The third webinar in DecarboN8's Future Transport Fuels Webinar Series for academics, students, policymakers, businesses, civil society and anyone interested in the decarbonisation of transport in the UK. About the event: Over the last four years, CEP has applied its economy-wide approach to analysing the likely wider economy impacts of enabling the roll-out of electric vehicles in the UK. This is seen as a key component of reducing emissions from private transport and facilitating the transition to net zero. In this webinar we will discuss our latest research that explores the macro economic and societal impacts of both investing to reinforce the electricity network and from shifting fueling from fossil fuels to electricity. We will also explore considerations for a ‘Just Transition’ and regulatory and policy implications. About the speaker: Professor Karen Turner is Director of the Centre for Energy Policy at the University of Strathclyde. She has previously held academic posts at in the Economics Departments at Heriot-Watt, Stirling and Strathclyde Universities. Karen was one of six ESRC Climate Change Leadership Fellows and her main research interests lie in considering and modelling the economy-wide and macroeconomic impacts of energy policy and industry developments. The main focuses of her current work is considering the wider economic and societal value proposition for a range of low carbon energy solutions, including energy efficiency, electric vehicles, industrial decarbonisation and CCUS, through projects funded by UKRI and various government and industry bodies. Karen is currently a member of the Scottish Just Transition Commission, was member of the committee delivering the Royal Society of Edinburgh’s inquiry on Scotland’s Energy Future and is leading a cross-cutting sub-group of a new Royal Society (London) study on the long term role of energy storage.

1. Exploring the economic and societal impacts of enabling the
rollout of electric vehicles in the UK
Professor Karen Turner
@StrathCEP
https://www.strath.ac.uk/humanities/centreforenergypolicy/
Professor Karen Turner
Director, Centre for Energy Policy,
University of Strathclyde
karen.turner@strath.ac.uk
23rd June 2020
Decarbon8 - Future Transport Fuels Webinar Series

2. CEP team and approach
• TheCentre for Energy Policy (CEP)
is a multi-disciplinary research,
knowledge exchange and policy
stakeholder engagement hub
• Energy and climate issues in a
wider public policy context.
• Crucial need to understand
economic, social and political
context and consequences
• Expertise in modelling for wider
economy scenario analyses – where
and how is/could value generation
be affected by alternative courses
of action?

3. Electric Vehicles – a key solution to decarbonising private
transport?
Professor Karen Turner
@StrathCEP

4. CEP research wider economy impact of EV infrastructure
Our research (funded by EPSRC CESI and SPEN) integrates energy and economic system modelling
to investigate the crucial question of who ultimately pays for the costs of upgrading the power network to
facilitate the intended roll out of EVs.
Development of our research programme:
• First stage –EPSRC CESI funded project involving collaboration between the Centre for Energy Policy and
Scottish Power Energy Networks: Upgrading electricity networks to support the initial stages of the
EV roll-out (to 2030).
Key findings
• Net positive impacts on GDP (trajectory 0.1%), employment (up to 3000 jobs) and household incomes
• These impacts vary across time and particularly in response to the extent to which investment activity
be spread out (key – minimising disruption to the wider economy and smoothing cost recovery via
consumer bills)
Second stage – SPEN-funded project, EV rollout to 2050, more focus on welfare variables/social cost-
Professor Karen Turner
@StrathCEP

5. @StrathCEP
Model development and application
• First, an energy system model (UKTIMES) is used to simulate scenarios involving different
assumptions around extent ‘smart’ charging capability and consumer response for projected
EV rollout
• Secondly, the outcomes of the UKTIMES on the required investment costs, and efficiency
gains realised through using EVs for private transport, is used to inform a multi-sector
economy-wide UK ENVI ComputableGeneral Equilibrium (CGE) model

6. EV investment scenarios modelled
Three EV charging scenarios are analysed using the UK TIMES model, based on National Grid’s Future Energy
(FES) 2019
1. Mixed charge slow: the adoption of smart charging takes longer, with only 15% of all EVs doing smart charging by
2030, 30% by 2040, then increasing rapidly to 75% by 2050.
2. Mixed charge central: this scenario shows a steadier adoption of smart charging, with 20% smart charging by
2030, 60% by 2040 and 75% by 2050.
3. Mixed charge fast: smart charging is adopter faster by EV users, with 45% smart charging by 2030, 70% by 2040
and 75% by 2050.
Other key assumptions
• We assume a large EV penetration reaching 99% EV penetration by 2050
• We consider the EV rollout in these scenarios to affect all transportation in cars and vans – personal transport
• In addition, we assume an efficiency improvement with EV rollout - about 30% by 2050, relative to 2010 levels
• Costs of investment recovered via energy bills over 45 year lifetime of assets created – 1/3 of spend is within UK
Professor Karen Turner
@StrathCEP

