THE ROLE OF BATTERY ELECTRIC VEHICLES IN DEEP DECARBONIZATION

1. Introduction

Two major forces are converging that could dramatically change transportation. The first force is technological change and the second is climate change. For the first time in a century, the emergence of advanced battery electric vehicles (BEVs) could topple the dominance of internal combustion engine (ICE) vehicles for road-based passenger and the freight transport. Electric vehicles (EVs), once deemed inferior and expensive, have seen improvements in batteries, electric motors, and related electronic technology to the point where EV performance and cost could soon be comparable to that of a conventional ICE (Nykvist and Nilsson, 2015; Reichmuth and Goldman, 2017). At the same time, the Paris Agreement of 2015 (UN, 2015) under the United Nations Framework Convention on Climate Change (UNFCCC, 1992) has set ambitious decarbonization goals. Whereas earlier analysis found that transport was the most difficult sector to decarbonize (Clarke et al., 2014), the battery technology could overturn that finding. The purpose of this paper is to explore the degree to which the technological developments in batteries and EV platforms could change conventional understanding of future transportation and greenhouse gas emissions mitigation. While Paris goals are framed in terms of limiting average global temperature change relative to pre-industrial levels in 2100, most of the heavy lifting occurs in the next few decades. We will focus our attention on changes that occur by 2050, a period which is also more directly influenced by near-term technology and policy developments, although our analysis includes the full period to 2100.

The central question that this paper seeks to explore is, what impact could continued advances in BEV technology have in reshaping the future global energy system and what implications do those changes have for future CO₂ emissions with and without emissions limiting policies? The impact of BEV technology improvements can be seen on the energy system, relative to a reference scenario, for which we assume that technology developments follow patterns similar to those of the past, and relative to an alternative scenario in which BEV technology continues to improve. Future pathways are thus articulated highlighting the impacts of technology and CO₂ emissions mitigation policies independently and in combination. None of the six pathways that we develop (see Methods below) is intended to be an unconditional forecast of the future. Rather the six alternative scenarios are intended to work in combination to illuminate energy and emissions sensitivities to technology and emissions limitation scenarios.

The present transportation sector is dominated by fossil fuel use, accounting for roughly one-quarter of global fossil fuel and industrial GHG emissions, all associated with direct combustion (IEA, 2018). This study advances prior research on the implications for the general trend toward electrification (EPRI, 2018; Sugiyama, 2012) to explore a future in which all global road transport services are electrified through the explicit availability of BEV options for all the transport road modalities. The transition to BEVs provides a new and readily achievable emissions mitigation opportunity for addressing climate change in the transport sector. The emissions reduction potential within the transport sector from BEV adoption is clear since BEVs have no tailpipe emissions. However, the broader economy-wide emissions and energy system impact of BEV adoption and the economic and climate mitigation cost implications of a fully electrified global road transport network are not well understood. This analysis investigates energy system pathways between two alternative road transport systems, one dependent on the liquid fuels and another dependent on the electricity, under deep decarbonization scenarios. While many analyses have investigated the relationship between transportation and global GHG emissions reduction (Edelenbosch et al., 2017; McCollum et al., 2018; Pietzcker et al., 2014), with the exception of Zhang and Fujimori (2020) few analyses investigate the ultimate value of global BEV penetration and the link between transport electrification and climate mitigation cost.

In its Fifth Assessment Report (AR5), the Intergovernmental Panel on Climate Change (IPCC) found the transportation sector to be one of the most difficult to decarbonize (Clarke et al., 2014; Sims et al., 2014). Two features of the sector work together to generate this effect are: (1) a lack of competitive low-emission alternatives to fossil fuel transport that could easily overtake the market if the cost of fossil fuels increased and (2) the small share of fuel costs in the overall cost of providing transport services. Hence, economic modeling has generally found that carbon taxes have relatively little effect on emissions mitigation in the transportation sector (Sims et al., 2014). In contrast, fuel cost is a substantial part of the cost of electricity generation from fossil power and many cost-competitive, low or zero-emission alternatives to fossil fuels are available including wind, solar, nuclear, hydro, and bioenergy, as well as carbon capture and storage (CCS) options for fossil fuels and biomass energy. A carbon tax has a powerful effect on carbon emissions in the power sector, particularly for new investment decisions, and it is generally understood that the electricity sector represents a low-cost opportunity for GHG emissions reduction (IPCC, 2014). Additionally, a carbon tax, in itself, encourages greater electrification of end-use services because the price of electricity rises less rapidly than the price of fossil fuels with the associated carbon tax (Edmonds et al., 2006; Larsen et al., 2018).

