Most observers recognize that electric vehicles will dominate light duty transportation and supplant vehicles powered by internal combustion engines powered by fossil fuels over the coming decades. Already, the cost to operate EVs is significantly lower than ICE vehicles and as battery prices continue to fall along the cost curve of production improvements and scale, the initial cost to purchase an EV is likely to be equal or lower than a comparable ICE vehicle within the decade.
But the tipping point for EV adoption is not likely to come until sometime during the latter half of this decade. Given that EVs displace significant amounts of carbon--and even more when powered by renewable electricity—there is an opportunity to both accelerate decarbonization efforts and EV adoption by establishing a market focused on carbon credits earned by EVs over the next several years.
Eventually, buying an EV will be the default choice for consumers. But by waiting until EV purchases qualify as business-as-usual society will miss the opportunity to reduce millions of tons of carbon emissions.
The math is pretty straightforward:
An ICE vehicle averaging 25 MPG and driven an average number of miles per year will emit over 4 ½ tons of carbon each year from the use of gasoline as its fuel. While the amount of carbon an EV is responsible for depends on the generation mix on the grid when the vehicle is charging, the average is a fraction of the amount generated by its gasoline-fueled counterpart.
Even without using renewable energy to charge an EV, the emissions reductions average nearly 4 tons of carbon per year. When being charged by renewable energy, the EV carbon emissions is zero, thus saving nearly 5 tons of carbon from being emitted into the atmosphere.
Using our Emissions-IQ platform (E-IQ), TimberRock is measuring the actual carbon impact of participating vehicles by matching the vehicle’s charging periods with the carbon intensity of the grid the vehicle is charging on during the same period. E-IQ ingests vehicle charging period data from onboard telematics and harmonizes that data with time-stamped carbon intensity signals of the grid when the charging occurred, thus creating an accurate and verifiable measure of the carbon emissions generated by the vehicle charging session. We can translate the number of kWh consumed by the vehicle during the charging session into the number of miles added to the EV’s range.
Comparing the emissions generated by the vehicle charging session with the carbon-intensity of gasoline and the emissions generated by driving an equivalent ICE vehicle the same number of miles as added to the EV’s range during the charging session allows us to calculate the actual pounds of carbon displaced by driving the EV rather than the ICE vehicle. When the total number of pounds of carbon emissions avoided by the EV equals 2,205 (1 Metric Ton), we create and record a carbon credit for that vehicle.
We have used California’s Low Carbon Fuel Standard (LCFS) as the basis for our methodology. But LCFS is a compliance program for fossil fuel producers and the carbon credits earned by charging EVs accrues to electricity providers, fleet owners or charging station operators. We believe a voluntary program that benefits EV owners where companies and organizations that wish to accelerate the adoption of EVs in their region or areas of operations purchase credits from participating vehicles could have national applicability and directly impact consumer purchase decisions.
One approach would be for a prospective EV purchaser to assign the carbon credits earned by the vehicle over a fixed period of time, such as 3 or 5 years. The EV purchaser would receive an upfront payment or rebate representing the net value of the credits assigned which they could apply directly to the vehicle purchase price, thus reducing the EV acquisition cost.
The value of the rebate or upfront payment would depend on the market value of the carbon credits at the time. At $15/ton, a 5 year strip might be worth a couple hundred dollars. If carbon credits increase in value, as seems plausible, such a trip could be worth substantially more. We also believe that the rigorous methodology used to calculate the credits and the verifiability of the carbon savings make these credits more tangible than many other carbon credits currently on offer which could lead to greater demand for EV-derived credits over time.