Electrification of transport: Challenges, mechanisms and solutions

Electrification of the car fleet will increase the interdependence between the transport system and the electricity market. This will require new policy measures and improved coordination and collaboration between different policy makers and institutions. We assess different policy measures and investigate through numerical models how an electrification of the Norwegian car fleet may affect the transport system and the electricity market. We have had four seminars with the «user group» (April 2016, and May 2017, October 2018, and November 2019). In the first, we discussed the project, and in the second we presented some results and discussed scenarios for the electric transport market. In the third we presented some more results and informed about the process around the numerical modelling of the scenarios. In the fourth and final seminar we presented some new results and the user partners had prepared comments to the presentations. In the article by Greaker og Kristoffersen in Samfunnsøkonomen no. 4 2017, it is shown that different charging standards can have a negative influence on the electrification of the car fleet. Wangsness, Proost and Rødseth (2018) use a stylized numerical model of the Oslo area to illustrate the impact of the favorable EV policy in Norway, and the present inefficient pricing of car use and public transport fares. It is shown that the EV policy cet. par. lead to more congestion and less use of public transport. There is a clear conflict of interest between reducing CO2 emissions through the present EV policy, and the goal of stopping the growth of car transport in cities. There are also potential welfare gains from using a more efficient tax policy. Wangsness (2018) analyses road pricing and discuss how the price should vary across types of cars (EV/non-EV), time periods (rush hours /non-rush hours) and geography urban/rural areas) when one also has to take into account governmental budget constraints and other distortionary taxes. A numerical model gives some estimates of optimally differentiated road prices. Wangsness, Proost and Rødseth (2019) develop a stylized model for passenger transport in the Oslo area where the agents' choice of car ownership, transport patterns and EV home charging is determined jointly in equilibrium. The paper analyses the need for grid expansion due to home charging and the implications of applying peak tariffs. Greaker, Hagem and Proost (2019) analyse how the potential for bidirectional charging of EVs affects the electricity market and the consumer cost of EVs. Wangsness, Kittelsen, Steinsland, Aune & Nævdal (2020) analyzes the interaction between the power market and the transport marked in several scenarios, with high shares of EVs, towards 2030. This is done by deploying specialized numerical transport models and energy market models. A main result is that the production capacity and transportation capacity of the power market are robust against a high share of EVs. Wangsness & Halse (2021) conduct an econometric analysis of how increased share of EVs affects the cost of the local transmission grid. They find very small impacts. Holtsmark (2020) compiles figures that may indicate that electric cars are not a solution to local noise and pollution problems. Even as electric cars will dominate, we will continue to struggle with both noise and local pollution from car traffic. The article concludes that there is a significant mismatch between the socio-economic costs of using electric cars and the costs that users pay. Greaker (2020) studies the optimal regulatory policies for charging of electric vehicles. He finds that that policies should seek to standardize high-speed charging systems as this will unambiguously mean faster phase-in of electric vehicles. He also finds that governments should subsidize both the charging at each station and the entry of charging stations.

Prosjektet har bidratt til det internasjonale forskermiljøet. Det har gitt økt samarbeid på tvers av institusjonene som har deltatt, og bedre kjennskap til hverandres modell-apparat. Prosjektet gir klare anbefalinger til myndighetene om virkemiddelbruk. Det kan gi bedre virkemiddelbruk i framtiden. Brukerne av prosjektet har fått mer informasjon om kraftmarkedets evne til å håndtere en elektrifisering av transportsektoren.

ENERGIX calls for research that can facilitate a transformation to environmentally sound transport systems. In particular, ENERGIX seeks focus on policies that: i) reduce greenhouse gas emissions, ii) reduce energy consumption, iii) give consideration to local environmental impact and iv) take into account the zero growth target for passenger car transport in major cities. We refer to this as a quadruple dividend of environmentally friendly transport systems. There is a need for knowledge about how this quadruple dividend can be achieved, and the implications for the wider economy. This project considers the electrification of the transport sector as one way to realize such goals, and takes a comprehensive system-wide perspective on regulatory issues and the implications of such a change would have for social welfare and affected industries. Electrification of the transport sector makes the transportation system and the electricity market increasingly entwined, highlighting a need for improved coordination and collaboration between different policy fields and institutions. We assess different policy packages and explore the effects on the electricity market and the transportation sector. The output of the project is expected to provide knowledge which is essential for making the right investment decisions in electricity production capacities, in charging technologies, in the grids, and in the market for EVs, as well as for efficient transportation planning.