By Dylan Kanner (United States)
Image source: portlandgeneral.com
Abstract
The EU and US must accelerate the transition to electric transportation via investment capital mobilization. The most relevant greenhouse gas (GHG) emission sector is transportation, and the most promising development is E-mobility. The E-mobility goal is to develop the most efficient and sustainable transportation modes using renewable energy. Humanity’s common goal is to bridge profitability and sustainability to create a more balanced economy. The EU is a step ahead of the US in electric vehicle (EV) sales and can motivate US development. Simultaneously, recent US developments motivate further EU development. Joe Biden’s Inflation Reduction Act (IRA) invests $369 billion toward energy security and climate change programs. Some European Commissioners are concerned that this development will cause EU businesses to relocate to the US. I address this disparity when comparing the EU and US. I also assert the need for more corporate investment in renewables and less in fossil fuels. The EU and US can accelerate the E-mobility transition by incentivizing renewable resourcing in large industries and eliminating the sales of polluting vehicles.
Policy Statement Preview
The escalating climate emergency obligates every nation to be proactive in climate change mitigation efforts. Global warming likely will exceed 1.5 degrees Celsius by 2030 if we don’t take the initiative. The transportation sector is responsible for nearly 30% of GHG emissions. I investigate how the EU and US specifically can accelerate the transition to electric transportation through capital investment mobilization. I will discuss the Bipartisan Infrastructure Law’s (BIL) public transportation budget increase via carbon pricing and the introduction of EV order tax credit under the Inflation Reduction Act (IRA). The E-mobility transition scales from the individual consumer all the way up to large private corporations. The EU is a step ahead of the US in electric vehicle (EV) sales and public transportation development. I address the disparity when comparing the EU and US due to the lack of EV progression in the US. The EU and US plan to reduce their emissions by at least 50% by 2030 relative to their base years (1990 and 2005). The E-mobility goal is to develop the most efficient and sustainable transportation modes using renewable energy. The global goal must be to bridge profitability and sustainability to create a more balanced economy. The EU and US can accelerate the E-mobility transition by financially incentivizing renewable resourcing and eliminating the sales of polluting vehicles. Dr. Lamya N. Fawwaz, executive director at Masdar, once said “Every two minutes, the energy reaching the earth from the sun is equivalent to the whole annual energy use of humanity. All the energy … the cars, lighting, and air conditioning of the world … in one year is equivalent to two minutes of the sun.” So why not let the sun drive our cars?
GHG Emission Sector: Transportation
Transportation is an integral part of the economy. It allows people to travel to and from work each day and it makes up a significant portion of the global market. The issue is that fossil fuels generate 95% of global transportation energy. Time and money are the two strongest economic factors. People constantly seek the cheapest and fastest transportation regarding both personal vehicles and public transportation. Although price fluctuations move demand in one direction or another, certain variables may cause demand and even supply to shift completely. The Covid pandemic’s quarantine period correlated with an astronomical decline in gasoline consumption. US petroleum consumption in the transportation sector decreased from 687 million tons in 2019 to 597 million tons in 2020, a 25-year low. According to the US Energy Information Administration, “From 2019 to 2020, petroleum consumption decreased in every energy-consuming sector, and it decreased a record 15% in the transportation sector.” Similarly, the EU experienced a significant decrease in transportation fuel consumption (petroleum) – from 375 million tons in 2019 to 321 million tons in 2020. Hundreds of millions of people worldwide were unable to travel for work or leisure. It seemed almost as if the world was frozen in time. The point here is - should it require a global pandemic to reduce fossil fuel consumption? No, it shouldn’t. Transportation fuel consumption quickly increased toward its pre-pandemic levels following the loosened Covid restrictions as was presumed. The Covid pandemic will be the least of our problems if humanity doesn’t follow its urgent climate change mitigation and adaptation guidelines.
EU and US Developments in Investment Capital Mobilization
The US is heavily dependent on automobiles but is still very behind the EU in EV sales. The EU reported 1.88 million EV sales in 2022 compared to 770,000 in the US. The EU also installed 363,900 new charging stations compared to 88,670 in the US. This EU progress should influence EV development in the US. Simultaneously, recent US developments may motivate further EU development. Joe Biden’s IRA invests $369 billion toward energy security and climate change programs. Some European Commissioners are concerned that this development will cause many EU businesses to relocate to the US. Bernd Lange, head of the European Parliament's Trade Committee, indicates the “low bureaucratic burden” and “low energy prices” in the US resulting from the IRA. The US government authorized a $108 billion public transportation budget covering 2022-2026 under the Bipartisan Infrastructure Law (BIL). However, only $91 billion is guaranteed. According to whitehouse.gov, “President Biden’s Bipartisan Infrastructure Law invests $7.5 billion in EV charging, $10 billion in clean transportation, and over $7 billion in EV battery components, critical minerals, and materials.” The EU is funding new green energy projects in 11 member states exceeding €200 billion in accordance with the US new BIL and IRA developments. Both the EU and US plan to reach net-zero transportation emissions by 2050.