Global analyses of climate change often lag in the adoption of new technologies (Barron, 2018) and thus far, the rapid penetration of BEVs occurring for all the passenger and freight road transport services from improvements in BEV performance and cost have not been anticipated. The cost of the lithium-ion (Li-ion) battery pack is the largest single contributor to the purchase price of BEVs with sufficient range to compete with ICE equivalents. Dramatic battery price reductions have been achieved in the past decade as the average price of the Li-ion battery pack has fallen from 1000$/kWh in 2010 to 132$/kWh in 2021 (BNEF, 2018, 2020, 2021; Goldie-Scot, 2019; Nykvist and Nilsson, 2015; Reichmuth and Goldman, 2017). Recent improvements to the longevity of Li-ion batteries may allow BEV battery packs to provide a million-miles of use that can last the lifetime of the BEV (Harlow et al., 2019). Rapid improvements to battery characteristics and costs are lowing the purchase price of BEVs for all the modal applications. For passenger light-duty vehicles (LDVs), the BEV cost is nearly at parity with ICE equivalents (Lutsey and Nicholas, 2019).

Fully electric buses (e-buses) and electric trucks (e-trucks) for commercial and municipal applications are also emerging. For e-buses and e-trucks, the total cost of ownership (TCO), which includes fuel, operating, maintenance, and infrastructure costs in addition to the vehicle purchase cost, is a more relevant and favorable metric for comparisons to diesel equivalents. The upfront purchase price of e-buses and e-trucks are significantly higher than their diesel equivalents thus far, but e-buses and e-trucks are more compelling in TCO comparisons (BNEF, 2018; Heid et al., 2017). With continued battery cost improvements, currently declining at a rate of 18% per year (BNEF, 2018), Li-ion battery pack costs below 100$/kWh is expected within the next few years and as low as 70$/kWh by 2030 (BNEF, 2018; Goldie-Scot, 2019). Vehicle purchase cost parity of LDVs and TCO parity for most bus and truck applications are expected within a decade (BNEF, 2018; Heid et al., 2017).

The potential benefits of BEVs for local air pollution, carbon emissions, and vehicle operational savings are so great that many cities and municipalities have already announced plans for large-scale or full transition to electrified road transport within the next few decades (Aldama, 2019; Barnard, 2019; BNEF, 2018; Michell, 2020). Local and regional actions to limit or phase-out the use of ICEs in favor of BEVs for both private and public road transport could lead to a fully electrified global road transport system by mid-century.

The long-term transportation scenarios with alternative assumptions of BEV adoption in an integrated assessment (IA) framework to fully assess the upstream and downstream impact of global transport electrification are explored in this paper. A scenario in which new purchases of ICEs are phased out implements an approach that goes beyond employing fuel price penalties alone. We compare two extreme scenarios; one where future road transport is fully electrified and another where ICEs and liquid fuel use continue to dominate road transport. We explore two alternative climate policy backgrounds. One limits global climate forcing to 2.6Wm${}^{-2}$ implying an average Earth surface temperature change of $2^{\circ }$C. The other assumes current policies remain in effect indefinitely. By contrasting these two scenarios, we can quantify the mitigation cost impact of transport electrification. Additional sensitivity cases, with and without CCS, explore the economic value of transport electrification as it interacts with other technology availability. Throughout the analysis, we systematically quantify the impact of BEV adoption on global liquid fuel use, electricity generation, carbon emissions, energy prices, and mitigation cost in achieving the 2.6Wm${}^{-2}$ ($2^{\circ }$C) goal.

