Reducing energy demand in the transportation sector is one of the most difficult challenges we face to meet our CO2emission reduction targets. Due to the sector’s dependence on fossil fuel energy sources and the monumental negative consequences for climate change, air pollution and other social impacts, countless researchers, policymakers and other stakeholders view a widespread transition to electric mobility as both feasible and socially desirable.
How do we go about making it happen? As researchers working on low carbon mobility we need to start looking beyond technical challenges and look at the role of consumer acceptance and driver behavior, as well as the role for policy coordination, to move forward. My colleagues and I have been looking at research on vehicle-to-grid (V2G) and vehicle-grid-integration (VGI) and found that the focus has been too narrow so far. To help make the transition to electric mobility happen, we need to understand the benefits of the technology and propose areas where research should expand. Read more ›
Despite the hype and excitement, not to mention the fanciful visions put forth by Tesla’s Elon Musk, electric vehicles (EVs) are not yet winning over the transportation sector.
Aside from a few outliers, one to two per cent of the vehicles sold in most developed nations, including the United States, the United Kingdom, Germany and France, are electric vehicles. Canada is a clear laggard, with market share well below one per cent.
This is nowhere near the goal set by the Clean Energy Ministerial for electric vehicles to make up 30 per cent of the vehicles sold by 2030, which seems to be the minimum trajectory to achieve the long-term mitigation goals for greenhouse gases.
Despite these unimpressive sales, enthusiasts argue that the electric future is inevitable, driven by ever-cheaper batteries and consumer interest. But we’ve seen such predictions of unbridled optimism before for several alternative fuel visions — all followed by periods of unmet expectations and disappointment.
Perhaps recognizing its lack of progress to date, the Canadian government plans to announce a Zero Emissions Vehicle (ZEV) Strategy in early 2018.
To help inform this strategy and the Canadian public, my research team at Simon Fraser University, supported by the Metcalf Foundation, has this month released Canada’s ZEV Policy Handbook. This report builds off of our 2016 EV Policy Report, which found that no part of Canada was on its way to meet long-term EV sales goals. Our new handbook provides a toolbox to get us on track.
The future of EVs: Why we need public policy
My team’s published research shows that some of the biggest barriers to EV sales are a lack of supply, limited availability and variety of EV makes and models, and limitations in charging infrastructure. The only thing that can overcome these barriers is public policy.
All of the improvements in cars and trucks over the last century, be they safety, environmental or otherwise, can be linked directly to policy. Seat belts, air bags, unleaded gasoline, fuel economy improvements — all came about through strong policy support.
The same is true for EVs.
For example, much of the initial and ongoing development of hybrid, plug-in hybrid and battery electric vehicle technology can be linked to one particular policy: California’s ZEV mandate
First introduced in 1990, the ZEV mandate requires automakers to develop and sell EVs (or hydrogen fuel-cell vehicles) in California. Automakers that do not sell enough EVs relative to their other vehicle sales can either buy credits from those that over-comply (e.g. Tesla) or pay a stiff financial penalty.
Only a few regions globally are breaking through the two per cent barrier for EV sales. In each case, policy can be viewed as the main driver.
The clear champion to date is Norway — no other country comes close.
In 2017, about one in every three new vehicles sold in Norway is an EV. The explanation is no secret: Norway offers huge incentives.
Specifically, the country has removed the high taxes typically applied to the purchase of a new car in that country, effectively lowering the purchase price of an EV to about equal that of a conventional vehicle.
California is a different sort of EV champion. For decades, the California Air Resources Board (CARB) has sought to support and direct innovation to help the state to achieve its environmental goals. In recent years, CARB has solidified a vision of deep greenhouse-gas mitigation for each sector.
Its approach to passenger vehicles includes a number of complimentary policies — financial subsidies, high-occupancy vehicle (HOV) lane access and deployment of charging infrastructure. But what stands out is the ZEV mandate.
This policy is unique in that it puts the onus on automakers to leverage their marketing skills and innovation to build the EV market, and to develop the makes and models that consumers want. In addition to California and the nine other ZEV states, Québec has recently developed a ZEV mandate, along with China.
