Working Paper

Integrating electric vehicles within U.S. and European efficiency regulations

This paper assesses options for integrating electric vehicles within U.S. and European CO2 emission and efficiency regulations through 2030. The paper evaluates of future electric vehicle penetration under three regulatory approaches: life-cycle accounting, tailpipe accounting (i.e., electric vehicles are counted as zero), and the use of multipliers or super-credits (i.e., electric vehicles get counted multiple times). These three regulatory scenarios are assessed for their impact on the relative cost-effectiveness of electric vehicles versus combustion vehicle technologies, the regulating efficiency improvements of combustion vehicles, and the implications for fleet-wide CO2 emission reductions. Three implications of the work are as follows—

The use of electric vehicle multipliers or super-credits come with a substantial environmental cost. As electric vehicle shares continue to increase to above 5% of new vehicle sales, vehicle efficiency improvements are increasingly undermined due to super-credits. When super-credits and zero-upstream emissions accounting are used for electric vehicles, standards through 2030 could see a 26-41% loss in regulatory CO2 benefits.

There is a limited place for preferential incentives for electric vehicles within the efficiency and CO2 regulations. Zero gram per kilometer CO2 accounting in regulations provides a balance for electric vehicles, improving their cost-effectiveness by 23%-33% to help spur the market, with a modest environmental cost of 4–6% of the overall CO2 benefits through 2030.

Any stringent standards can help drive electric vehicles into the market. Such regulations, if developed with smart built-in incentives, clear targets for electric vehicles, and complementary consumer policies, can be highly effective in accelerating the deployment of electric vehicles.