7. Enabling and realising stages
CEP has developed a Net Zero Principles Framework which can be used as a tool for policy makers. It describes:
• Enabling stage: before emissions reductions can begin, need to invest in, install and facilitate operation of new
equipment, infrastructure and/or systems capability to enable emissions reduction
• Realising stage: with this capacity and capability in place, we can actually realise emissions reductions by working
with this new capacity in how we live and work.
1) Enabling stage
• Range of activities, including putting wires and cables in the ground - mainly construction spending within UK
• Full cost of this must be 100% recovered through consumer bills over a 45 year period
• Cost recovery pushes up electricity prices; additional investment activity in economy pushes up prices more
(labour, capital costs) - can cause ‘crowding out’
2) Realising stage
• Progressive shift from conventional vehicles to electric vehicles
• A change in fuelling from petrol and diesel to electricity
• Efficiency gains in private transport – less energy needed per mile driven
• Households make overall savings on fuelling
• Coincides with ongoing recovery of enabling costs through consumer bills

8. £0
£50,000,000
£100,000,000
£150,000,000
£200,000,000
£250,000,000
£300,000,000
£350,000,000
£400,000,000
Evolution of total investment for slow, central and fast investment
scenarios to enable the 99% EV roll out by 2050
Mixed charge_slow Mixed charge_central Mixed charge_fast
End of
investment
Scenario Total investment
Mixed charge_slow £16,848,359,000
Mixed charge_central £10,691,536,000
Mixed charge_fast £9,844,518,000
N.B. Investment figures are top
down and illustrative. Real
investment figures may vary
significantly due to variations at a
DNO level e.g. existing network
condition and required location of
EV charging points
Slow uptake of smart charging
Fast uptake of smart charging

9. -20000
-15000
-10000
-5000
0
5000
10000
15000
Agriculture,forestryandfishing
Miningandquarrying
Fossilfuelextraction
OtherMininingandmining…
Food(andTobacco)
Drink
Textile,Leather,Wood
PaperandPrinting
Cokeandrefinedpetroleum…
ChemicalsandPharmaceuticals
Rubber,Cement,Glass
Iron,steelandmetal
ElectricalManufacturing
Manufactureofconventional…
ElectricVehicles
Transportequipment/Other…
Electricity,transmissionand…
Gas
Naturalwatertreatmentand…
WaterManagementand…
Construction-Buildings
WholesaleandRetailTrade
LandTransport
Othertransport
Transportsupport
AccommodationandFood…
Communication
Services
Educationhealthanddefence
Recreational
Otherprivateservices
Net long run impacts of sectoral employment (FTE change relative to
base year values) from 99% EV penetration in the UK by 2050, enabled
by electricity network upgrades
Electricity
EVs
Services
Manufacture of conventional vehicles
Petroleum products

10. -£1,200,000,000
-£1,000,000,000
-£800,000,000
-£600,000,000
-£400,000,000
-£200,000,000
£0
£200,000,000
£400,000,000
£600,000,000
£800,000,000
£1,000,000,000
Agriculture,forestry…
Miningandquarrying
FossilFuelextraction
OtherMininingand…
Food(andTobacco)
Drink
Textile,Leather,Wood
PaperandPrinting
Refinedpetroleum…
Chemicalsand…
Rubber,Cement,Glass
Iron,steelandmetal
ElectricalManufacturing
Manufactureof…
ElectricVehicles
Transport…
Electricity,…
Gas
Naturalwater…
WaterManagement…
Construction-Buildings
WholesaleandRetail…
LandTransport
Othertransport
Transportsupport
Accommodationand…
Communication
Services
Educationhealthand…
Recreational
Otherprivateservices
Net long run impacts of earnings from employment (value change relative
to base year values) from 99% EV penetration in the UK by 2050,enabled
by electricity network upgrades

11. -0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
Evolution of net impacts (% change relative to base year values) on
UK prices of electricity, the CPI and exports for slow, central and fast
investment scenarios to enable the 99% EV penetration by 2050
Price of
electricity_slow
Price of
electricity_central
Price of electricity_fast
CPI_slow
Exports
Electricity price
CPI

