In Conversation
October 2020

In Conversation with: Dr. Tilak Doshi, Managing Director of Doshi Consulting

In this issue of our “In Conversation with” we talked to Dr Tilak Doshi, an energy sector consultant based in Singapore. Dr Doshi shared his views and observations about the global “2050 decarbonisation” plan and move towards Electric Vehicles (EVs) with us. We would like to thank Dr Doshi for his efforts to comprehensively answer our questions which provide some highly valuable and very interesting insights into this matter, highlighting a range of topics often overlooked in the political discussion between the various stakeholders in the race to save the world from impending climate catastrophe.   

Profile:

 Dr Tilak Doshi                                                    

Managing Director          

Doshi Consulting

Dr. Tilak K. Doshi is Managing Director of a Singapore-based energy consulting company. Dr. Doshi is an industry expert with over 25 years of international work experience in leading oil and gas companies and think tanks. Dr. Doshi is the author of many articles and three books on energy economics, the most recent being the “Singapore Chronicles: Energy” (Straits Times Press, 2016). He received his Ph.D. in Economics from the University of Hawaii on a scholarship provided by the East-West Centre. He was one of two candidates which were granted the 1984 Robert S. McNamara Research Fellow award by World Bank, Washington, D.C. His previous appointments include Managing Consultant at Muse, Stancil & Co (Asia); Chief Economist, Energy Studies Institute, National University of Singapore; Senior Fellow and Program Director, King Abdullah Petroleum Studies and Research Center (KAPSARC, Riyadh, Saudi Arabia); Executive Director for Energy, Dubai Multi Commodities Centre (DMCC, UAE); Specialist Consultant, Saudi Aramco (Dhahran, Saudi Arabia); Chief Asia Economist, Unocal Corporation (Singapore); Director for Economic and Industry Analysis, Atlantic Richfield Corporation (ARCO, Los Angeles, U.S.).

Q: In one of your recent publications, you picked up on the widespread view that fossil fuels are considered as “dirty” and renewables such as wind and solar energy and electric vehicles are considered as “clean” in the public eye. This has become a fixture of mainstream media and policy assumptions across the political spectrum in developed countries. The main question seems to be only, how quickly can governments in those countries, led by an alleged scientific consensus, decarbonize the world and save it from impending climate catastrophe. 

What is your view on the clean energy strategies and roadmaps introduced? What are the key elements which need to be taken into account in order to obtain a fully comprehensive, meaningful synopsis of the situation and the impact the planned steps will have?  


A: The basic point about clean energy strategies that needs to be considered is the economic costs of the particular technologies such as solar, wind and electric vehicles. These economic costs need to account for “life-cycle” or “full-cycle” costs of the technology proposed, that is the full opportunity costs in terms of alternatives foregone. 

For example, it is true that solar PV (Solar Photovoltaic) module costs have come down dramatically and the direct capital costs of investing in solar power as seen by an investor or home-owner wanting to put in solar panels on his roof might make the proposition attractive. However, the nominal costs ignore the costs of subsidies given out to encourage renewable energy (RE) and regulations such as renewable portfolio standards (RPS) which guarantee demand for the wind and solar. The policy maker needs to consider all costs – such as the cost of adjusting for its intermittency by requiring back-up power generators to kick-in “when the sun does not shine or the wind does not blow”. 

The need for back-up generation is just one of a number of system wide costs imposed by the intermittency of weather-dependent solar and wind-power. The claim that intermittent sources of RE can replace the need for 24/7 grid-supplied power based on fossil fuels is a misleading claim. Rigorous economic analyses of the hidden costs of unreliable, weather-dependent solar and wind power have countered such claims. According to data reported by energy generators to regulatory authorities in the US, wind and solar power are two to three times more expensive than existing coal or gas-fuelled power.

The “life-cycle cost” approach to renewable energy takes into account the upstream industries in mining ores and raw-material processing that is required for components which go into the manufacture of solar panels and wind-mills as well as the expected costs “downstream” such as the safe disposal of used components and batteries at the end of their productive life. For EVs, I pointed out the massive increase in mining and ore-processing required to support renewables in components such as lithium, cobalt, graphite and manganese as well as rare earths such as neodymium, praseodymium (Pr), dysprosium (Dy) and terbium (Tb). China has the majority of the world’s rare earth reserves with around 36% and the Russian Commonwealth of Independent States (CIS) have 19%. Chinese dominance of supply chains in many of these commodities across the world has become a key issue in the defence strategy of the US and several other major western countries.  

