[Energy-topia] Why Oil Consumption Isn't Decreasing in the Age of Electric Vehicles

Oil Demand Remains High in Other Sectors
Battery Greenhouse Gas Emissions Also Require Attention

The island of Sulawesi in Indonesia, the world's largest nickel reserve country, is changing rapidly day by day. The once dense subtropical forests have turned into nickel mining sites. Excavators and dump trucks are moving here and there, and refining plants have been established in the once quiet coastal villages. The local residents have become more prosperous with new jobs, but they have also faced new problems of pollution and contamination. This is the scene on Sulawesi Island as reported recently by The New York Times (NYT) in an article titled "Chinese factories in Indonesia are creating pollution along with jobs."

To respond to the climate crisis, countries around the world are promoting electric vehicles (EVs) even by providing subsidies. China, which has the notorious title of the world's largest carbon emitter, has seen the proportion of electric vehicles in new car sales exceed 30%. However, doubts remain about whether electric vehicles are truly saving the planet. While EVs themselves are environmentally friendly, their entire life cycle may not always be so.

Are electric vehicles truly eco-friendly? If you have an interest in EVs, you might have asked this question at least once. Many related studies have been conducted. The conclusion so far is that electric vehicles are still more environmentally friendly than internal combustion engine vehicles.

The U.S. Environmental Protection Agency (EPA) even created a section on its website called "Myths about Electric Vehicles" to emphasize their eco-friendliness. Cited there is the GREET (Greenhouse gases, Regulated Emissions, and Energy use in Technologies) model developed by Argonne National Laboratory with support from the U.S. Department of Energy (DOE). Using this model, the total greenhouse gas emissions over the life cycle of an electric vehicle are shown to be less than half of those of a gasoline car. For example, comparing the Tesla Model 3 and the Toyota Corolla, the Model 3 becomes more environmentally friendly than the Corolla after driving 13,500 miles (about 21,725 km).

Conversely, this means that before driving 13,500 miles, the Model 3 is not more eco-friendly than a gasoline car. According to the EPA's analysis, electric vehicles have 0% greenhouse gas emissions during operation, but the battery (18%), manufacturing and disposal (17%), and fuel supply (65%) stages show quite high emissions.

Earlier this year, Polestar and Rivian commissioned consulting firm Kearney to produce the Pathway Report, which found that greenhouse gas emissions during the supply chain stage for electric vehicles are 35-50% higher than those for internal combustion engine vehicles. Based on this, Kearney concluded that reducing emissions from electric vehicles alone cannot achieve greenhouse gas reduction targets.

It is true that electric vehicles replace oil consumption. BloombergNEF analyzed that EVs are substituting 2 million barrels of oil per day. Nevertheless, this year’s daily oil consumption reached a record high of 102 million barrels. This is because demand for oil remains high in other sectors.

Now, countries are moving away from the simplistic idea that just increasing the number of electric vehicles will reduce oil consumption. In Europe, regulations have been extended to supply chains, including battery passports. This is because there is a growing recognition that managing the entire life cycle of electric vehicles is essential to meet greenhouse gas reduction goals. The Korean government and companies also seem to need serious consideration and response to this issue.