The Paradoxes of Quantifying Electric Vehicles’ Emissions in Regulated Economies

Electric vehicles (EV) and other so-called low emission vehicles (LEV) are promoted as means to reduce Greenhouse Gas emissions. Economists routinely assess the corresponding saving in emissions by considering that EV emit only “in the power plant”, based on the technological features of the energy generation system. Such quantification neglects regulations on CO2 emissions, such as Corporate Average Fleet Emissions and Emission Trading System, typically present in the EU. But these regulations can deeply alter EVs emissions, although indirectly. This mostly takes place through a compensation mechanism between EVs and conventional fleet’s emissions and through the capping of emissions in the energy sector. While most scholarly literature and policymakers suggest that EVs do not emit on the road but do so, instead, in power plants, our analysis concludes that EVs increase tailpipe emissions but do not increase energy production emissions; this is due to indirect and counterintuitive impacts triggered by regulation. This paradoxical result is robust to a large set of evolutions and adaptation strategies such as increase in renewables, technological progress, Vehicle-to-Grid, etc. Our analysis implies a correction of electric vehicles’ emissions quantification in use in countries where regulations produce these effects and, consequently, a reformulation of policy recommendations