These two leading regions provide two different strategies for EV success. Norway’s strategy is largely “demand-focused,” using exceptionally large incentives and tax breaks to make EVs more appealing to consumers. California’s strategy, on the other hand, focuses more on the supply side, applying a regulation to automakers to channel innovation and marketing strategy.
In our new ZEV Policy Handbook, we find that both demand-focused and supply-focused policy packages can work in Canada.
The problem is that current policies in Canada, and most countries globally, are too weak: Short in duration and lacking in “teeth.”
Many regions offer EV purchase subsidies, but these are too small and temporary to make a noticeable difference in EV sales in the long term. Ontario’s purchase incentive is notably large, offering $3,000 to $14,000 for an EV. But because it’s not clear if such a policy will be in place for more than a year or two, automakers and other stakeholders don’t get a clear signal if EVs really are the future.
Comparing subsidies and regulations
While both approaches can be successful, they have different strengths and weaknesses. Our handbook compares each policy package across five criteria: Effectiveness, cost-effectiveness for government, political acceptability, complexity and strength of “signal” for transition.
Offering strong, Norway-like subsidies can indeed push EV sales, and subsidies in general are found to be publicly acceptable. However, to have a lasting impact our modelling indicates that such incentives will need to be large in value and offered for a long duration, likely a decade or even longer.
Such a plan would be costly for government, which could lead to public backlash in the long run, not to mention limiting public funds that could be used for other societal benefits such as education or health care.
The ZEV-mandate approach has the advantage of being clear and direct. Automakers are given a sales target, with firm penalties for non-compliance, in effect harnessing and guiding the powers of innovation and product development at the source.
Most immediately, research shows that regions with a ZEV mandate have significantly increased EV availability and EV sales.
In the longer term, such a policy can send a strong, durable signal to the many relevant stakeholders that the transition to electric mobility is under way, producing confidence to develop and build supporting infrastructure and services.
The main drawback is the political resistance by automakers, who understandably bristle at the thought of added regulation. For this reason, some policymakers see a ZEV mandate as politically uncomfortable, especially in regions where automakers have strong political clout, such as Canada, the United States and Germany.
Due to such potential opposition, our handbook also considers a third pathway to success: Dramatic tightening of our vehicle emissions standards, to about 40 per cent of the current fleet average by 2040. Such a policy could also send a signal about a transition to EVs, without requiring extensive government expenditure.
Either way, go big
There is an easy answer for what can make EVs thrive: Strong policy.
However, there is no easy answer for which strategy is best for a given region. Norway and California provide excellent examples of leadership — though each has its own unique cultural and political contexts. Any region, national or subnational, that is serious about supporting EVs will need to consider the trade-offs for themselves.
But it’s clear that the only way to be successful is to go big: Either implementing large subsidies for a long time, or enacting strong, durable regulation with “teeth.”
The book presents a historical perspective of the role of energy in driving economic growth. It grapples with the question of whether we need radical change to our
economic system to create a sustainable future or whether investment in renewables will drive a new phase of “green growth”. The discussions at the event clearly demonstrated how divided the sustainability community is over answering this question. While everyone agreed that we need a positive approach, some were arguing for more radical changes to deal with the magnitude of the problem.
The ideas behind the book
Having been at SPRU for the past 3 years, this book has definitely helped all the ideas I have heard in seminars and lectures come together and suddenly make sense. ‘This is a truly interdisciplinary book that brings together different strands of thinking’, said Professor Carlota Perez, the discussant at the event and who I interviewed briefly afterwards.
What is unique about it, as Karoline Rogge, Senior Lecturer at CIED pointed out during the discussion, is the way it brings together the concept of techno-economic paradigm changes with ecological economics, which describes the way in which economies depend on flows of energy and materials to and from natural ecosystems. Ecological economics emphasizes the interdependence of the economy with natural ecosystems, as opposed to mainstream economic thinking which treats the environment as an externality. The book emphasises the way we should not only change where our energy comes from but the way we use it, increasing energy productivity.
It also draws on Carlota Perez and Chris Freeman’s work on techno-economic paradigm changes. Carlota Perez, building on work by Freeman and Schumpeter, identified five surges of economic growth throughout history starting with the industrial revolution. Each surge has been driven by a set of technological and organisational innovations attracting financial investment that leads to a bubble and a crash. Then, after a recessive period, a growth era begins, with the full social benefits of the technology being realised when institutions have co-evolved to help realise them.
