With a collective annual demand of more than 40 million passenger vehicles, three of the largest car markets in the world, the EU, US and China, have all set fuel economy improvement targets of approximately 30% for cars from 2014-2020 (as measured in NEDC gCO₂/km), which are expected to exceed forecasted new internal combustion engine (ICE)-powered car capabilities.

The World Energy Perspective 2016: E-mobility: closing the emissions gap report, published by the Council in collaboration with Accenture Strategy, examines the growth in sales of EVs as the latest technologies to increase average fuel efficiency and meet these stringent economy standards, set in all three markets, referred to as the “EV gap”.

In the EU, the EV gap is 1.4 million, 10% of the estimated 2020 projected passenger sales, in the US, 0.9 million (11%) and in China roughly 5.3 million, 22% of the projected passenger car sales.

The report, presented in the margins of the G20 Energy Ministers meeting in Beijing (29-30 June) by Berat Albayrak, Minister of Energy and Natural Resources of Turkey, highlights key findings which represent a new frontier and a significant opportunity for the energy sector which will be fully embraced at this year’s World Energy Congress in Istanbul (9-13 October), where global energy leaders will address these and similar challenges.

To help close the emissions gap through more widespread adoption of EVs, utilities need to play a critical role— not only to ensure a reliable electricity supply, given the added pressure from plugging more EVs into an already stressed grid network, but also by making sure that any added demand for electricity to power EVs increasingly comes from clean power sources.

—Stuart Solomon, Managing Director, Accenture Strategy

Electricity demand attributed to new EVs can likely be managed with proper planning by utilities and could be further mitigated at the local level with emerging technologies such as vehicle-to-grid (V2G), the report said. Faced with a complex array of policy and technology options including hybrid technology, down-weighting technology, off-cycle credit, aerodynamic improvements and many more, it is important for decision makers to understand the potential impact and feasibility of each option.

Key recommendations of the report include:

For industry: Vehicle manufacturers will need to respond to regulatory pressures and shift their product portfolio to avoid material penalties. Additionally, there is an opportunity for vehicle manufacturers and utility electricity providers to partner to deliver a superior value proposition to consumers. By 2020 each market would need an additional:

• 3.7 TWh (equivalent to 734,000 homes) in the EU
• 4.5 TWh (equivalent to 367,000 homes) in the US
• 26.2 TWh (equivalent to 17 million homes) in China

For policymakers: Regulators should examine how proposed fuel requirements can be matched by working with industry through financial and operational incentives in order to achieve desired improvements in CO₂ emissions.

For consumers: Consumers should provide feedback to regulators and manufacturers by evaluating the economic and environmental benefits of EVs alongside alternative online transportation methods.