Electric vehicles (EVs) are becoming cheaper along with the cost of lithium-ion batteries, and their market share is expected to increase. The International Energy Agency's Global EV outlook 2017 estimates that there are already two million EVs on the road worldwide, with China and the United States taking the lead, followed by Japan, Norway, and the Netherlands. Still boosted by subsidies in many jurisdictions today, it won't be too long until EVs will become price-competitive on their own (see my blog Volvo goes electric). The EV30@30 Campaign, supported by the Clean Energy Ministerial working group, aims for a 30% market share of EVs by 2030.

As EVs become more popular, are electric vehicles (EV) always cleaner than conventional gasoline or diesel vehicles, and always cleaner than hybrid-electric vehicles? The answer, put simply, is: electric vehicles are only as clean as the electricity they use. If electricity is generated mostly from coal, EVs are not necessarily cleaner.

In a recent and very influential paper Holland et al. (2016) asked the question "Are there environmental benefits from driving electric vehicles?" in response to the generous subsidies that are offered for EVs in the United States at the federal level and by individual states. They are careful to include all types of emissions, both global pollutants (carbon dioxide) as well as local pollutants (nitrogen oxides and others). As EVs charge from the local grid, which is broadly divided into three major interconnections in the United States, EVs draw on electricity that ranges from broadly clean (in the west) to broadly dirty (in the east). All included, they find that in some jurisdictions subsidizing EVs is beneficial as it further helps reduce local pollution, while in others EVs should actually be taxed because charging them increases pollution from dirty power plants. Charging EVs also generates much larger spatial spillovers. Whereas driving a conventional internal-combustion engine vehicle pollutes your local environment, charging EVs can trigger pollution far away as power plants in distant corners of the grid provide power.

The situation is generally more advantageous in Canada, where a larger share of electricity is generated from hydro power than in the United States. But not all provinces are equally clean. Alberta's, Saskatchewan's, and Nova Scotia's electricity still makes use of a lot of coal (68%, 51%, and 64% in 2015, respectively). Ontario has phased out coal and only uses about 12% natural gas. The rest is from carbon-free sources including wind, sun, nuclear, and hydro.

Exactly how dirty can electricity be for EVs to remain superior to gasoline-engine vehicles or hybrid-electric vehicles? It is useful to carry out a few simple back-of-the-envelope calculations to illustrate the feasible range. Let us focus only on carbon dioxide and set aside local pollutants for the moment. As Holland et al. (2016) shows, taking local pollutants into account fully sets the bar higher for EVs. To begin with, a typical gasoline-powered car emits about 250 grams of CO₂ per kilometer, and a typical hybrid-electric vehicle about half that. Electric vehicles require about 0.25 kWh per km, and a simple approximation of the CO₂ output of power plants is to use the share of coal and natural gas. The average coal plant has emissions of about 900 grams of CO₂ per kWh, and the average natural gas plant about 400. An EV that was powered solely by coal would thus emit 225 grams of CO₂ per kilometer, while electricity solely from natural gas would bring this number down to 100. With this information it is easy to conclude that EVs ares always cleaner in terms of CO₂ than a conventional gasoline-only vehicle (225 is a bit less than 250). EVs don't always win out against hybrid-electric vehicles everywhere.

The ternary diagram below shows the composition of electricity with respect to the share of coal and natural gas, with the remainder (labeled "renewables") capturing all carbon-free sources. This type of diagram is very useful for showing three variables in two dimensions. Every point in the diagram represents a different composition. The point at the top of the triangle marks where all generation is carbon-free. Moving down on the left side (and the red lines) increases the share of coal, and moving from left to right on the bottom side (and the blue lines) increases the share of natural gas. At the bottom left all generation is from coal, and at the bottom right all generation is from natural gas. Finally, moving up along the right side (and the green horizontal lines) increases the share of carbon-free electricity sources.

Several provinces are marked in the ternary diagram. Low-carbon provinces such as BC and Ontario hover at the top of the diagram. The provinces that rely much on coal—Alberta (AB), Saskatchewan (SK) and Nova Scotia (NS)—are clustering in the bottom left of the diagram. In these three provinces, driving a hybrid-electric vehicle will remain the better choice than driving an EV. The green and yellow areas show where EVs and hybrids are cleaner, respectively. If electricity was purely from natural gas, EVs would still be less CO₂-intensive than hybrids. As soon as the share of coal exceeds 20%, however, EVs are at risk of becoming more CO₂-intensive than hybrids. When the share of coal rises above 50%, it's pretty much game-over for EVs.

The calculations above are rather simplistic, but they capture the gist of the problem. Promoting EVs makes sense in places where electricity is relatively clean. However, where electricity still relies on a lot of coal, hybrid-electric vehicles are the better option to promote. Public policy should carefully adjust promotional programs to take the composition of electricity generation into account.

Update February 2020: The International Energy's Global EV Outlook is an annual publication. You find the 2019 edition here. It is available free, but visitors to the IEA site have to register. The key highlights: the global stock of electric passenger cars passed the 5 million threshold in 2018, with 45% of them in China.