Buses arrive and depart silently in Shenzhen. There is no rumbling of engines, no groan as they strain to leave the bus stop and merge into traffic. The same is true for most delivery trucks. Although many streets in this massive city in Southern China’s Pearl Delta are still noisy at rush hour, certain sounds are conspicuously absent.
Over the last four years, this city of 12.5 million inhabitants has transformed the vehicles on its roadways by deploying more than 150,000 electric vehicles. This has been led by Shenzhen’s famous all-electric fleet of more than 16,000 buses, but also through the deployment of more than 60,000 “electric logistics vehicles”—mostly light trucks, and a large number of taxis, as well as the installation of more than 40,000 charging stations.
To put this into perspective, more full-size electric vehicles (EVs) were sold in Shenzhen in 2018 than in the entire nation of Norway, which easily leads the world in the share of EVs in its new car market. The city is the tip of the spear for China’s massive EV market, and it charts a path for electrification of transportation for the rest of the world.
As such, Shenzhen’s EVs are a model for one step we will need to take to keep a stable climate. An October 2018 report by the Intergovernmental Panel on Climate Change (IPCC) is clear that in order to keep the world below 1.5 degrees Celsius of warming, we must decarbonize other sectors besides electricity. And this means that we must stop fueling most if not all vehicles with petroleum, as well as eliminate the burning of oil and gas for heating.
Although various forms of demand reduction and improved energy productivity will be critical here, another essential element will be to electrify large portions of the transportation and heating sectors. There are potential symbioses to doing this and integrating large volumes of renewable energy on the grid.
The electrification of transportation has already begun. EVs made up only 2.4 percent of global passenger vehicle sales in 2018, but this market share is increasing every year. And in China, the world’s largest market for electric vehicles, the portion of new, full-size car sales was 4.5 percent last year—in addition to a large market for “low-speed” EVs.
It is likely that EV adoption will grow at a faster rate in the future. Multiple studies have shown that once a certain number of years passes, the total cost of owning an EV is lower than owning an internal combustion engine (ICE) car. There are multiple factors at play here; investment bank UBS estimates that the maintenance cost of EVs is 60 percent lower, and the cost of electricity as a fuel is universally lower than gasoline.
A primary benefit here is that EVs are simpler and more efficient. Not only do they require fewer moving parts, but while ICE vehicles lose the most of the energy contained in fuel through various means, including waste heat and friction, the majority (estimates vary between 60 percent and 75 percent) of the power that goes into an EV makes it to the wheel. Due to these advantages, it is likely inevitable that EVs would replace ICE cars, climate crisis or no.
But despite these inherent advantages, the up-front costs of EVs are still higher than ICE cars, and policy support is still a major driver of EV adoption. This remains true in China even though direct subsidies in the nation have fallen to much lower levels than in Western countries.
This is in part because China’s policies also constrain sales of ICE cars. Colin McKerracher, head of Advanced Transport for Bloomberg New Energy Finance, has identified six cities with “major” purchase restrictions on gas-powered cars. This includes Shanghai, where a license plate for an ICE car costs US$14,000 via auction, and Beijing, where the lottery system gives participants a 0.05 percent chance of getting a license plate for an ICE vehicle. These restrictions don’t apply to EVs.
“We are going from a world where it is purchase incentives and direct subsidies to one where it is much bigger policy levers that are driving things forward.”
There are also larger policies at play. “We are going from a world where it is purchase incentives and direct subsidies to one where it is much bigger policy levers that are driving things forward,” explains McKerracher.
This includes China’s New Energy Vehicle Credit Program, which provides tradable credits for the production of EVs and fuel cell vehicles for manufacturers with plants in China. Manufacturers can trade credits, but those who don’t have enough credits can lose access to this market. McKerracher describes this as “probably the most important single piece of EV policy globally,” as it is spurring not only Chinese automakers but global companies to produce more EV models.
But even with these sticks and carrots, there is still the problem of up-front costs. And here, the biggest development may be in business models. Rocky Mountain Institute (RMI) has found that in Shenzhen, 98 percent of the electric delivery trucks, box trucks, and other electric logistics vehicles are leased, not owned. These lease agreements often include maintenance and service agreements, a practical solution to the fact that maintaining and repairing EVs requires a unique skill set that leasing companies develop and that the people leasing them often lack.
Ting Li, RMI’s regional manager for China, says that alternative business models are coming to cars as well. “In 5 years, 10 years, you may not need to own a car,” states Li, who expects this to follow the pattern of bicycles. “Nobody owns a bike in China. There are bikes everywhere; you can use a bike. We must move to a similar smart drive-sharing economy.”
The Heat Is On
Transportation is not the only sector where electrification is an essential strategy to reduce emissions, with clear and tangible benefits. Fully 40 percent of the world’s energy is consumed in buildings, and heating is one of the largest sources of building energy use, particularly in residential buildings. As such, moving buildings to electric heat and other services is one of the fastest, most direct ways to reduce building emissions.
