 emission relative to the business as usual scenario is between 5 and 6 % for both of the two vehicle population development scenarios. Substantial CO 2 mitigation effects occur from 2020 onwards. By 2030 propulsion technologies could save between 40 and 47 million tonnes of CO 2 . Air quality effects uncertain Fine particles or particulate matter (PM2.5) pose a large health risk especially in densely populated megacities. They are the main reason for the so called “Airpocalypse” in China. Because of their small size, particulates can easily become lodged deep inside a person’s lungs, causing considerable damage. In Beijing, about one third of all local PM2.5 emissions can be attributed to road transport [3]. Various air pollutants were analyzed in the study. EV promotion significantly reduces volatile organic compound and carbon monoxide emissions, but may increase nitrogen oxide, sulfur dioxide and PM2.5 emissions significantly. Figure 5 displays the per-kilometer well-to-wheel primary PM2.5 and volatile organic compound emissions for hybrids, plug-in hybrids with an allelectric range of 15 or 50 kilometers (PHEV15/ 50) and battery-powered EVs relative to their ICEV counterpart in China from 2010 to 2030. Well-to-wheel PM2.5 emissions mainly result from upstream energy production. As the power generating efficiency and clean energy production share increases, emissions gradually decrease for all propulsion technologies. By 2030 the well-to-wheel PM2.5 emissions of hybrid EVs and plug-in hybrids (PHEV15) will decrease by 30 % and 14 % respectively. Plug-in hybrids with a longer all-electric range (PHEV50) and battery EVs exceed emissions of a conventional vehicle (ICEV) by 42 % and 91 %. The principal concern when discussing air pollutants are health effects, especially in an urban environment. As emissions shift from the tailpipe to upstream energy production, not only the quantity but also the location of air pollutants matters. Apart from the EV market share, the impact on urban ambient air quality depends on the location of the energy production as well as meteorological and topographic conditions. ICEV HEV PHEV50 BEV ICEV HEV PHEV50 BEV ICEV HEV PHEV50 BEV ICEV HEV PHEV50 BEV ICEV HEV PHEV50 BEV 2010 2015 2020 2025 2030 400 350 300 250 200 150 100 50 0 g CO 2 / km Well-to-tank Tank-to-wheel Vehicle cycle BEV Battery Electric Vehicle PHEV50 Plug-in Hybrid Electric Vehicle with an all-electric range of 50 km HEV Hybrid Electric Vehicle ICEV Internal Combustion Engine Vehicle 2010 2015 2020 2025 2030 1000 800 600 400 200 0 WTW CO 2 emissions, million tonnes Business as usual Scenario 1 Scenario 2 Figure 3: Lifecycle CO 2 emissions using different propulsion technologies Source GIZ/ Tsinghua Figure 4: CO 2 emissions of Chinese road transport for two market development scenarios of EV Source GIZ/ Tsinghua International Transportation (67) 2 | 2015 28 BEST PRACTICE E-Mobility Energy security: a burning topic in-China By 2013, the share of imported petroleum in total domestic oil consumption in China rose to an all-time high of 58 % compared to 33 % in 2000. Beyond its impact on international politics, the dependency on imported fossil fuels has negative macro-economic effects: Volatile fuel prices and the export of domestic value creation lead to economic uncertainty and negative effects on employment. E-mobility in China has the potential to completely decouple the automotive sector from imported fuels. Plug-in hybrids with an all-electric range of 50 km can significantly reduce petroleum consumption by up to 50 %. Given that the share of oilbased electricity generation in China is negligible, battery-powered EVs almost entirely eliminate petroleum consumption. Climate protection through e-mobility does not come for free The LCA results show: Promoting e-mobility is not a low-hanging fruit in the battle against climate change. The long-term mitigation potential of EVs could come at significant abatement and environmental costs today. Nonetheless the LCA also shows that a low-carbon automotive sector is not attainable without EVs. A scenario analysis for the case of Germany comes to comparable conclusions [4]. A low-carbon transformation of the road transport sector is only attainable if EVs are established in the market, if transport demand management is effectively leading to a modal shift and if the share of renewable energy increases substantially. What are the implications of these results for policy making in China? A comprehensive systemic climate and environmental approach is required beyond the promotion of e-mobility. Now is the time to develop innovative intermodal mobility solutions, improve battery recycling, transform the energy sector and install dust removal and desulfurization technology. If these preconditions are met, e-mobility in China will activate its huge climate and environmental protection potential. To develop a roadmap for a climate and environmentally sound e-mobility is the aim of the Sino-German cooperation project “Electro-Mobility and Climate Protection in China” funded by the German Federal Ministry for the Environment as well as several Chinese Ministries. Coming back to the initial question: Are the substantial investments in e-mobility justified from an environmental point of view? We believe that the answer is “we currently do not see much of an alternative”. Without any doubt the demand for motorized individual mobility in China will not slow down significantly any time soon. The technological lock-in effect of not investing in e-mobility now - to enable it to develop at the same pace as the renewable energies - could therefore be very costly in the long run. Long development cycles in the automotive industry, long innovation cycles for traction batteries and a costly charging infrastructure require early collaboration across industry and the state. If government, car manufacturers, and other stakeholders, such as charge point operators and utilities, fail to drive the required market expansion now, the passenger road transport sector is likely not ready for the necessary decarbonization when the power sector is! ■ 1 The cooperation is funded by the German Federal Ministry for the Environment through its International Climate Initiative, and implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and Tsinghua University. The study can be downloaded from www.sustainabletransport.org. SOURCES: [1] Energy Development Strategy Action Plan (2014-2020), China State Council [2] Frankfurt School-UNEP Centre (2015), Global Trends in Renewable Energy Investment [3] Beijing Municipal Environmental Protection Bureau (2014), http: / / zhengwu.beijing.gov.cn/ [4] Umweltbundesamt, Öko-Institut (2013), Treibhausgasneutraler Verkehr 2050 Christian Hochfeld Senior Advisor Sustainable Transport, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Beijing (CN) christian.hochfeld@giz.de Ye Wu, Prof. Tsinghua University Beijing, School of Environment, Beijing (CN) ywu@tsinghua.edu.cn Frederik Strompen Project Manager, E-Mobility and Climate Change, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Beijing (CN) frederik.strompen@giz.de ICEV HEV PHEV15 PHEV50 BEV ICEV HEV PHEV15 PHEV50 BEV ICEV HEV PHEV15 PHEV50 BEV ICEV HEV PHEV15 PHEV50 BEV 2015 2020 2025 2030 0.07 0.06 0.05 0.04 0.03 0.02 0.01 0.00 PM 2.5 emissions (g/ km) Well to tank Tank to wheel ICEV HEV PHEV15 PHEV50 BEV ICEV HEV PHEV15 PHEV50 BEV ICEV HEV PHEV15 PHEV50 BEV ICEV HEV PHEV15 PHEV50 BEV 2015 2020 2025 2030 0,5 0,4 0,3 0,2 0,1 0,0 VOC emissions (g/ km) Well to tank Tank to wheel Figure 5: Well-to-wheel PM2.5 and VOC emissions for different propulsion technologies until 2030 Source: GIZ/ Tsinghua