The energy and economic impacts of the EV transition: UK case study

Jaime Nieto¹, Paul Brockway¹, Marco Sakai² and John Barrett¹

¹University of Leeds, UK, ²University of York, UK

Motivation:

Alongside the global transition from fossil-to-renewables electricity supply, there is also a key switch in end uses underway too, with a leading example of electric vehicle (EVs). Policies are being put in place to drive that transition from internal combustion engine (ICE) to EVs – for example the UK has outlawed sales of new ICE cars from 2030. As a result, sales of EVs are rapidly rising.

Whilst there is much focus on critical materials required for this transition, the energetic and macroeconomic transition impacts are less well studied. First, regarding energy: by transitioning to EVs, the final-to-useful efficiencies of cars (typically 20-25%) is replaced by the much greater efficiency of an electric motor (typically 80-90%). As a result, the EV system energy efficiency is much greater than for ICE vehicles, which means that significant fuel savings occur – an in parallel benefit to the switch to an increasingly lower carbon fuel. Second, from our work studying historical energy systems through societal exergy analysis (SEA), we know that increases in aggregate national final-to-useful thermodynamic efficiency drives macroeconomic responses, typically of increasing economic growth (Santos et al., 2021). For example, using the MARCO-UK model based on SEA suggests that 25% of UK economic growth 1971-2016 was from gains in thermodynamic efficiency (Sakai et al,. 2019). We apply an updated MARCO-UK model to the future-facing question: What are the energy and economic impacts of the EV transition in the UK?

Methods:

Based on the solid foundations of the country-level SEA study methodologies, we updated the original MARCO-UK model (Macroeconomic Resource COnsumption) with updated data, so the model runs 1971-2018 for historical analysis, and 2018-2050 for future (ex-ante) analysis. The MARCO-UK model has previously studied the macro-socioeconomic impacts of a rapid housing retrofit in the UK (Nieto et al., 2020) and post-brexit UK energy targets. It is the only current macroeconomic energy-economy model where final-to-useful energy efficiency and useful exergy is included in the core of the model. We model a baseline scenario of continued ICE-based road vehicles, and then compare to four scenarios, which have transitioned by 2050 to 50/100% EV fleet, running on 50/100% renewable electricity.

Results:

The results will enable us to study various effects on the UK economy. Firstly, we can know the effect on energy systems itself, i.e. the demand for primary, final and useful stage energy, and associated energy rebound effects. Second, from increases to primary-final energy efficiency (from the switch from petrol/diesel to renewable electricity) and final-to-useful efficiency (from the switch from ICE to EV road fleet), we can ascertain the macroeconomic impacts of the scenarios, including GDP, capital and investment. Third, is the wider socioeconomic impacts on areas including the labour market, disposable income and household spending. The paper is suited to different topics, including Renewables transition, energy efficiency, transport/EVs, scenarios/modelling.

References:

• Nieto, J., Brockway, P. and Barrett, J., 2020. Socio-macroeconomic impacts of meeting new build and retrofit UK building energy targets to 2030: a MARCO-UK modelling study. In Sustainability Research Institute (SRI) Working Paper No. 121.
• Nieto J, Pollitt H, Brockway PE, Clements L, Sakai M, Barrett J. Socio-macroeconomic impacts of implementing different post-Brexit UK energy reduction targets to 2030. Energy Policy. 2021;158:112556.
• Sakai M, Brockway PE, Barrett JR, Taylor PG. Thermodynamic Efficiency Gains and their Role as a Key ‘Engine of Economic Growth.’ Energies. 2019;12(110):1–14.
• Santos J, Borges AS, Domingos T. Exploring the links between total factor productivity and energy efficiency: Portugal, 1960–2014. Energy Econ. 2021;101.