2. Methods

Six scenarios were developed using the Global Change Assessment Model (GCAM) (Calvin et al., 2019; Edmonds and Reilly, 1985; Kim et al., 2006; Wise et al., 2014) to investigate the role of BEVs in future GHG emission pathways. The version of GCAM utilized here reflects advances in capturing interactions between the energy sector and macro-economy, GDP, and are documented in Supplementary Materials to this paper. The transportation sector representation in GCAM is detailed and reconciles top-down and bottom-up issues by enabling specific vehicle technology characterization within modal nesting and transport service categories (Kim et al., 2006; Kyle and Kim, 2011). Historically based price and income elasticities for transport demand behavior and transport service costs that include not only fuel and vehicle purchase costs, but also the travel time value of transit modes, determine the demand for transport services. This feature more realistically captures the opportunity cost of transit or commuting times and preferences for faster and time saving modes of travel. Moreover, the IA framework of GCAM fully captures the economy-wide upstream and downstream responses from changes in the provision of transport services and fuel choices.

Table 1 provides a summary of the six scenarios investigated. Two transport technology scenarios (Base, BEV), two climate policy backgrounds (No Policy, 2.6Wm${}^{-2}$), and climate policy with two alternatives for carbon capture and storage technology availability (CCS, NoCCS). We use the Base scenario as a benchmark against which to compare the transportation technology and restricted climate forcing scenarios.

Base is the GCAM core scenario and employs “Middle of the Road” (Fricko et al., 2017) technology assumptions and does not anticipate rapid penetration of BEVs in road modalities. ICEs are preferred in Base, reflecting legacy views of continued ICE dominance. Recent data, however, show strong growth in global EV sales with sales volume doubling from 3 million in 2020 to 6.6 million vehicles in 2021 with corresponding EV market shares rising from 4% to 9% (EVvolumes, 2022; IEA, 2022). We may be reaching a tipping point in the transition toward BEVs driven primarily by reductions in vehicle purchase cost from ongoing improvements in battery cost (Carrington, 2021; Stone, 2020; WRI, 2021).

The BEV scenario, in contrast to Base, explores a world in which all road transport modalities are fully electrified soon after 2050. The BEV is a transformative scenario in which it removes the availability of the ICE option for new purchases for all road transport by 2050. We are agnostic as to whether this outcome emerges as the result of preference changes or regulatory intervention. In the BEV scenario, existing stocks of ICEs operate until end of life is reached by 2065. We assume that consumer and government preferences favor BEVs by the mid-century due to economic and environmental factors. The BEV scenario is updated with recent cost improvements of batteries and assumes falling purchasing cost of BEVs that reach parity with conventional ICEs by 2035. In addition, battery-electric options for two- and three-wheel vehicles, buses, and freight trucks are also included along with LDVs such that electrification of all road transport modality is possible. Other nonemitting vehicle technologies, such as hydrogen fuel cell EVs and battery electric technologies for rail, air, and ship modalities were not included in the scenario.

In our 2.6Wm${}^{-2}$ scenarios, we explore the sensitivity of our results to the availability of carbon capture and storage technologies. We label the cases in which CCS is widely available and unavailable as CCS and NoCCS, respectively. In CCS scenarios, we allow the technology to be applied widely throughout the economy, including options for use in cement manufacturing, electricity generation, petroleum refining, and hydrogen and biofuels production. CCS use in conjunction with bioenergy creates the potential for carbon emissions removal and net negative emissions, otherwise known as bioenergy with carbon capture and storage (BECCS). Other negative emission technologies with large-scale potential but higher costs (Minx et al., 2018), such as direct air capture and ocean fertilization, were not included in the analysis. However, we include some carbon from biological sources to be used as industrial feedstocks and stored in long-lived products for the built environment. Previous studies have shown that the widespread deployment of CCS to be an important strategy for addressing climate change (Clarke et al., 2014). Afforestation and policies to expand the land-carbon reservoir are also possible but raise food prices and were not included in this analysis (Wise et al., 2014).

3. Results

3.1. Carbon prices and climate mitigation costs

Alternative assumptions of transport electrification result in divergent energy pathways with large differences in the resulting carbon price for achieving the 2.6Wm${}^{-2}$ limit (Fig. 1(a)). This change is amplified with time. By 2050, the change in carbon price is more than 20% if CCS is available and more than 27% if it is not. Global carbon prices, measured in 2015 constant US dollars, rise to a range of 165–520$/tCO₂ by 2050 from the lowest cost scenario, 2.6_BEV_CCS with both BEV and CCS technologies, to the highest cost scenario, 2.6_Base_NoCCS without both technologies. Greater availability of all emissions mitigation options is beneficial for reducing the mitigation costs in general. But lower carbon prices are achieved with BEVs as BEVs reduce the dependence on costly carbon-neutral biofuels for relatively less expensive zero-emissions electricity (see Sec. 3.4). It is also noteworthy that continued improvements in BEV technologies, as assumed here, are a more cost-effective provider of mobility services and lead to increased GDP of roughly 0.5% in 2050.

