China – Electric Vehicles & Transportation
Do a quick Google search using the words “China” and “electric cars,” and you’re bound to get a lot of hits on how Tesla, BMW, VW and other players are looking to be first movers into China’s nascent electric vehicle market. You’ll even come across an article arguing how China will dominate the U.S. electric bus market. This is no surprise, given the chronic air problems faced in China and the potential for electric vehicles to reduce on-road emissions.
When it comes to solving China’s environmental problems, solutions most likely to win the favor of local Chinese policymakers are ones that can improve the environment without impeding China’s economic growth. This has to do with the incentive structure of the Chinese government. Chinese officials are rewarded with promotions and greater political influence if they can grow their local economy. See the following article to learn more about this and how the Chinese central government is trying to change it.
Electric vehicles, seen as a win-win for business and the environment, could be the low-hanging fruit that make officials look good and their superiors happy. This might explain the recent spark (no pun intended) for electric vehicles in China. As I argued in a research report for Equinox Center, electric vehicles have the potential to both reduce on-road emissions and provide economic growth through investments in new battery technologies and fuel-cost savings. Households will be able to use the money they save on fuel to purchase other goods and services. This, in turn, will create jobs in sectors that are more people-intensive than the oil industry.
However, electric vehicles aren’t entirely emission-free – there is an upstream impact associated with charging these vehicles. And this is the most important factor to consider for the Chinese market, where coal generates the largest percentage of the country’s electricity, (see Figures 1 and 2). In fact, it has been a larger producer of greenhouse gases (GHGs) than transportation by a difference of 41 percent!
This sounds like a contradictory argument so far, but really, it points to the potential of electric vehicles and the need for China to increase its renewable energy use (or at least switch to a cleaner fossil fuel like natural gas). This is especially true if EVs are to become truly effective at reducing China’s GHG emissions. This will certainly take time to achieve, given the Chinese government’s heavy ties to the global coal industry. What, then, are the alternative solutions to China’s chronic air problem as it relates to transportation?
Well, the Chinese government has tried a number of options in recent memory, one of which is limiting the number of vehicles on the road. This has also been implemented in an effort to reduce the traffic congestion that plagues many Chinese cities. Without going into all the options available to cut down on traffic, car-sharing is one option I’d like to focus on.
Living in Beijing before, I have witnessed firsthand the sluggish pace of taxis and personal cars. Taking public transit can also be a nightmare, especially during rush hour, because there are just too many people to serve at one time. As such, public transportation can be a huge inconvenience for those that desire expedience and a greater level of comfort.
A car-sharing option for Chinese people could (1) reduce traffic congestion, (2) serve as another convenient transportation choice and (3) address on-road GHG emissions by reducing the number of vehicles on the road. Car-sharing programs such as car2go and zipcar have already proven very popular in Europe and major U.S. metropolitan cities. Of course, as is the case with all successful business models, car-sharing will need to be tailored specifically to China’s market and culture.
Issues to consider include (1) pricing – can car-sharing compete with taxis and other transportation choices? (2) challenging perceptions of success – car ownership has become a status symbol in China and (3) protecting business property – how do you track every user and hold them accountable for any damage done to the car they are sharing? Other questions include car-sharing’s impact on the Chinese auto market. Yet given China’s chronic air pollution and reliance on coal to generate electricity, car-sharing is certainly a model worth considering alongside alternatives such as electric vehicles.