Biden Administration Electric Vehicle Mandate Faces a Varietyof Practical and Economic Challenges
On August 5, 2021, President Biden announced that he would sign an Executive Order that sets the ambitious goal of making one-half of all new vehicles sold in 2030 zero emission vehicles, including battery electric, plug-in hybrid electric or fuel cell electric vehicles. While the goals are in line with Biden’s initial Executive Order on climate change, there are a myriad of issues associated with such a plan. In addition, if the escalation of fuel costs over the last eight months have not been enough, the cost of energy, supplies and vehicles are likely to be dramatically higher than combustion engine vehicles used by Americans today.
Although the US Environmental Protection Agency (EPA) and US Department of Transportation (DOT) are charged with addressing smart fuel efficiency and reduced emission vehicle standards, there are questions whether the purported cost savings and climate impacts of the new policy account for what is necessary to produce raw materials, vehicles, and energy to fuel zero emission vehicles. Notably, the President’s announcement suggests that the proposed rules to address these two matters will “deliver around $140 billion in net benefits over the life of the program, save about 200 billion gallons of gasoline, and reduce around two billion metric tons of carbon pollution.” Additionally, that “[f]or the average consumer, this means net benefits of up to $900 over the life of the vehicle in fuel savings.”
Before the vehicles can even be produced sufficient raw materials need to be acquired to provide for the electric vehicle (EV) batteries. Mandating EV by 2030 does not in any way mean that sufficient materials and production will exist to meet that level or, if so, at what cost to American consumers. A recent Wall Street Journal article noted that the International Energy Agency concluded that to get to the level of EV sales mandated under Biden’s Executive Order the demand for key materials to produce the batteries would rise dramatically by 2040, specifically: lithium (4,200%), graphite (2,500%), nickel (1,900%) and rare-earth metals (700%). There are fundamental questions about whether there are sufficient resources and where they would need to be mined.
EVs in the immediate future will use lithium-ion batteries. An Autoweek story on the supply chain issue from November 2020 broke down the source issues. Lithium-ion batteries are composed of an anode made of graphite and cathode of cobalt, nickel, manganese, and other materials. These materials come from limited places in the world. Specifically, lithium is concentrated in Argentina, Bolivia, and Chile. Cobalt comes from the Democratic Republic of the Congo (DRC). Aside from the environmental and human rights issues in these emerging countries, the markets are very concentrated. Chinese companies, backed by the Chinese Communist Party, largely control the extraction and processing of these key minerals. In 2018, China was responsible for more than 85% of DRC’s cobalt ore and concentrate exports. Unfortunately, China’s vertical market control extends beyond the mining and production of raw materials to the actual battery manufacturing. The same Autoweek article noted that a single Chinese battery company supplies four major auto brands with EV batteries. Putting aside the Covid-19 issues and response from China, the last year has high-lighted the significant issues that the US can suffer from disrupted supply chains.
Another issue related to sourcing raw materials is the impact of substantial mining and production on the environment. The environmental impact per EV is substantial and not something that has been addressed in the Biden Administration’s rush to address climate change. For example, a typical EV battery from a popular car maker weighs 1,200 pounds of which approximately 80% of the weight comes from mined materials. The mining impacts alone are mind boggling, with a single EV battery requiring mining 100,000 pounds of raw ore for processing. To meet the Biden EV mandate by 2030 would require the United States to have approximately 10 million electric vehicles. This would translate into mining about 500 million tons of new materials, with corresponding emissions, water use and environmental impacts. Although the Biden Administration and climate groups are vehemently opposed to coal mining and want to eliminate it, at present coal mining in the country only produces about 700 million tons per year.
Another consideration underlying EV is whether the electrical grid has sufficient capacity to absorb the necessary charging process that will be required. Based on home use, typical homes use 50 kilowatts (kw) per day. Most is during peak night-time hours when families are home. The average electric draw during night-time hours is about 4 kw per hour. The power grids are not built with excessive capacity and a group of up to 7 homes is usually serviced by a 20 kw transformer. By comparison, a typical EV charger requires 12 kw per hour (for about 30 miles of driving). Consequently, adding multiple EV chargers in the same suburban neighborhood would quickly surpass the capacity of the local electrical grid. As a result, to provide adequate energy supply for EV charging the electrical supply will need significant upgrades.
At the same time President Biden is pushing climate changes policies, electric vehicles, and increased fuel mileage requirements his actions since taking office have dramatically impacted the price of gasoline. The decision to kill the Keystone pipeline project and place a moratorium on federal oil and natural gas leases in the Artic National Refuge have been compounded by ransomware attacks that shut down east coast petroleum pipelines. Despite an abundance of US petroleum supplies under the Trump Administration, last week Biden was forced to ask OPEC to increase oil supplies. Predictably, OPEC declined saying they “believe oil markets do not need more oil than they already plan to release in the coming months.” Consequently, while Biden is pushing green priorities through Executive Orders and the infrastructure bills, American consumers are facing significant cost increases. Prior to the election a barrel of crude oil was under $40 per barrel. It is now about $63 per barrel. As a result, the price of gasoline is almost 50% higher today than prior to the presidential election and OPEC, which includes Russia, have no interest in increasing the supply of petroleum to reduce fuel and gasoline prices in the US.
Finally, but underlying the transition to EV is the question of where sufficient electrical power will come from to provide charges for the EVs. Obviously, the Biden Administration and many states, such as New York, disfavor traditional electrical generation facilities based on coal or natural gas. Similarly, nuclear power plants are not popular with the green programs and activists. Solar and wind power have limitations based on capacity and production (i.e., daytime) when most EV charging takes place at night.
Whatever one thinks about climate policies, there are some very practical realities that the country needs to consider in any transition to EVs, whether voluntary or by government mandate. The supply of raw materials, cost of vehicles and access to electric power to charge EVs would seem to be at the very core of considerations as to when, if and how fast to ask Americans to make a transition to EVs. In addition, rising inflation and fuel costs are presenting real challenges to American consumers. Unfortunately, it appears that policy announcements and artificial deadlines are dictating policy rather than a considered approach to ask Americans to make such a drastic transition. If the last week in Afghanistan has shown anything about the current administration’s policies, it appears that once headed down an announced path there is little consideration given to alternatives and flexibility to address difficult challenges.
For additional information about the issues discussed above, or if you have any other Environmental Law concerns, please contact the Underberg & Kessler attorney who regularly handles your legal matters or George S. Van Nest, the author of this piece, here or at (716) 847-9105.