Pricing indirect emissions accelerates low-carbon transition of US light vehicle sector

Large-scale electric vehicle adoption can greatly reduce emissions from vehicle tailpipes. However, analysts have cautioned that it can come with increased indirect emissions from electricity and battery production that are not commonly regulated by transport policies. We combine integrated energy modeling and life cycle assessment to compare optimal policy scenarios that price emissions at the tailpipe only, versus both tailpipe and indirect emissions. Surprisingly, scenarios that also price indirect emissions exhibit higher, rather than reduced, sales of electric vehicles, while yielding lower cumulative tailpipe and indirect emissions. Expected technological change ensures that emissions from electricity and battery production are more than offset by reduced emissions of gasoline production. Given continued decarbonization of electricity supply, results show that a large-scale adoption of electric vehicles is able to reduce CO₂ emissions through more channels than previously expected. Further, carbon pricing of stationary sources will also favor electric vehicles.