The Complex Impact of EVs on Corporate Emissions

Companies and consumers alike are increasingly switching to electric vehicles (EVs), thanks in part to the tax credits found in the Inflation Reduction Act and new EV options from automakers. Bloomberg estimates that over half of passenger vehicles sold in the U.S. will be electric by 2030. The push for EVs may leave a sustainability professional to wonder: How do EVs impact corporate emissions?

The impact is complex. EVs decrease Scope 1 emissions because they do not rely on fossil fuel combustion engines, which directly emit greenhouse gasses. However, EV’s increase Scope 2 emissions because they increase electricity use (unless that electricity is 100 percent emissions-free). Purchasing new EVs and disposing of old gas vehicles also increases Scope 3 emissions, but this can be managed by aligning EV procurement with planned vehicle turnover. (In this article, we will focus on changes in Scope 1 and 2 emissions.)

Overall, the decrease in Scope 1 emissions from the adoption of electric vehicles typically outweighs the increase in Scope 2 emissions, leading to an overall emissions reduction in these scopes. But sustainability professionals will be tasked with measuring the net effect, which requires detailed understanding of the emissions impact across different fuel types and electric grids.

 

How Electric Vehicles Impact Scope 1 Emissions

Reducing your organization’s demand for gasoline and diesel will reduce emissions associated with the combustion of those fuels. This impact can be estimated by multiplying the annual fuel demand from combustion vehicles by the appropriate emissions factor.

In the example below, we show how the adoption of 100 electric vehicles would affect an organization’s Scope 1 emissions.

Note: Miles/yr. and Mile/Gal assumptions based on EPA estimates for a typical passenger vehicle in the U.S. These calculations address CO₂ only, they do not incorporate the CO₂ equivalent impact of other vehicle greenhouse gasses like CH₄ and N₂O

 

How Electric Vehicles Impact Scope 2 Emissions

Once your organization purchases electric vehicles, you will need to incorporate their annual electricity demand into your annual emissions calculations. The increase in Scope 2 emissions is a function of the number of vehicles, their annual electricity demand, and your grid emissions factor. Your grid emissions factors may vary by location, so your EV emissions may vary by location as well.

Different EV types will have different levels of efficiency (miles/kWh). Many companies are looking forward to wide availability of heavier duty EVs, like trucks and vans, but those will likely have different efficiency rates, so detailed accounting is key.

In the example below, we show how the adoption of 100 electric vehicles would affect an organization’s Scope 2 emissions. As we saw in the previous example, these 100 electric vehicles would reduce Scope 1 emissions by 460 metric tons of CO₂ per year, resulting in a simultaneous increase in Scope 2 emissions of 284 metric tons of CO₂ per year. The overall result would be a decrease of 176 metric tons of CO₂ per year.

 

Recommendations for Incorporating Electric Vehicles in Your Climate Strategy

Organizations can benefit from EVs if they are thoughtful about when and how they make the switch. Our recommendations, based on our clients’ experiences:

1. Consider the impact of electric vehicles holistically, which means carefully quantifying the impact on scopes 1, 2, and 3.
2. Create long-term renewable energy procurement plans with the anticipated added EV electricity use in mind.
3. Think regionally. Since the emissions intensity of the local electricity grid impacts the climate benefits of EV adoption, you may wish to prioritize EV procurement in areas with greener grids.
4. Consider aligning EV procurement with planned vehicle turnover to lessen the negative impact on Scope 3 emissions.
5. Assess climate benefits alongside other factors such as upfront cost, maintenance cost, charging infrastructure availability, and other organizational-specific considerations.

EV adoption can play an important role in an emissions reduction strategy, but the story is not a simple reduction in fuel use. When considering adopting EVs or planning long-term emissions reduction strategies, organizations should plan with increased Scope 2 emissions in mind.