To sum up, life-cycle criteria for evaluating renewable energy projects would include:

  • Direct capital cost of equipment
  • Cost of land and its clearance, and its impact on local flora and fauna
  • System wide costs imposed by supporting RE (e.g. need for back-up power by other fossil-fuel-based power generation to stand-by idle until required to ramp up or down depending on the vagaries of weather)
  • Need to include both, the explicit costs of subsidies as well as “hidden costs” of regulations such Renewable Portfolio Standards
  • Costs of upstream processing, including mining and ore-processing
  • Costs of safe disposal or recycling of E-waste from renewable energy components    

One simple measure of the steep costs of renewable energy, without going into the details of life-cycle economics of each of the technologies, is provided by the following data:

  • The world spent US$3,660 billion on climate change projects over the eight-year period 2011–2018. A total of 55% or about $2,000 billion of this sum was spent on solar and wind energy.
  • Despite this, wind and solar energy still produced only 3% of world energy consumption in the year 2018, while the fossil fuels (oil, coal and gas) produced 85% between them.
  • If it takes $2 trillion to grow solar and wind contribution to global primary energy from an estimated 0.5% in 2011 to 3% in 2018, how much will it cost to bring it up to 100% by 2050 as several countries and organizations are now proposing? 

Q: You have been addressing some concerns about the life cycle carbon dioxide emissions from the production of EVs. A study sponsored by the National Natural Science Foundation of China, submitted to the International Conference on Applied Energy (*), also reveals that CO2 emissions from the production of EVs is estimated to be around 60% higher than the levels emitted from a comparable internal combustion engine vehicle (ICEV). 

(*) for our readers’ reference, a copy of the a.m. study is available by using the following link: https://www.sciencedirect.com/science/article/pii/S1876610217309049

Please, share your thoughts and findings on the different carbon dioxide emissions from EVs and ICEVs with us. 

A: About half the lifetime carbon-dioxide emissions from an electric car come from the energy used to produce the car, especially in the mining and processing of raw materials needed for the battery. This compares unfavourably with the manufacture of a gasoline-powered car which accounts for 17% of the car’s lifetime carbon-dioxide emissions. The production of an EV causes 30,000 pounds of carbon-dioxide emission as it hits the showroom. The equivalent amount for manufacturing a conventional car is 14,000 pounds.

Once on the road, the carbon dioxide emissions of EVs depends on the power-generation fuel used to recharge its battery. If it comes mostly from coal-fired power plants, it will lead to about 15 ounces of carbon-dioxide for every mile it is driven—three ounces more than a similar gasoline-powered car. Even if the EV is driven for 90,000 miles and the battery is charged by cleaner natural-gas fueled power stations, it will cause just 24% less carbon-dioxide emission than a gasoline-powered car. “This is a far cry from ‘zero emissions’" as put by one commentator. 

The data reported by experts in this field suggest that EVs, solar panels and windmills are not “zero emissions” technologies once all life-cycle costs are taken into account. For instance, the thousands of tons of cement and steel that go into building wind-mill towers are all produced using fossil-fuel intensive production methods – there are few alternatives to substitute coking coal, for instance, in making steel. The research by Mark Mills of the Manhattan Institute, Gautam Kalghatgi of Oxford University, Michael Shellenberger in his latest NYT bestseller, and the documentary film by Michael Moore all suggest that large-scale replacement of conventional power generation by renewable energy is prohibitively expensive and will give rise to even more adverse environmental concerns due to intermittency, very low efficiency and very large area footprints of solar and wind energy.    


Q: China and the European Union appear to be the front runners in global EV developments, but a large number of other countries, including many in Asia, are also pushing for decarbonisation, introducing promotions and incentives for the switch to “clean energy” and eliminating conventional fuel type vehicles. 

Do you see any specific challenges for lesser developed countries, adopting ambitious zero-emission targets, such as emissions from power generation? If the required, incremental volume of power needed to recharge EV batteries will come from traditional coal-fired power plants, how will this change a country’s CO2 emission balance versus another where power plants are fuelled with natural gas?