12. -0.05
0.00
0.05
0.10
0.15
0.20
0.25
Evolution of net impacts (% change relative to base year values) on UK
GDP, employment and earnings from employment for slow, central and
fast investment scenarios to enable the 99% EV penetration by 2050
Earnings _fast
Earnings
_central
Earnings
_slow
GDP_fast
Earnings
GDP
Employment
2050

13. Key Findings – sustained positive macroeconomic impacts
• A shift in fuelling away from using import-intensive petrol and diesel towards the output of the electricity
sector (higher domestic content) is likely to enable net positive gains in activity levels in many sectors of
the economy from the outset
• Over time, as the EV roll-out gains pace, this can be expected to deliver larger and clear sustained net
economic gains that substantially offset the wider economy costs associated with paying for network
upgrade activity.
• The boost, triggered and driven by more demand for UK electricity and greater consumer/household
spending across a wide range of UK sectors, is likely to be sufficient for many UK industries outside of
those supplying conventional vehicles and fuel to enjoy sustained expansion
Professor Karen Turner
@StrathCEP

14. Key Findings – impact on labour productivity and earnings
• The new key findings arise from consideration of real earnings associated with job creation and the
of GDP, through labour productivity (GDP per employee/hour of work). Both are key metrics in public
evaluation
• The expansion that emerges from our simulation is characterised by both earnings and GDP expanding
faster than employment across all timeframes and investment levels/spread. This means that the boost
involves a shift in the composition of expanding activity in favour of higher average wage and/or value-
added sectors (of which the UK Electricity industry is one, on both measures).
• This type of shift is also important in terms of what it means for the tax base and the levels of revenues
we find accrue to the public budget year-on-year.
Professor Karen Turner
@StrathCEP

15. Professor KarenTurner
@StrathCEP
But with economic benefits come with two key
considerations
1) Expansion is ultimately driven by better off UK households being able to spend more, which
puts upward pressure on all prices and has competitiveness impacts – change in
composition of GDP away from exports
2) The main source of expansion in the scenarios modelled here is increased demand for UK
electricity, which, in addition to investment cost recovery, is likely to cause sustained
upward pressure on the price of electricity faced by UK business and domestic consumers
contributes to CPI and competitiveness pressures
• Contributes to CPI and competitiveness pressures
• But crucially, greater pressure on electricity prices could act to widen real income
inequalities – and offset some wider economy gains achievable via other net zero
actions – e.g. energy efficiency, where source of benefits is reduced energy service costs

16. Professor KarenTurner
@StrathCEP
Speed of transition, and cumulative gains affected by timing/level of
investment and electricity price impacts
• Transition to long-run outcome takes until latter part of 21st century
• Differences across investment scenarios is most affected by what happens to the
price of electricity – and, crucially, the impact of recovering investment costs
through bills adds to pressure from increased demand
• Scenarios involving high up-front and overall investment costs demonstrate the
slowest transition paths – i.e. slowest, and lower cumulative gains, particularly in
earnings
• There is economic value in encouraging the quick uptake of smart charging

17. Key Findings – implications for a ‘Just Transition’
1. All three scenarios we consider have a net positive effect on the wider
economy once ‘enabling’ and ‘realising’ stages interact – although timing and
scale of investment has some control on just how positive
2. Infrastructure upgrades to facilitate a transition to electric vehicles could help
create more and higher value jobs – this is not only good for those employed
but is good for the public budget
3. Consideration should be given to the likely sustained upward pressure on the
of electricity faced by UK business and domestic consumers which may impact
low income households who may be less likely to see economic benefit
Professor Karen Turner
@StrathCEP

18. Professor KarenTurner
@StrathCEP
How can the results be used/future policy facing research develop?
Informing SCBA
Earnings is the most obvious input to social cost-benefit analysis
Value of gains are identified by year – can be discounted, cumulative and NPV impacts could be
considered across different required return periods etc.
Alongside or integrate to existing SCBA? Regulator vs. central govt. SCBA perspective
Spatial focus
Analysis conducted here at national level for national level investment requirement – regional/DNO
level would depend on data, but scenarios could be scaled
Question: should wider economy returns from DNO level investment be considered at level of the
regional economy served by that DNO or for the national economy?Why? What are the questions
being asked by different decision makers?