Plug-in Vehicle Deployment in California: An Economic Assessment David Roland-Holst Department of Agricultural and Resource Economics UC Berkeley dwrh@berkeley.edu 30 October 2012 Clean Air Dialogue (CAD) Working Group, Sacramento
Acknowledgements • This research was performed at the invitation of the California Electric Transportation Coalition. We wish to thank the CARB and CalEPA staff for their data, Natural Resources Defense Council, Electric Power Research Institute and California Electric Transportation Coalition for their technical review, and Chris Yang, U.C. Davis, for data, insights and advice. We also thank the CARB and CalEPA staff for their data, and Chris Yang, U.C. Davis, for data and insights. • The author also wishes to thank many research assistants for dedicated support during this project: Drew Behnke, Billie Chow, Melissa Chung, Elliot Deal, Sam Heft-Neal, Shelley Jiang, Fredrick Kahrl, Mehmet Seflek, and Ryan Triolo. • Financial support from CalETC is gratefully acknowledged. 30 October 2012 Roland-Holst 2
Objectives 1. Estimate direct and indirect economic impacts of Plug-in Electric Vehicle (PEV) deployment. 2. Inform stakeholders and improve visibility for policy makers. 3. Promote evidence based policy dialogue. 30 October 2012 Roland-Holst 3
Summary of Findings • Light-duty vehicle electrification can be a potent catalyst for economic growth, contributing up to 100,000 additional jobs by 2030. • On average, a dollar saved at the gas pump and spent on the other goods and services that households want creates 16 times more jobs. • Unlike the fossil fuel supply chain, the majority of new demand financed by PEV fuel cost savings goes to in- state services, a source of diverse, bedrock jobs that are less likely to be outsourced. • Individual Californians gain from economic growth associated with fuel cost savings due to vehicle electrification, whether they buy a new car or not. As a result of light-duty vehicle electrification, the average real wages and employment increase across the economy and incomes grow faster for low-income groups than for high-income groups. 30 October 2012 Roland-Holst 4
How we Forecast The Berkeley Energy and Resources (BEAR) model is being developed in four areas and implemented over two time horizons. California Components: GE Model Technology 1. Core GE model Transport Electricity 2. Technology module Sector Sector 3. Electricity generation/distribution 4. Transportation services/demand Time frames: 1. Policy Horizon, 2010-2030 2. Strategic Adaptation Horizon, 2010-2050 30 October 2012 Roland-Holst 5
Detailed Framework Emission Data National and International Engineering Estimates Initial Conditions, Trends, Prices Adoption Research and External Shocks Demand Trends in Technical Change Sectoral Outputs Resource Use Standards Trading Mechanisms Producer and Technology Policies California Innovation: Consumer Policies Production GE Model Technology Consumer Demand Detailed Emissions of C02 and non-C02 Detailed State Output, Electricity Transport Trade, Employment, Sector Fuel efficiency Income, Consumption, Sector Energy Regulation Incentives and taxes Govt. Balance Sheets RES, CHP, PV Household and LBL Energy Balances Commercial PROSYM/MARKAL/NEMS Vehicle Initial Generation Data Choice/Use Engineering Estimates - Data - Results - Policy Intervention 30 October 2012 Roland-Holst 6
PEV Deployment Scenarios Scenario Name Description 1 Baseline Assume California implements current commitments to state and post-1990 federal fuel economy standards, but continues growth at levels forecast by the Department of Finance. This is the baseline scenario. 2 PEV15 Including the Baseline scenarios, but assuming 15.4% PEV deployment in the new light-duty vehicle fleet by 2030, this would be consistent with the ZEV regulations being met by PEVs. Tax credits for PEV vehicles are phased out by 2020, and LCFS credits are awarded for pollution reduction (see section 3). 3 PEV45 Same as PEV15, except PEV deployment is accelerated to 45% of the new light- duty vehicle fleet by 2030. 30 October 2012 Roland-Holst 7
Macroeconomic Impacts Change from Baseline trend in 2030. Billions of 2012 dollars and FTE jobs. PEV15 PEV45 Real GSP 4.954 8.177 Net Job Growth 48,816 97,761 Source: Author estimates. 30 October 2012 Roland-Holst 8