A: It is counterproductive to promote EVs in areas where electricity is primarily produced from lignite, coal, or even heavy oil combustion. Thus EVs are a means of moving emissions away from the road rather than reducing them globally. Some emissions reductions are achieved by EVs using electricity from natural gas compared to coal (natural gas turbines are the most fuel-efficient power generation technology). In many Asian countries such as India and China, however, natural gas is significantly more expensive than locally-mined coal. 

It should also be noted that coal power, if generated in the latest ultra-supercritical latest-technology (4th generation) plants, is extremely efficient and has low emissions of pollutants (such as Sox, NOx, ozone, particulate matter, mercury, etc.). Even if CO2 emissions remain, local pollutants with direct health impacts (CO2 does not have local health impacts) such as oxides of sulfur and nitrogen and particulate matter (soot) are minimized and avoid urban smog problems.  



Q: The increasing production of EVs is driving a boom in Cobalt and other toxic heavy metal production and demand. 

What are the main concerns here, in terms of global availability and future demand scenarios? What implications could this have on countries involved in the mining and upstream processing of minerals? 

A: Replacing just 50 million of the world’s estimated 1.3 billion cars with electric vehicles would require more than doubling the world’s annual production of cobalt, neodymium, and lithium, and using more than half the world’s current annual copper production.

The environmental and social impact of vastly-expanded mining for these materials — some of which are highly toxic when mined, transported and processed – in poorer developing countries afflicted by corruption and poor human rights records will be drastic and impose heavy burdens on many of these countries. The local pollution and human rights violations involved in mining for minerals and rare earths in Africa, China, Latin America and elsewhere have been reported by UN agencies and human rights groups such as Amnesty International. The clean and green image of EVs stands in stark contrast to the realities of manufacturing batteries.

Also, for many countries, dependence on batteries and the minerals and metal mining and processing largely controlled by countries such as China and Russia will be seen as a threat to national security. For example, the Trump administration is urgently trying to revive rare earths mining in US federal properties.  Under Covid-19 and trade conflict conditions, many countries are now trying to re-design supply chains so that over-dependence is avoided, whether it is in pharmaceuticals or energy technology supply. 



Q: Having addressed the issues surrounding the production of EVs, how can a consumer make a sound decision on the actual CO2 emission savings of an EV versus an ICEV? What is the full life cycle CO2 emission saving of a “clean energy” car versus a conventional fuel-type car? Are there any other factors to be taken into consideration? 

A: Under European electricity grid conditions for example, if we assume 100,000 km for the life-cycle of a car, the benefit of EVs (in terms of reduced CO2) of only 9%-14% compared to gasoline vehicles and results in impacts indistinguishable from those of a diesel vehicle. In other words, since manufacturing EV batteries is so energy and mining-intensive, the “zero-emission” EV is far from being zero emissions if we take into account all the costs of upstream mining, refining and manufacturing of minerals and rare earths needed for rechargeable batteries. Furthermore, we need to consider the energy source for power grids – if it is coal-based, this merely changes pollution from tail-pipes in cars to pollution from power plant stacks. Finally we need to consider the costs of recycling or safe disposal of batteries and other toxic components involved in EVs compared to the much lower costs of disposing or recycling the lead-acid batteries of gasoline or diesel cars. 



Q: The average car buyer will obviously also look at the cost of replacing a conventional fuel-type car by an EV. EVs are significantly more expensive than a standard-gasoline or Diesel powered passenger car, in terms of acquisition cost for the vehicle as well as due to the expected, shorter battery lifespan of an EV. 

How does this impact the consumer’s decision? Are today’s tax and rebate incentives sufficient to compensate for the incremental cost and to trigger a consumer move away from conventional towards alternative technology or, perhaps, should a full feasibility study be made before consideration is even made in this direction?  

