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Bjorn Lomborg: Norway having 10% electric cars is because of ‘massive subsidies’ – New $30K car could receive benefits worth $26K

Electric cars are certainly fun, but almost everywhere cost more across their lifetime than their gasoline counterparts. That is why large subsidies are needed. And consumers are still anxious because of the short range and long recharging times.

Despite the U.S. handing out up to US$10,000 for each electric car, less than 0.5 per cent of its cars are battery-electric. Almost all the support goes to the rich. And 90 per cent of electric-car owners also have a fossil-fuel car that they drive farther. Indeed, electric vehicles are mostly a “second car” used for shorter trips and virtue signalling.

If you subsidize electric cars enough, people will buy them. Almost 10 per cent of all Norway’s passenger cars are now electric because of incredibly generous policies that waive most costs, from taxes to tolls, parking and congestion. Over its lifetime, a US$30,000 car might receive benefits worth more than US$26,000. But this approach is unsustainable for most nations. Even super-rich Norway is starting to worry, as it loses more than a billion dollars every year from exempt drivers.

Though technological innovation will eventually make electric cars economical even without subsidies, concerns over range and slow recharging will remain. That is why most scientific prognoses show that electric cars will increase in sales but not take over the world. A new study shows that by 2030, just 13 per cent of new cars will be battery-electric. Governments that ban new fossil-fuel cars would essentially be forbidding 87 per cent of consumers from buying the cars they want. It is hard to imagine that could be politically viable.

The International Energy Agency estimates that by 2030, if all countries live up to their promises, the world will have 140 million electric cars on the road, about seven per cent of the global vehicle fleet. Yet, this would not make a significant impact on emissions — for two reasons. First, electric cars require large batteries, which are often produced in China using coal power. According to the IEA, just producing the battery for an electric car can emit almost as much as a quarter of the greenhouse gases that a gasoline car emits across its entire lifetime.

Second, the electric car is recharged on electricity that almost everywhere is significantly fossil fuel based (though, in fairness, Quebec is an exception, with its almost entirely hydro-produced electricity).

Together, these two factors mean that, over its first 60,000 kilometres, a long-range electric car will emit more CO₂ than a gas car. Having a second electric car for short trips could actually mean higher overall emissions.

Comparing electric with gasoline cars, the International Energy Agency estimates the electric car will save six tons of CO₂ over its lifetime, assuming global average electricity emissions. Even if the electric car has short range and its battery is made in Europe mostly using renewable energy, its savings will be at most 10 tons.

President-elect Biden wants to restore the full electric car tax credit, which means he will essentially pay US$7,500 to reduce emissions by at most 10 tons. Yet, he can get U.S. power producers to cut 10 tons for just US$60. What he plans to spend on electric-car subsidies could cut 125 times more CO₂ if he spent the money directly on emission reductions.

If the whole world follows through and gets to 140 million electric cars by 2030, the IEA estimates that will reduce emissions by just 190 million tonnes of CO₂ — a mere 0.4 per cent of global emissions. In the words of Fatih Birol, head of IEA, “If you think you can save the climate with electric cars, you’re completely wrong.”

We need a reality check. First, politicians should stop writing huge cheques in the mistaken belief that electric cars are a major climate solution.

Second, there is a much better and simpler solution. Again according to the IEA, hybrid cars, such as the Toyota Prius, save about the same amount of CO₂ as electric cars over their lifetime. Moreover, they are already competitive with gasoline-driven cars — even without subsidies. And, crucially, they have none of the electric car downsides, with no need for new infrastructure, no range anxiety and quick refill.

Third, climate change doesn’t care about where CO₂ comes from. Personal cars are only about seven per cent of global emissions, and electric cars will only help a little. Instead, we should focus on the big emitters of heating and electricity production. If research and development could make green energy cheaper than fossil fuels in these uses, that would be a game-changer.

Right now, electric car subsidies are something wealthy countries can afford to give to rich elites to show virtue. But if we want to fix climate, we need to focus on the big emitters and drive innovation to create better low-CO₂ energy from fusion, fission, geothermal, wind, solar and many other possible ways forward. Innovations that will make just one of them cheaper than fossil fuels mean not just well-meaning rich people changing a bit, but everybody, including China, India and nations in Africa and Latin America, switching large parts of their energy consumption toward zero emissions.

Bjorn Lomborg is president of the Copenhagen Consensus. His new book is “False Alarm – How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet.”