Converting Usages of Fossil Fuels to Electricity (5-minute Read)

Electricity generation is in a state of conversion. That means that in the US, for example, the biggest source of CO2 is transportation. Until recently, cars and trucks burn so much gasoline and diesel. But we're seeing change in the transportation market as well.

The transportation sector is the second-largest source of global greenhouse gas (GHG) emissions. To slash emissions and avert catastrophic climate change, we need to transition to cleaner transportation alternatives. The danger of emissions from vehicles goes beyond climate impacts: air pollution increases the risk of cancer and respiratory issues like asthma and bronchitis. Communities of color in the Northeast and Mid-Atlantic US are exposed to approximately 66% more air pollution from vehicles than White residents. Globally, vehicle emissions have been linked to approximately 385,000 premature deaths in 2015. 

Electric vehicles (EVs) are gaining popularity. It took five years to sell the first million electric passenger cars, 17 months to sell the second million, and just six months to get from 3 million to 4 million. Though the total volume of electric vehicles is still low compared to traditional gas-powered vehicles, EV adoption is skyrocketing – with global sales growing by 46 percent in the first half of 2019, compared to the same period in 2018. Much of the recent growth, especially in the US, has been due to the mass production of the Tesla Model 3, which was the highest-selling EV globally in 2019 – making up 13 percent of the global plug-in vehicle market. Between 2010 and 2019, the price of lithium-ion batteries fell by 87%, contributing to the increasing competitiveness of EVs. When the first mass-market EVs were introduced in 2010, the average cost of a battery pack was $1,000 per kWh. Falling costs meant that by 2017, Tesla’s Model 3 battery packs were only $190 per kWh. If the price of battery packs falls between $125 and $150 per kWh, then EVs are forecast to cost the same or less than internal combustion vehicles. Experts project this is happening in mid-2020s. Some forecasts project the price of battery packs to fall to around $73 per kWh by 2030, as manufacturing methods and materials improve.

Financial incentives have helped to bridge the gap to make EVs cost competitive. Each of the top-10 countries for electric car registrations has some type of financial incentive in place. China, the world’s largest market for electric cars, employs regulatory and purchase incentives that, together, led to nearly 800,000 electric vehicle registrations in 2018. Germany, the UK, Italy, and Romania all offer purchase incentives for electric vehicles. Whereas, the US, Norway, and the Netherlands offer tax bonuses, and France offers a combination purchase incentive and scrappage bonus for older non-EVs. The US federal government offers a $7,500 consumer tax break for the first 200,000 vehicles an automaker sells. As of the beginning of 2020, only Tesla and General Motors hit the cap.

With the climate crisis deepening and viable alternatives to gas vehicles increasing, a growing number of countries are planning to phase out combustion engines. Countries like China, India, the UK, and France have all announced plans or intentions to begin phasing out fossil fueled vehicles by 2030 or 2040. A lot of other countries, even states and cities, are passing laws that will phase out internal combustion engines. Norway, already selling the highest number of EVs per capita, has already put into law to phase out gasoline cars in five years, and a lot of other places in 10 years. Even Germany, where the automobile was first invented there (as they claim), Chancellor Angela Merkel said it's the right approach. We'll see how they put that into legislation.

The trend is similar in the auto manufacturer space. Many major auto manufacturers are developing plans to phase out traditional vehicles and transition to entirely electric lineups. For example, Daimler (owner of Mercedes-Benz) is accelerating its EV program to have 10 new EVs by 2022. All Volvo models introduced in 2019 and after would be hybrid or electric. BMW will have 12 new battery electric vehicles (BEVs) and 13 new hybrids by 2025. Volkswagen announced that it would attempt to bring 30 or more BEVs to the market by 2025. Whether consumers will forgive and forget Volkswagen’s wicked diesel emission cheats is a challenge that this global brand will face. The global electric vehicle market is expected to grow exponentially in the coming years. The International Energy Agency projects that by 2030, electric vehicle stock could grow by more than 30 times 2019 levels and reach 245 million electric cars, buses, and trucks.

The US is projected to see 18.7 million EVs on its roads by 2030, up from 1 million at the end of 2018. In 2019, electric buses continued to witness dynamic developments, with about half a million vehicles on the road worldwide.

Not many years ago, people in the long-haul transportation industry believed that it would be very difficult to electrify tractor-trailers. There are many exciting developments in this space as well.  Tesla, which pioneered some of the most sellable EVs, are now getting into the 18-wheeler market. This electric semi will have a range of 300 to 500 miles using batteries. Nikola, an emerging competitor, is planning to sell 18-wheelers big trucks, which will use hydrogen generate electricity for propulsion. Anheuser-Busch is purchasing 800 hydrogen-electric Nikola semi-trucks, with a range of up to 1,200 miles. This beer-maker’s entire fleet will be powered by renewables by 2025. Recently Nikola has been ensnared in a scandal of misleading investors and the founder had to resign. However, the enthusiasm in this space has not been dampened.

Besides the electrification in transportation, there is a nascent movement to electrify homes. Many houses in North America use natural gas for cooking, and natural gas, propane or heating oil (a substance very much like diesel) for heating. Local governments of more progressive cities and towns are promulgating new building codes that new buildings will have to use electricity for such purposes instead of fossil fuels.