Emission mitigation costs of the alternative technology scenarios, as measured by the area under the marginal abatement cost (MAC) curve for carbon, are shown in Fig. 1(b). The undiscounted global annual mitigation costs in 2050 range from 3.6 to 9.4 trillion 2015 constant US dollars per year, with both BEV and CCS inclusion as the least expensive, and the base transport technology without CCS as the most expensive. Carbon price reductions from BEV adoption resulted in 24% and 27% lower emissions mitigation cost with and without CCS, respectively, by 2050 relative to corresponding scenarios without BEVs (Fig. 1(b)). The incremental impact of CCS availability was 50% with base technology and 48% with BEV.

As an alternative to the MAC cost assessment, gross domestic product (GDP) losses in the alternative 2.6Wm${}^{-2}$ scenarios are compared. A macro-economic module has been newly implemented in GCAM that captures the GDP feedback of domestic and global energy system changes and emissions mitigation responses that is further described in the Supplementary Materials. The GDP is a primary driver of energy and service demands in GCAM and this new capability addresses a prior limitation of GCAM. Changes to the GDP from carbon price impacts, with feedback of changes in energy prices and energy service provisions, provide a more consistent measure of economic impacts as compared to the MAC cost estimates calculated with static GDP pathways. As noted earlier, the BEV is a technological improvement unavailable in the reference scenario. This improvement is reflected in a 0.5% increase in GDP in 2050 in the 2.6Wm${}^{-2}$ scenario.

Rising carbon prices have a negative impact on regional and global GDPs due to higher energy prices and reduced energy services. Thus, all climate scenarios have lower GDPs than the Base scenario (Fig. 1(c)). Global GDP losses in the alternative 2.6Wm${}^{-2}$ scenarios range from 5% to 12% in 2050 (Fig. 1(d) and Table 2), which is consistent with IPCC estimates of climate mitigation costs (Clarke et al., 2014). GDP losses are substantially avoided in our advanced BEV scenarios due to lower carbon prices required for achieving the 2.6Wm${}^{-2}$ limit.

BEVs mitigate global GDP losses in 2050 by 23% (with CCS available) and 27% (with No CCS), as shown in Fig. 1(d) and Table 2. While the availability of CCS technology reduces GDP losses by 47% (with base transport technology) and 44% (with advanced BEV technology). The combined impact of adding BEV and CCS technology to the reference technology set in the 2.6Wm${}^{-2}$ scenario is to reduce GDP losses by 59%.

BEV benefits for reducing GDP losses in the 2.6Wm${}^{-2}$ scenarios are even greater in latter half of the 21st century as the emission constraint becomes more stringent, carbon prices continue to escalate, and road transport becomes fully electrified. Figures 6 Panel c and S1(d) shows nearly 40% reduction of GDP losses by 2100 from the BEV transition.

The two alternative approaches, MAC cost and GDP change, to measure the emissions mitigation cost impact of BEV adoption resulted in similar magnitude of mitigation cost savings.

3.2. Carbon emissions

Reductions in total global fossil fuel and industrial CO₂ emissions due to BEVs alone are approximately 6% lower in the BEV scenario than Base by 2050 (Fig. 2(a)). Emissions reduction without climate policy is notable but modest in contrast to the 2.6Wm${}^{-2}$ scenario. Other studies have shown that BEVs have lower lifecycle GHG emissions than ICE vehicles but the magnitude of these differences is dependent on the composition of electricity production in a region (Bieker, 2021). Transportation sector CO₂ emissions are directly responsive to BEV adoption, however, and are reduced by 62% in the BEV scenario by 2050 (Fig. 2(b)). There is substantial reduction in transportation sector CO₂ emissions consistent with recent analysis of transport decarbonization potential when viewed in isolation from the rest of the economy (Gota et al., 2019). Moreover, falling demand for refined liquid fuels due to electrification has the additional benefit of lower upstream emissions from unconventional oil production and fuel refineries. Emissions reduction from upstream fuel production amount to as much as 9% by 2050, as shown in the combined industrial and buildings sector emissions of Fig. 2(c). However, electric power sector CO₂ emissions are 22% greater in BEV than Base by 2050 (Fig. 2(d)) and counteract emission reductions achieved by transportation and industrial sectors.