A: Despite the subsidies or rebates available for EV purchases in many countries, the upfront costs of EVs are still significantly higher than comparable gasoline or diesel cars. A recent study of EV policies in Singapore found that the upfront cost of EVs is more than 50% higher than the upfront cost of a comparable diesel or gasoline vehicle, and this more than compensates for the additional health damage costs from the particulate matter (PM) and SO2 pollution emitted by conventional cars. Crucially, the operating or variable costs of operating EVs on a lifetime basis are comparable to those of conventional cars: because over 90% of Singapore’s population live in high-rise apartments, widespread EV adoption will necessitate a heavy reliance on costly and time consuming communal charging stations, which offsets some of the savings from not needing to run on gasoline. As a consequence, EVs are a highly costly means of achieving CO2 emissions reductions: the social cost of carbon (SCC) would need to be as high as S$9,700 per tonne of CO2 before EVs break even with conventional cars on the basis of social costs.

An analysis of the Phase I EV test-bed published by LTA and EMA in 2014 also came to similar conclusions.  EVs were found to be technically feasible in Singapore: the daily average driving distance for corporate EV users was equal to 46 km, considerably lower than the EV manufacturers’ reported range of 120-160km per charge, and this meant that the bulk of charging took place at the participants’ primary charging sites. However, the study noted that “EVs are currently not economically feasible for adoption, even after factoring in the health and environmental benefits to society”, primarily due to the high upfront cost of EVs.

A recent paper by Toyota concluded that even in the most optimistic scenarios EVs would not reach purchase price parity with conventional cars by 2030.


Q: Battery life in EVs is another point of concern. What are the potential long-term implications? What needs to be implemented to address issues such as e-waste disposal, its management and regulations? 

A: Many factors go into how long an EV battery lasts. For example, the batteries in all electric cars sold in the U.S. are usually covered under warranty for at least 8 years or 100,000 miles. Kia covers the battery packs in its electric cars for 10 years/100,000 miles. However, some automakers only cover the battery pack against a complete loss of its ability to hold a charge, which is extremely rare. Others, including BMW, Chevrolet, Nissan, Tesla (Model 3) and Volkswagen will replace the pack if it falls to a specified capacity percentage while under warranty, which is usually 60-70 percent. 

According to data compiled by the organization Plug In America, the battery pack in a Tesla Model S will lose around five percent of its original capacity over the first 50,000 miles, with the rate of depletion actually slowing down from there. It should be noted that electric cars kept in the hottest climates can be expected to lose battery capacity quicker than those living in more temperate areas. Extreme heat is damaging to lithium-ion chemistry, which is why many electric cars come with liquid-cooled battery packs. Excessive use of public Fast Charging stations (they can bring an EV up to 80 percent of its capacity in as little as 30 minutes) can also take a toll on a battery’s long-term performance. That’s because the faster an electric car is charged, the hotter it becomes and, again, that’s not battery friendly.

Q: We understand that Europe and Japan are developing clean future liquid fuels as a viable option for advanced ICE application. The ambition appears to match or better alternative energies like EVs. What is your comment regarding this?

A: The global liquid biofuels market size was valued at USD 65.4 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 6.4% from 2020 to 2027.

New biofuels such as bio-diesel and ethanol-spiked gasoline have been supported by subsidies and government-imposed mandates for many years in the US and Europe.  A notable example is the US experience with mandated ethanol production, which has been characterized by an extraordinary level of special interest influence on the regulatory regime administering the ethanol program.  The problem with government intervention of this kind is that it encourages firms to seek regulatory and financial support directly from government agencies rather than to undertake new technology ventures in a competitive market. This creates incentives for rent-seeking by those who specialize in lobbying and influencing the regulatory process.  

The use of biofuels has encouraged the emergence of mono-crop agriculture in places such as Germany, where mixed-use land or forests are given over to single crop agriculture like corn (for ethanol) or soy (for bio-diesel) which compromises ecological diversity and is harmful to indigenous flora and fauna. 

In Indonesia, there has been a long debate regarding the conversion of forest land into palm-oil for the bio-diesel market. In terms of climate change impacts, there have been studies about the negative contribution of bio-fuels to GHG emissions once land-use change has been taken into account.  



Q: We would like to thank you very much for the opportunity to talk to you and for sharing your views and findings with our readers. Are there any other points, not covered by our questions, which you deem important to raise in order to enable the reader round off his or her view on the electrification topic for road transportation?    

A: For all those who are more interested in the topic of EVs as well as related topics, please read my article on Forbes on electric vehicles as well as other related topics on renewable energy also published by Forbes.

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