BIL and IRA Proposals
I propose that the BIL guaranteed $91 billion public transportation fund be increased to the full authorized amount of $108 billion. The US government should increase carbon pricing by 18% to subsidize the BIL fund and electric transportation companies, as well as increase the relative cost of carbon-intensive technology. This allows funds to be moved from unsustainable firms, such as oil mining and high-combustion engine companies, to renewable energy and other sustainable funds. Companies like Shell, BP, and ExxonMobile are among the worst concerning fossil fuel procurement and attract revenues upwards of $300 billion. A considerable portion of these revenues must be allocated toward electric transit systems. The IRA allows EV users to earn up to $7,500 in tax credit (up to $4,000 and 30% sale price limit for used EVs). I propose that the tax credit for users of preowned EVs be increased from $4,000 to $6,500 while maintaining the 30% sale price limit. Consumers will be satisfied even if it means automobile retail markups. Many people interested in purchasing a new EV face the issue of a long waiting time. The IRA should allow people who preorder a new EV to be eligible for the tax credit.
Considering 83% of the US population resides in urban areas, public transportation investment should be heavily increased. Only 38.9% of the EU population lives in urban areas, yet the EU exceeds the US in both the EV and public transportation sector. By adding the US EV revenue ($49.07 billion) and public transportation revenue ($40.49 billion) for 2022, we find that 83% of this total should be the new public transportation investment. This new investment of $74.33 billion, along with the $49.07 billion, will total $123.4 billion, which is manageable considering the BIL budget increase from carbon pricing. The EU and US initiated emissions reductions by effectively administering carbon pricing. These proposals incentivize clean transportation, tax credit opportunity, and circular economy contribution. I also propose that annual tax rebates distribute higher amounts of money to cities with higher concentrations of EV and public transportation consumption. Urban areas require more electric public transportation development, while suburban and rural areas require more EV development.
Green Energy Transition
Automobiles, public transit, aircraft, and even marine vessels must switch to biofuel (especially ethanol), hydrogen, wind, and solar power. The number of battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV) must be increased, their weight must be decreased, and their aerodynamic resistance must be reduced to improve fuel and design efficiency. The average person switching to electric transportation will prevent 2 tons of annual carbon emissions. If everyone in the EU and US did this, 1.56 billion tons of CO2 emissions would be prevented annually. The US invested $37.6 billion in wind projects, $36.6 billion in solar projects, and $7.9 billion in biomass projects between 2011 and 2021. Meanwhile, over 1.3 million new green jobs have been created in the EU since the year 2000. The European Commission’s new REPowerEU policy aims to invest €210 billion in new energy. This includes doubling the EU solar power capacity and divesting from Russian fossil fuel imports, which could save the EU up to €100 billion each year. The renewable energy expansion fosters economic growth and environmental improvement. The European Green Deal expresses the EU capacity for over 400 gigawatts of solar and wind energy. To put that number into perspective, 400 gigawatts equals approximately 42% of the EU total power capacity and a third of the US total power capacity. Coal and oil sales will soon be replaced by green energy trade. My carbon pricing increase proposal will benefit renewable energy investment for both regions and will deliver the results our planet needs to overcome climate change.
Primary Proposal
Our planet’s critical climate condition forces the EU and US to accelerate the electric transportation transition via investment capital mobilization. We must follow the steps listed in my policy statement to achieve our 2030 goal of limiting global warming to 1.5 degrees Celsius and becoming climate neutral by 2050. The EU and US can accelerate the e-mobility transition by incentivizing renewable resourcing in large industries and eliminating the sales of polluting vehicles. The transportation sector requires the most development because it is the most polluting industry, and it impacts many aspects of daily life. Respective governments must implement stronger legislation regarding carbon pricing, sustainable subsidies, and tax credits. Most importantly, President Biden and EU Commissioners must work together to incentivize renewable energy use by proving its cost effectiveness. Increasing the BIL and IRA clean transportation budgets via carbon pricing will reduce private corporation GHG emissions. These funds will later be returned to corporations that show climate change mitigation progress. Business and consumer behavior is almost always profit oriented. The ultimate solution aligns with being environment oriented. EU and US climate neutrality will be achieved by 2050 for our planet’s sake or future generations will be left with this burden and suffer the consequences.
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The EU EV market exceeds the US EV market two-fold and exceeds the US in public transportation revenue. Goal is to decrease these gaps but at the same time to increase revenue for both sectors exponentially via capital investment. |
Works Cited
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