The big hopes for the Copenhagen Climate Change Conference (COP15), which started this week, were recently toned down to more realistic expectations. Early on, the global community expected that COP15 would lead to a new international agreement in place of the soon-to-expire Kyoto Protocol. Now, it is widely expected that there will indeed be substantial progress toward a new international agreement, but that the deal will be sealed at some other venue in the future.

The main reason for the revised expectations is the inability of developed countries (e.g., the United States) and developing countries (e.g., China and India) to agree on their relative commitments for carbon abatement levels. The Kyoto protocol required only developed countries to curb their emissions; the new international treaty will have to be a lot more aggressive with its emission goals for both developed and developing countries.

Despite the immense importance of this debate, it will not alter the pace of the electrification of transportation. There are strong intrinsic motivations – for developed as well as developing countries – to embrace EVs, regardless of when the climate deal is sealed.

Many developed countries are actively reducing the carbon intensity of their energy sectors by switching to cleaner fuels for generating electricity (e.g., coal to natural gas), and by producing more energy from renewable resources. The increasing marginal cost of energy sector carbon abatement opens the door to a new “low hanging fruit” – the transportation sector, which is still reliant on fossil fuels. Developed countries also get a “double win” by embracing EVs, as the distributed energy storage feature of EVs enables more renewable energy to come online.

Developing nations such as China – the largest single carbon emitter – consistently show increasing interest in EVs, which they recognize as a major economic growth opportunity. Just as consumers in developing countries have “leapfrogged” to mobile phones, skipping landlines altogether, EVs can be seen as an opportunity for “industrial leapfrogging” as developing countries focus on EV production before ever building out a robust industrial base for producing and servicing gas-powered vehicles. Leapfrogging to EVs also happens to have tremendous potential for carbon emissions abatement in the developing world.

CO2 emission levels of countries/regions (million metric tonnes, 2007). Size of rectangles correspond to emissions levels. Click to enlarge. Source: Financial Times / EIA

In turn, developed countries are naturally inclined to build an EV ecosystem to reduce the risk of losing the market opportunity to developing countries. This can be seen as a defensive play for developed countries to protect their entrenched local automotive business ecosystems at what is certainly a critical juncture for the industry. Given their high share of global emissions, the race to electrified transport in the developed world (e.g., the United States and Europe) is sure to make a significant impact in emissions reduction as well.

As citizens of the world, we all hope that the international community will seal a new climate deal as soon as possible. But, regardless of global deals, some country or set of countries will become global EV industrial leaders, and those countries will be the first beneficiaries of the transition.

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