Fuel efficiency, power trading, and emissions leakage from driving electric vehicles: Evidence from Chinese provinces

Abstract

This paper investigates how driving electric vehicles redistributes tailpipe emissions and brings unintended impacts elsewhere. Using vehicle registration and electricity transmission data in China, we decompose emissions reductions of adopting an electric vehicle into three distinct effects: fuel efficiency, power trading, and emissions leakage. The fuel efficiency effect, arising from the higher energy conversion rates of electric vehicles relative to gasoline vehicles, accounts for most emissions reductions by electric vehicle adoption. The power trading effect, referring to emissions exported by outsourcing power generation used to charge electric vehicles, constitutes only a small portion of emissions reductions. The power trading effect is nearly offset by the leakage effect—the emissions increases borne by other regions, implying little nationwide gain from shifting charging power across regions. Overall, some provinces incur losses by net emissions increases, though most benefit from electric vehicle adoption. The losing provinces capture proportionally fewer benefits from local small-scale electric vehicle adoption but absorb disproportionately more emissions by supplying power used for electric vehicle charging in other areas. We show that investing in renewable power generation should be prioritized to mitigate the inequality of emissions reductions across regions in the middle and late stages of electric vehicle transition.