The transition to BEVs allows large portions of the transport sector to decarbonize more rapidly than other end-use sectors in the 2.6Wm${}^{-2}$ scenarios. Direct transport emissions decline more rapidly since EVs have no tailpipe emissions. This response is a departure from previous transport studies such as the IPCC AR5 (Sims et al., 2014; Sugiyama, 2012). This result is contingent on our assumptions, which are critical to the result. First, we assume that BEVs rapidly reach parity and then become more cost-effective providers of transport services. Second, in our most aggressive BEV scenario, we assume that BEVs take over the new sales market. We note that the ability to assess and quantify the specific sectoral contributions to net total emission is made possible by the IA framework.

In the 2.6Wm${}^{-2}$ scenarios, future global CO₂ emissions are constrained to a fixed trajectory, and thus, the availability of BEV or CCS technologies does not affect total CO₂ emissions (Fig. 2(a)). Alternative technology pathways do, however, have an impact on emissions at the sector level. When CCS is not available, all sectors must rely fully on carbon-neutral fuels or zero-emissions electricity as the dominant approach to achieve deep carbon emissions reductions. Without CCS, CO₂ removal from the atmosphere is limited to afforestation and enhancement of other natural carbon stocks and potential applications of biological feedstocks to produce long-lived materials for the built environment (Kuittinen et al., 2021). Whereas with CCS, net negative CO₂ emissions from BECCS in electric power and industry compensate for continued fossil fuel utilization in transport. In the 2.6_Base_CCS scenario without BEVs, the transport sector continues to emit CO₂, but emissions are 45% lower in 2050 relative to Base (Fig. 1(b)). Deployment of BEVs, in addition to CCS, further lowers the transport of CO₂ emissions as electrification reduces the need for liquid fuels in transport. Transport CO₂ emissions are 81% lower by 2050 in 2.6_BEV_CCS relative to Base (Fig. 2(b)). At the same time, the BEV scenarios have reduced the deployment of BECCS technologies as compared with Base transportation technology scenarios.

3.3. Transport services

The primary force driving aggregate demands for passenger and freight transport services is income growth, which affects both the scale and composition of services, with higher per capita incomes demanding both more total service and preferring time-saving modes. The resulting scale of the global passenger and freight transport service demands (not including international shipping) is shown in Fig. 3(a). In the Base scenario, passenger service grows by more than half from 2015 to 2050, while freight service grows more than doubles. Changes in the composition of LDV, bus, and freight truck by vehicle technology for Base and BEV are shown in Fig. 3(b). The vehicle composition in the BEV scenario is driven primarily by the ICE phase-out assumption. Overall, passenger transport demands for LDV and air travel grow relative to bus, rail, and other modes due to rising incomes and preferences for faster modes of travel (Fig. S6).

Passenger and freight transport services increase in the BEV scenario relative to Base as the cost per passenger-kilometer and ton-kilometer declines with BEV adoption. By 2050, global passenger and freight services are 4% and 2% greater, respectively, in BEV than Base (Fig. 3(a)). Once the nonenergy cost of BEVs reach parity with ICE equivalents, as assumed to occur by 2035, the cost of transport service provision from BEVs is lower than their ICE alternatives due to lower fuel costs. Reduced cost of transport services in all scenarios with BEV transportation assumptions show greater GDP than those with Base transportation technology assumptions. The higher GDP in turn feeds back to further stimulate demand for transport services (Fig. 3(c)).

Limiting climate forcing to 2.6Wm${}^{-2}$ decreases transport services relative to the Base transport scenario. Global passenger and freight services are reduced by 6% and 13%, respectively, by 2050 in 2.6_Base_CCS, and more severely by 11% and 23%, respectively, in 2.6_Base_NoCCS (Fig. 3(a)). Both the increase in the transport service cost from higher fuel prices and tailpipe carbon penalties and slower GDP growth from higher economy-wide energy prices temper the growth in transport service demands. The magnitude of transport service reductions is directly linked to the carbon price levels when road transport is dependent on liquid fuels and ICEs as shown by the relative severity of service reduction between the 2.6_Base_CCS and 2.6_Base_NoCCS scenarios. The impact on freight truck services is particularly noticeable due to their higher fuel and carbon emissions intensity and fuel cost shares.