Globally, the most popular technology for doing so is electric heat pumps. These make use of ambient heat that is upgraded using a refrigerant cycle—essentially the same mechanism as in a refrigerator or air conditioner, but in reverse. Different kinds of heat pumps can use heat from multiple sources, including the ground, water sources, and the air; the most inexpensive and popular form is the air source heat pump.
Because of their novel mechanism, heat pumps can transfer more thermal energy than the electrical energy they consume, often at a three-to-one ratio. This means that there is no way that conventional heating methods, even burning gas, can compete on efficiency.
“If you are using gas for heat, your maximum efficiency will always be less than one,” explains Jenny Hill, the head of buildings, industry, and bioenergy for the UK’s Committee on Climate Change. “But to get above one, you need to make use of other sources of heat in the environment.”
“If you are using gas for heat, your maximum efficiency will always be less than one.”
The use of heat pumps is not limited to space heating, and there are heat pump models for water heating and even clothes dryers. But while the global market for heat pumps has seen an increase in recent years, and heat pump technology has improved in terms of dealing with cold weather, there are still limitations. New heat pumps can work in temperatures as low as –25 to –30 degrees Celsius but are less efficient at these lower temperatures—an odd limitation for a heating technology.
Fortunately, heat pumps are not the only technology for decarbonizing heating. Resistive electric heating, which works by heating an element and then moving the hot air near that element, has no such limitations in cold weather. However, it is also less efficient than heat pumps.
There are also other solutions to decarbonizing heating, including solar thermal space and water heating. But despite being a mature technology, solar thermal systems have not been widely deployed outside of China and Israel. In the rest of the world, this technology has not been as popular as heat pumps.
One distinct advantage that both electric and solar heating systems have over fossil fuels is that they can stabilize heating costs because the price of gas and petroleum tends to fluctuate more than electricity prices. They also avoid the fire and explosion risk inherent with these fuels.
Symbiosis with Renewable Energy
Some of the leading models for moving to very high levels of renewable energy don’t end with electricity, but also include the decarbonization of other sectors, often through electrification. This includes Stanford University Professor Mark Z. Jacobson’s 100 percent wind, water, and solar studies, promoted through The Solutions Project.
To integrate the variable output of wind and solar, it is highly useful to have flexible demand, which both EVs and electric heat can supply. For instance, with the right price signals, both space heating and EV charging can be set to happen at times with a mix of high levels of renewable energy, low demand, and low prices. For heating, this is usually a matter of preheating a few hours before temperatures are forecast to drop.
“In the longer term we hope there is going to be some value in managing charging in terms of ancillary services.”
However, this won’t happen automatically. Making the demand from these two resources flexible requires technology to transfer price and weather signals and to control when to charge EVs and run heaters. It also requires policy support, in the form of either demand response programs or some mechanism to translate wholesale market dynamics to the retail level, such as time-of-use rates. And in practice, getting these devices to participate in wholesale power markets often means aggregating large numbers of devices.
And while heaters can supply demand response and run at the time of high renewables and low wholesale prices, EVs—which are essentially mobile lithium-ion batteries—have the technical ability to provide a larger range of services to the grid. “In the longer term, we hope there is going to be some value in managing charging in terms of ancillary services,” explains Chris Nelder, the manager of RMI’s EV-to-grid practice.
But while Nelder describes this work as nascent, some companies are already testing the waters. Start-up Nuvve is currently providing a range of grid services from the batteries in EVs parked at charging stations through 11 pilot programs in Denmark, France, Japan, the United States, and the UK.
The services that Nuvve can provide in different markets are often limited by existing policies and regulations. While the vehicles that the company manages are paid to supply frequency regulation in Denmark, regulatory barriers currently prevent them from doing so in California.
The potential for the electrification of transportation, heating, and other sectors to play a major role in decarbonization has led to a slogan popularized by writer David Roberts of Vox in an October 2017 post: “electrify everything.”
And the benefits of moving various sectors from burning fossil fuels to electricity are not only recognized by energy wonks. Norway, France, the UK, and China have all set timelines to phase out all sales of ICE cars. The city of Berkeley, California, made history by banning gas services in new construction, effective January 2020—and this has been followed by at least 13 other California cities. Bans are also being considered in Massachusetts, Vermont, and Washington.
Electrification is not the only solution for all end-use sectors, and it is not even clear that it is the best solution for some applications. However, it clearly has advantages for both buildings and transportation.
The move from burning fossil fuels to electric power in these sectors will inevitably be a big component of reducing greenhouse gas emissions, with potential symbiotic effects for the grid and higher penetrations of renewable energy. And it is already reducing emissions, from Shenzhen to Los Angeles, as we move from the fuel tank to the battery, and from the nozzle to the plug.