The Spark

Electric cars are only as green as their power grid

Electric cars charging in Oslo
Education Images | UIG | Getty Images

Want a really clean power grid? Look to Norway.

President Barack Obama has just announced America's "first-ever national standards to limit carbon pollution from power plants." His "Clean Power Plan" calls for a 32 percent reduction in carbon dioxide emissions from 2005 levels by 2030.

Why? America's electricity is still mostly coal-fired, with natural gas being a close second and nuclear a distant third. The U.S. is second only to China, which is about twice as reliant on coal, in annual carbon dioxide emissions.

Norway, meanwhile, is almost entirely powered by water. Remarkably, 96 percent of its electricity is supplied by hydropower. In turn, its carbon dioxide emissions at about 36 million metric tons last year were just a fraction of America's, at nearly 5.1 billion, and China's, at 8.2 billion, per the International Energy Agency.

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The feat achieved by this Nordic country of only about 5 million people shouldn't be downplayed. It's not as if the country had no fossil fuels to draw upon—Norway is actually one of the world's top oil and natural gas producers. But Norway chose to largely export its fossil fuels, invest the money in a now almost $1 trillion sovereign wealth fund and draw its domestic electricity from hydropower.

As for the cost of this electricity? Norway's household bills average about $149 per megawatt hour. That's 23 percent higher than America's, at about $121, but both are among the cheapest in the developed world, per the IEA. Indeed Britain averages $229 per megawatt hour, Germany $387, Turkey $189 and Korea $101, by comparison.

This all helps explain why a visitor to Norway today would see endless electric cars zipping around. It's as if Texas or North Dakota were buzzing with Teslas and Nissan Leafs, rather than gas-guzzling pickup trucks and SUVs.

Battery power

In fact, Norway just marked the sale of its 50,000th electric vehicle in April—months earlier than expected. To date this year, 1 out of every 5 cars sold has been battery-powered. Electric cars now account for nearly 3 percent of total cars in Norway, whereas they are a just fraction of a percent elsewhere.

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This concentration has been fueled by heavy tax breaks, subsidies, and privileges for purchasing and driving an electric car in Norway. It goes all the way back to an "a-ha" moment—literally—in the late 1980s, when environmentalist Frederic Hauge's foundation, Bellona, and the Norwegian pop group a-ha (known for hits like "Take on Me") collaborated to promote the nascent industry.

At the time, policymakers were motivated by a mix of environmentalism and envy. Neighboring Sweden had a flourishing auto industry, boasting world-beating automakers like Volvo and Saab. Norway was trying to encourage its own fledgling electric industry, featuring Pivco (later named Think), a company whose electric cars were featured at the 1994 Lillehammer Winter Olympics in Norway, which was purchased by Ford in the late 1990s, and later sold and shut down.

Norway's electric car market lived on, however, getting a second wind as global leaders began to recognize and regulate fossil fuel emissions in an effort to reduce pollution, carbon dioxide and harm to the environment.

While the country missed the boat in terms of fostering a global electric car juggernaut, its hydropower grid is becoming a juggernaut of its own.

Europe, after all, has now put in place a system to cap and price carbon emissions which companies trade among themselves. The cap, which operates in the 28 European Union countries plus Norway, Iceland and Lichtenstein, actually shrinks emissions from power stations and the like by 1.74 percent each year from 2013 onward, for a 21 percent targeted reduction by 2020.

While that system is still in transition today, emissions-free energy sources, like Norway's hydropower, are becoming ever more attractive.

In fact, Britain and Norway have just agreed to install for the first time an electricity pipeline, the "NSN interconnector," between the two countries. A link with Germany could be next.

That has researchers at the Norwegian University of Science and Technology suggesting the country could even become a "green battery" powering Europe, with renewable power gradually displacing its traditional oil and natural gas industries.

Developing world

If only Norway could supply such cheap, renewable power to the world.

The difficulty is that electricity usage is growing much more quickly in developing countries whose power sources are much more reliant upon traditional fossil fuels. That means that a Tesla driven in Norway is a vastly different vehicle, in terms of how it's powered, than one driven in China, the U.S., or most of the emerging world.

Electricity production has been growing twice as fast in nondeveloped countries than in developed ones over the past 40 years. In 2011, production from the developing world surpassed that of the developed world outright, according to the IEA.

As a result, more than two-thirds of global electricity production still comes from fossil-fuel powered plants, as of 2013. America's share is similar, with fossil fuels powering 66 percent of electricity provided year to date. In China, the grid is said to draw upward of three-quarters of its power from fossil fuels, particularly coal—with its concomitant heavy pollution problems.

As researchers Bjart Holtsmark and Anders Skonhoft recently noted, "Indeed, the pollution from power stations is so dangerous and so widespread that even electric bicycles, of which China has 100 million, are only a fraction more environmentally beneficial than gasoline-driven cars."

If electric cars are to help solve the world's carbon emissions problem, "there needs to be a fundamental revision of electricity production," they added.