A fully electrified road transportation system is less affected by the 2.6Wm${}^{-2}$ limit. BEVs counter the impact of emissions mitigation on the transport sector by limiting the carbon price influence on transport service costs since carbon penalties on tailpipe emissions are eliminated and electricity price increases are capped by the availability of nonemitting power generation options. Note that the more rapid phase out of ICE buses and freight vehicles relative to passenger vehicles is due to the more intensive use of buses and freight vehicles and hence a shorter service life. Thus, BEVs allow total passenger and freight transport services to remain near levels observed in the Base scenario while achieving the 2.6Wm${}^{-2}$ limit (Fig. 3(a)).

When compared to the BEV scenario, however, the introduction of the 2.6Wm${}^{-2}$ policy leads to small reductions in the overall demand for transportation services. For example, total passenger transportation service is reduced by 1% in 2.6_BEV_CCS relative to BEV and 7% when CCS is unavailable. At the modal level and for LDV and freight trucks in particular, the transition to BEVs results in transport services that exceed Base levels despite the stringent 2.6Wm${}^{-2}$ scenario (Fig. 3(c)).

3.4. Energy pathways

BEV penetration shifts energy use toward electricity and alters energy pathways as shown in Figs. 4(a)–4(d). Biofuel use is affected by both technology and policy. Biofuels use more than quadruples between Base and 2.6_Base_NoCCS. Total economy-wide refined liquid fuel use is reduced by 25% in the BEV scenario by 2050 relative to Base (Fig. 4(a)). Both fossil fuels and biofuels contribute to total liquid fuel use for transport with fossil fuels comprising the bulk of liquid fuel use in Base without climate policy. The BEV scenario reduces global fossil fuel use relative to total energy (Fig. 4(b)). But, biofuels use also falls by 24% in BEV by 2050 relative to Base since fossil liquids and biofuels are substitutable at the end-use (Fig. 4(c)).

Increases in electricity demand for supporting BEVs counter reductions in liquid fuel use in transport. Global electricity generation increases by 24% in BEV by 2050 relative to Base (Fig. 4(d)). Nonetheless, the net impact on emissions between Base to BEV technology scenarios is to reduce CO₂ emissions by 6% in 2050.

It is the carbon price in the 2.6Wm${}^{-2}$ scenarios that exerts the greatest change in liquid fuel use and the relative shares of fossil fuels to biofuels composition. In 2.6_Base_CCS, global total liquid fuel use is reduced by 22% by 2050 relative to Base (Fig. 4(a)), but fossil fuel and biofuel use move in opposite directions. Fossil fuel composition of total liquid fuel use is cut in half, while biofuels use more than doubles. Since biofuels are treated as a carbon-neutral commercial fuel, biofuels do not incur carbon penalties. Emissions from any land-use change and conversion losses from biofuel production are accounted for directly. Fossil fuel use continues in 2.6_Base_CCS, as carbon sinks from BECCS compensate for emissions from continued fossil fuel use in transport and other sectors.

When CCS including BECCS is not available in the 2.6Wm${}^{-2}$ scenarios, global use of fossil fuels decline by 86% relative to the Base scenario and biofuel increase by 320% without BEV and 241% with BEV by 2050. Other potential carbon-neutral synthetic fuels (Rosa, 2017) were not included in this analysis since carbon feedstocks from capture is not assumed to be available in this scenario. Total liquid fuel use, fossil plus biofuel, is reduced by 43% in 2.6_Base_NoCCS by 2050 relative to Base.

BEV adoption in the 2.6Wm${}^{-2}$ scenarios further lowers the demand for liquid fuels since road transport, a major portion of total transportation energy demand, substitutes electricity for liquid fuels. Total economy-wide global liquid fuel use in 2050 is reduced by 40% and 55% in 2.6_BEV_CCS and 2.6_BEV_NoCCS, respectively, relative to Base (Fig. 4(a)). This translates to significant reductions in the biofuel consumption. Relative to Base 2.6Wm${}^{-2}$ scenarios, BEVs reduce biofuel use by 17% and 19% with and without CCS, respectively, by 2050 (Fig. 4(c)). Liquid fuel use continues in other nonroad transport modalities and end-use sectors.

