An electric vehicle charging

Centre for Energy PolicyElectrification of Private Transport - Press Release 22 September 2020

Can the electrification of private transport lead to economic prosperity?

The Centre for Energy Policy at the University of Strathclyde is publishing its latest research, which looks at the macroeconomic impacts on the UK economy of electrifying private transport up to 2050.

This is seen as one of the leading options for reducing emissions from the transport sector, which will be an essential part of getting to net zero. The economic analysis undertaken considers the investment required to upgrade the electricity networks, along with the wider rollout and use of electric vehicles in the private transport sector. 

Professor Karen Turner, Director of the Centre for Energy Policy, conducted the research. She said: “The UK has set binding targets to meet net zero emissions by 2050 and transport is one of the key sectors where emissions will have to significantly reduce.

“While a range of possibilities exists to decarbonise transport, electrification is currently seen as a leading option for cars and vans in particular. One clear policy challenge is presented by the target of ending sales of petrol and diesel cars and vans by 2035, which will present challenges in terms of the supply of and demand for EVs.

“However, one of the key questions that remains for regulators and policy makers is how and when the required infrastructure upgrades to the electricity networks will be invested and paid for, which will have important implications for how the rollout more generally impacts across the wider economy.

“Our economic analysis shows that the switch to electric vehicles through to 2050 could ultimately deliver sustained benefits across the wider economy, with net positive effects on GDP - up to an additional 0.16% GDP per annum - employment of up to 30,000 additional full-time equivalent jobs, average wages and labour productivity. In the UK context, this is largely a result of the associated shift in fuelling away from using import-intensive petrol and diesel towards the increased output of the electricity sector, which has relatively strong domestic supply chain content, along with increased consumer spending.

“Of course, our research recognised that attention must be given to how quickly smart, off-peak, charging is likely to be adopted, how this impacts investment and the need to recover investment costs through energy bills. The latter, in particular, may combine with demand pressures from EV uptake and rollout to affect electricity prices. Similarly, changing investment and consumer demands could introduce price pressures in multiple markets, which in turn could have implications for UK competitiveness and export demands in other parts of the economy.

“Our research findings show that, while these factors constrain the expansion and its distribution, the macroeconomic impacts we report can be expected to emerge and ultimately lead to a positive net impact on the wider UK economy.”