The book proposes a dilemma: will a new surge of growth driven by investment in renewables, also known as “green growth” be the solution to our climate crisis or do we need to make more radical changes to our economic system and move to a post-growth economy, a system that focuses on delivering well-being rather than growth?
New pathway to prosperity
‘This is a very useful book. It is a condensed Bible of the energy and growth debate’ – said Carlota Perez. You could sense optimism in the room, which was partly filled with students studying on SPRU’s MSc programmes, including Energy Policy. They could be the future agents of change for the low carbon transition. The discussion after the lecture focused mostly on the ideas outlined by Prof Foxon on how to build a new pathway to prosperity, such as promoting green innovation, reducing working hours and introducing basic income, reducing wasteful consumption to move towards a circular economy and a way of measuring economic growth more focused on human wellbeing.
However, Prof Foxon pointed out that the only politically feasible strategy at the moment is focusing on “green growth”, but we should at the same time be developing ideas for a “post-growth” economy. ‘Without growth, we are not going to improve the lives of the great majority, but we need to redefine what we mean by growth’- said Carlota Perez.
We also have to remember that the low carbon transition is not only about technology; people play a key role too. As Prof Foxon emphasised: ‘It is important that people come together and keep the pressure on politicians and on industry to move faster towards a low carbon transition’.
I was certainly left with a lot of questions but also a sense of enthusiasm and curiosity. We have a big challenge ahead of us, but I felt that the people in the room were ready to rise to it.
Nora Blascsok is Communications and Engagement Officer for CIED.
Tim Foxon will be posting a further blog about his new book in the New Year.
In recent years there has been a surge of interest in community energy projects. Countries such as Denmark, Germany and the UK have seen such initiatives flourish, creating new ways of “doing energy”. As the country with the second highest share of renewables in Europe, one might expect to also find Finland among the leaders when it comes to innovative community energy projects. But despite its progressive energy policy, Finland has seen little activity when it comes to community energy initiatives. In a recent paper published in the Journal of Cleaner Production we investigated community energy initiatives in Finland, focusing on factors that could be preventing them from scaling up.
Community energy is a diverse sector with varied projects, types of origins and approaches. There is no such thing as a typical community energy project. In the UK context, they often mean sustainable energy projects which are initiated, led and developed by a range of civil society actors such as charities, cooperatives and neighbourhood networks.
Community energy in Finland
In Finland, community energy is often understood as small-scale local renewable energy. To date, there are only a few community energy projects; and while there is interest to develop such projects on the ground, the country has limited policies that would promote small-scale distributed energy production and citizen participation. To understand the factors that are preventing them from scaling up we interviewed thirteen members of 9 community energy projects and eleven experts involved in the sector.
Based on our interviews, we identified three different types of motivation for community energy projects in Finland:
1) cost reduction projects, where the projects’ main motivation was to save money related to energy costs;
2) technical expertise projects, where the projects were driven by the know-how of key members; and
3) system change projects, where project members wanted to disperse certain new technologies or knowledge into wider society.
Identifying barriers to community energy in Finland
Our research identified a number of barriers that are impeding the wider expansion of community energy projects in Finland.
Networks between local projects that enable the sharing of experiences and learning between projects can play a crucial role in increasing the number of community energy projects. Our research found that on the whole, networks were limited. Perhaps unsurprisingly, the ‘system change’ projects showed the highest degree of networking, learning, and interest in expanding.
We also found that the characteristics of community groups, cultural aspects and the specific context in which community energy develops are relevant in the scaling-up process. For example, in Finland, as in the UK, there is a culture of trying to ‘keep up’ with your neighbours. This could influence the uptake of community energy projects, as people are keen to see what their neighbours are doing and to copy them. Furthermore, concepts such as joint ownership, often used as a model in community energy projects, are relatively rare in Finland.
Scaling-up is also limited by issues that go beyond individual projects. These include a lack of a clear joint vision for the sector by key actors and practitioners and a clear sense of what community energy could mean in the Finnish context. There is also a limited number of organisations dedicated to promoting the sector, while an unfavourable policy and regulatory framework add further barriers.