The consequence of both BEV adoption and limiting climate change to 2.6Wm${}^{-2}$ is an increase in electricity demand. Relative to Base, global electricity demand increases by 26% and 32% for the 2.6_BEV_CCS and 2.6_BEV_NoCCS, respectively, by 2050 (Fig. 4(d)).

BEVs have significant impact on lowering the cost of limiting climate change to 2.6Wm${}^{-2}$ by enabling the substitution of electricity for liquid fuels in the transportation sector. Refined liquid fuel and electricity prices diverge sharply over time in the 2.6Wm${}^{-2}$ scenarios as shown in Fig. 5 (see also Fig. S5) (Luderer et al., 2022). Electricity prices, although higher initially with climate policy, are capped from escalation due to the availability of multiple nonemitting technologies, such as renewable, nuclear, and CCS technologies. For instance, US electricity prices in the 2.6Wm${}^{-2}$ scenarios, with or without BEVs, never exceed more than 40% of the Base scenario electricity prices as shown in Fig. 5(a). Carbon penalties have a greater impact on near-term electricity prices since power generation initially is predominantly derived from fossil plants with carbon emissions. But over time, rising carbon penalties have a diminishing impact on electricity prices due to the rapid accumulation of nonemitting power capacity, retirement of fossil plants, and the subsequent decarbonization of electricity. The consequence of this is that carbon penalties have a similarly diminishing impact on BEVs. Refined liquid prices are also lower in the 2.6Wm${}^{-2}$ scenarios with advanced BEV technology because reduced demand for fossil fuels slows fossil fuel price escalation.

Refined fuel prices, on the other hand, are directly linked to the carbon price trajectories. Carbon price levels in the 2.6Wm${}^{-2}$ scenarios result in liquid fuel prices that are more than twice of those in the Base scenario. Refined liquid fuel prices without BEVs for the United States are shown in Fig. 5(b). Without BEVs, fuel prices are 1.7–2.6 times greater (with and without CCS) than Base by 2050 in the 2.6Wm${}^{-2}$ scenario. While switching from fossil fuel to biofuel benefits carbon emissions mitigation, greater use of biofuels does not prevent liquid fuel prices from escalating. Commercial biomass feedstock prices also rise in the 2.6Wm${}^{-2}$ scenario without BEVs, as the global demand for biofuels increases in response to climate policy. Competition for land to produce bioenergy also drives major food crops prices higher, such as corn and wheat (see Fig. S8).

With BEV adoption in the 2.6Wm${}^{-2}$ scenario, however, liquid fuel demand is substantially reduced and prices of all refined fuels, including biofuels, are lower. The US fuel prices in the 2.6Wm${}^{-2}$ scenario with BEVs are now 1.6–2.1 times greater (with and without CCS) than Base by 2050 (Fig. 5(b)). BEVs help to reduce the escalation of end-use fuel prices under climate policy and provide a pathway for eliminating the dependence on high-cost biofuels as a means for lowering carbon emissions from road transport. In addition, reduced fuel prices from BEVs adoption contribute to lowering the fuel cost for other transport modalities and end-uses where liquid fuel use continues.

4. Comparison to Zhang and Fujimori Analysis

Our analysis confirms many of the findings of Zhang and Fujimori (2020) while providing contrasting insights in other domains. For example, both studies agree on the finding that penetration of EVs alone reduces transport CO₂ emissions relative to a scenario without the advanced EV technology. However, in scenarios without a climate forcing limit, power sector emissions increase, substantially offsetting the reductions obtained in the transport sector. However, both studies show that improved BEV transport technology provides small net reductions in total system CO₂ emissions, Fig. 6, Panel a.

Both studies find that carbon prices needed to limit climate forcing to 2.6Wm${}^{-2}$ are substantially lower with advanced BEV technology than without it, Fig. 6, Panel b. Quantitative estimates of carbon prices and GDP effects differ between the two studies. Zhang and Fujimori find that the carbon price needed to limit climate change to two degrees is higher than this study, Fig. 6, Panel b. Nonetheless Zhang and Fujimori show lower GDP losses despite the substantially higher carbon price required to limit climate change. Furthermore, their losses increase to about 2.5% in approximately five years and then plateau, Fig. 6, Panel c. Their carbon price, with and without BEV technology availability, increases sharply between 2020 and 2030, plateaus until roughly 2060, and then escalates exponentially. In contrast, this study finds monotonic patterns in carbon price escalation and GDP reduction.