Employment Effects Change from Baseline trend in 2030. FTE thousands. -20 0 20 40 60 80 100 120 PEV15 Accelerated Job Growth Slowed Job Growth Net PEV45 Source: Author estimates. 30 October 2012 Roland-Holst 9
Why it works The carbon fuel supply chain is among the least job-intensive in the economy. 100.00 Retail Employmnet Content of Output Construction 10.00 (logarithmic scale) Priv Services 1.00 Oil&Gas 0.10 California Agriculture, Industry, and Service Sectors 0.01 Source: California Dept of Finance and 30 October 2012 Roland-Holst 10 Employment Development Office
Index of Job Intensity by Sector Sector Job Index Agriculture 20 Construction 42 Oil & Gas 1 Vehicle Manufacturing 5 Vehicle Sales & Service 19 Wholesale & Retail Trade 29 Other Service 34 Source: California State Department of Finance 30 October 2012 Roland-Holst 11 and Employment Development Department
Employment Impacts by Sector (FTE thousands, change in 2030) Sector PEV15 PEV45 Agriculture 0 0 Other Primary 0 0 Oil and Gas -2 -6 Electric Gen and Dist 1 3 Natural Gas Dist. 0 0 Other Utilities 0 0 Processed Food 0 0 Construction -– Residential 1 2 Construction -– NonRes 2 5 Light Industry 3 6 Heavy Industry 1 3 Machinery 0 0 Technology 2 4 Electronic Appliances 0 0 Automobiles and Parts 1 2 Trucks and Parts 0 0 Other Vehicles 0 1 Wholesale, Retail Trade 15 30 Transport Services 2 4 Other Services 23 45 Total Net Jobs 49 98 New Employment 51 104 30 October 2012 Roland-Holst 12 Reduced Job Growth -2 -6
Real Income by Household Tax Bracket Household ZEV15 ZEV45 1 < $12k 0.2% 0.4% 2 $12-28k 0.2% 0.4% 3 $28-40k 0.2% 0.4% 4 $40-60k 0.2% 0.2% 5 $60-80k 0.2% 0.2% 6 $80-200k 0.2% 0.2% 7 $200k+ 0.1% 0.2% Average 0.2% 0.4% Source: Author estimates. 30 October 2012 Roland-Holst 13
Vehicle Adoption 100% 90% 80% Percent of Final Year Market Share 70% 60% Normal 50% Early Late 40% 30% 20% 10% 0% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Author assumption 30 October 2012 Roland-Holst 14
Fleet Composition PEV$Passenger$Cars$(by$tech$type)$ $ PHEV20$ $ $ 33%$ PHEV40$ $ $ 33%$ BEV100$ $ $ 33%$ $ $ $ $ PEV$Light$Trucks$(by$tech$type)$ $ $ PHEV20$ $ $ 50%$ PHEV40$ $ $ 30%$ BEV100$ $ $ 20%$ Source: Author 30 October 2012 Roland-Holst 15
Vehicle Miles Traveled Light trucks 20000 Annual driving (mi/yr/vehicle) Cars 15000 median: 17-yr, 234k 10000 median: 14-yr, 186k 5000 0 0 5 10 15 Vehicle age Source: CARB, 2008 30 October 2012 Roland-Holst 16
Vehicle Survival Rates !1.20!! !1.00!! !0.80!! !0.60!! !0.40!! !0.20!! !"!!!! 1! 2! 3! 4! 5! 6! 7! 8! 9! 10! 11! 12! 13! 14! 15! 16! 17! 18! 19! Source: SHTSA, 2006 30 October 2012 Roland-Holst 17
CA Gasoline and Diesel Prices 5.00 4.50 Price ($/gallon) 4.00 3.50 3.00 2.50 2.00 9 1 3 5 7 9 1 3 5 7 9 1 3 5 0 1 1 1 1 1 2 2 2 2 2 3 3 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Gasoline Diesel Source: EIA, 2012 30 October 2012 Roland-Holst 18
30 October 2012 Price (cents/kWh) 10 12 13 14 15 16 17 18 19 20 Baseline CA Electricity Price 11 2010 2011 2012 2013 2014 2015 2016 2017 Source: EIA, 2012 2018 2019 Year 2020 2021 2022 2023 2024 2025 2026 2027 2028 Roland-Holst 19 2029 2030
Battery Cost Efficiency $1,200# $1,000# $800# $/kWh& PHEV10# $600# PHEV40# BEV# $400# $200# $0# 2012# 2013# 2014# 2015# 2016# 2017# 2018# 2019# 2020# 2021# 2022# 2023# 2024# 2025# 2026# 2027# 2028# 2029# 2030# Source: McKinsey, 2012 30 October 2012 Roland-Holst 20
Incremental Vehicle Costs $30,000# $25,000# $20,000# PHEV20#PC# PHEV20#LT# PHEV40#PC# $15,000# PHEV40#LT# BEV#PC# BEV#LT# $10,000# $5,000# $0# 2012#2013#2014#2015#2016#2017#2018#2019#2020#2021#2022#2023#2024#2025#2026#2027#2028#2029#2030# Source: Author estimates. 30 October 2012 Roland-Holst 21
Aggregate Incremental Cost: PEV15 Millions of 2012 dollars) $6,000& $5,000& $4,000& $3,000& Incremental&Costs& Fuel&Cost&Savings& $2,000& Total&IncenBves& $1,000& LCFS&Credit& Net&Savings& $0& 2012& 2013& 2014& 2015& 2016& 2017& 2018& 2019& 2020& 2021& 2022& 2023& 2024& 2025& 2026& 2027& 2028& 2029& 2030& !$1,000& !$2,000& !$3,000& Source: Author estimates. 30 October 2012 Roland-Holst 22
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