The examples we studied show that there is scope for future expansion of community energy in Finland and this could be further aided by dedicated organisations, such as the Finnish Clean Energy Association, that facilitate networking and help share learning. As Finland has continued objectives for a low carbon energy future, citizen-led, local community energy projects could play a part in helping to deliver those.
This research was part of a wider research project for a PhD thesis by Salvatore Ruggiero and it was carried out with funding from the University of Jyväskylä. The work was also supported by the Centre on Innovation and Energy Demand.
While there was much acknowledgement of failings in UK energy policy and the enormous challenges ahead, particularly when it comes to decarbonising heat, there was palpable optimism in the room when looking to the future. One of the key messages was that the traditional “trilemma” is no more. Several experts said that the three dimensions of low costs, security of supply and reduction in carbon emissions no longer represent a challenge. Instead, according to one expert, we are now facing a 3D challenge: Digitisation, Decentralisation and Decarbonisation. Another expert went further and suggested that the energy sector is actually facing a 5-dimensional challenge: Decarbonisation, Decentralisation, Digitisation, Democratisation, and Disintermediation. Yet another suggested that Diversity should also be added to the list.
In this brave new “D” world, issues of low cost and security of supply are sure to remain. For example, it is unlikely that the annual press obsession with winter blackouts will disappear. Yet at the heart of the shift in the thinking on future challenges is the potential that can be harnessed from “smart” systems. This conference also demonstrated this shift by focusing on how “smart” systems could change the way energy is generated, supplied and consumed.
Colin Calder from PassivSystems gave illuminating insights into how blockchain technology could be used to harness the ability for consumers to trade energy they are generating (for example from solar panels on their roof) in a trusted secure way. Blockchain is the technology behind Bitcoin and is much lauded for its robustness and extremely low risk of corruption. It appears to be a good choice for providing a means for “prosumers” (both producing and consuming energy) to trade with each other. So-called “learning algorithms” could use smart systems to keep a home or office environment at particular temperature, while using pricing signals on the grid to do this in the most cost-effective way. Learning algorithms process data to determine patterns for a particular situation and therefore useful in automating comfort conditions in a home environment.
Catherine O’Kelly, from British Gas, talked about a forthcoming pioneering trial of 100 households in Cornwall. The aim of this trial is to test and demonstrate flexible demand, generation and storage. The homes are to be given the kit to generate and store their own energy. and connect to a virtual marketplace where the flexible energy is traded.
There were also positive discussions on the rapid current progress in the electric vehicle (EV) sector. With many mainstream car manufacturers announcing electrification of their fleets in the coming years, there was a mood of cautious optimism that the age of the electric car may finally be dawning. However, Darran Messem, Chairman of the Low Carbon Vehicle Partnership, emphasised that EVs still constitute less than two per cent of new car sales. In addition, much more work needs to be done in developing the technology for freight and the integration with emerging smart business models. Given the rate of change in this sector it was also argued that the policy landscape is largely playing catch-up; with big questions remaining over the lack of charging infrastructure and the capacity of EVs to offer demand-side response in the current distribution network arrangements.
Perhaps the most heated debate surrounded the Chair of the Committee on Climate Change, Lord Deben’s claim that the energy companies are still not doing enough to address energy demand in the residential sector. In particular, Lord Deben emphasised the lack of progress on residential energy efficiency, and chastised the energy retail sector for sitting on its hands and continuing to profit from the UK’s woefully inefficient housing stock. One solution he offered was the possibility for variable stamp duty for more efficient properties, as a means for stimulating demand for low carbon retrofits. Indeed, recent research by the Centre on Innovation and Energy Demand (CIED) and the UK Energy Research Centre (UKERC) has shown that the huge cost savings from the sector are not being realised by the current suite of policies.
To conclude, the UK is set to fail to meet the 4th carbon budget unless radical new policies are put in place, and decarbonising heat still looks an incredibly tough nut to crack. But learning is well underway in how we can leverage sophisticated information technology to help us meet our energy needs in a secure, cost-effective way. Simon Sharpe from BEIS ended the conference confirming that there is much government support for innovation and that smart systems have the potential to provide the most flexible energy systems in the world.