Both studies exhibit similar energy system adjustments in the presence of BEV technology. For example, both studies show increased electrification in the presence of advanced BEV technology, in both the reference, no emissions limit, and two-degree cases. Figure 6, Panel d shows that the presence of advanced BEV technology reduces demand for bioenergy compared to the comparable scenario with traditional transport technology in both the reference, no emissions limit, and two-degree cases.

The Zhang and Fujimori study shows that improved renewable energy technology has a limited effect on BEV market penetration. This study explores an alternative technology sensitivity, the availability of CCS. It finds strong, nonlinear interaction effects with CCS technology, particularly in the use of fossil fuel liquids, transportation emissions, and bioenergy crop production.

5. Conclusions and Discussion

We have explored the impact of improved BEV technology on carbon emissions with and without deep decarbonization limits, transport electrification, the energy system, and emissions mitigation costs. We find that the successful deployment of BEV technology for global road transport has the potential to reduce the cost of limiting climate forcing to 2.6Wm${}^{-2}$ by up to 30% by 2050 and 40% by 2100. BEV technology deployed extensively for all the road transport disconnects transport services from the dependence on liquids fuels and turns a difficult-to-decarbonize sector into a major part of the solution for addressing climate change. The true value of BEV adoption is not simply the reduction of transport direct emissions but its ability to provide a pathway toward achieving deep decarbonization at significantly lower costs. In this regard, the benefit of BEVs cannot be realized without decarbonization of the power sector. The cost of carbon mitigation scenarios without BEVs rises steadily, in part, due to the dependence on biofuels as a source of carbon-neutral or carbon-negative energy. BEVs provide an alternative approach to deep decarbonization. Aggressive electrification of transport through BEVs relieves the demand for biofuels in general and ultimately, the burden on fixed land resources for mitigating climate change.

In the 2.6Wm${}^{-2}$ scenarios, the price of biofuels increases with demand, but the price of electricity is capped due to the ready availability of nonemitting power generation options. Moreover, escalating carbon values have progressively less impact on electricity prices as the stock of nonemitting power capacity accumulates and effectively caps electricity prices. The growing contribution of all nonemitting electric power technologies under the 2.6Wm${}^{-2}$ scenarios creates a low-carbon electricity-transport system with BEVs.

The BEV impact goes beyond the energy system and GHG emissions. Improved BEV transport technology and lower transport service costs have a positive effect on global GDP adding almost half of a percent additional GDP to the world in 2050. The positive effect on GDP is not shared by all nations, however. GCAM regions with large fractions of GDP derived from the export of liquid fossil fuels on the world market experience reduced net exports in the near-term as a result of BEVs displacement of ICEs (see Fig. S7, Middle East results for 2050).

In addition to the analysis presented in this paper, the GCAM-integrated assessment modeling framework simultaneously calculates a larger set of ancillary information including the benefits of BEVs for lowering crop prices and air pollutants. Reductions in biofuel use with BEVs temper the impact of rising land prices in climate change scenarios and mitigate the escalation of crop and food prices (Fig. S8). Furthermore, electrification of road transport eliminates not only GHGs, but all air pollutants from road transport (Fig. S9). Air pollutants from local and distributed sources shift to central station electric power plants typically located away from urban areas. Pollutant controls on central stations and contributions from nonemitting power sources can support more dramatic reductions in air pollutants with major implications for human health when BEV and climate policy adoption occurs together.

In addition to BEV options for road transport, fully battery electric and battery-hybrid electric technologies emerging for rail, air, and ship modalities, which were not investigated in this paper, could have additional emissions reduction and climate mitigation cost benefits. BEVs, already being deployed rapidly throughout many parts of the world, are disruptive and enabling not only for transport services and combating air pollutants, but as a solution for addressing climate change.

Supplementary Materials

The Supplementary Materials are available at: https://www.worldscientific.com/doi/suppl/10.1142/S2010007823500045.

Acknowledgments

The research by Dr. Kim, Dr. Waldhoff, and Dr. Edmonds was supported by the US Environmental Protection Agency, Climate Change Division, under Interagency Agreement DW-089-92459801. The views and opinions expressed in this paper are those of the authors alone.