Charging Ahead: Exploring the dynamics between Energy Efficiency and Resource Efficiency in the Electrification Transition

By Femke Bosch

Key words: Energy Efficiency, Resource Efficiency, Electrification, Electric Vehicle, Lifecycle Thinking, Battery Recycling

Introduction 

It is possible to witness a paradoxical trend on the world theatre. The growth in the world’s population to 9.7 billion by 2050 combined with economic growth and rapid urbanization will trigger an increased demand for energy. Simultaneously, the declining availability of natural resources is a critical environmental trend (OECD, n.d.). These developments underline the need for sustainable energy policy, which is often made up by the twin pillars of renewable energy and energy efficiency (Petrichenko, 2016). Despite reducing the reliance of earth’s finite and polluting energy sources, the transition towards renewables still requires significant amounts of resources. In this context, the efficient use of limited resources through Energy Efficiency [EE] and resource management improvements remains important.   

This essay will further research such synergies between EE and Resource Efficiency [RE] by asking the following research question: To what extent can the objectives of energy efficiency and resource efficiency be aligned in the context of electrification and the EV transition? 

For developing an answer to this research question, synergies between the two core terms are first further explored on a conceptual level. EE and RE are inherently intertwined since EE gains automatically translate in the reduction of energy losses, and thus resource savings. However, despite this interconnectedness, proactively connecting these two policy domains provides significant added value. The second section will apply this logic to the topic of electrification, and more specifically to the case study of Electric Vehicles [EVs]. In the context of electrification and the EV transition, there is widespread consensus on the achievement of efficiency gains. However, patterns of resource consumption provide a more conflicting image. Taking a lifecycle perspective allows for a more detailed insight in patterns of energy and resource performance in different parts of the process value chain. In the production phase, EVs consume even more resources than Internal Combustion Engine [ICE] cars. However, such detrimental resource use is offset by efficiency gains in the use-phase. The final section will further discuss these findings and provide the policy recommendation of recycling. 

1. Conceptual Background: Energy Efficiency and Resource Efficiency 

The concepts of energy efficiency and resource efficiency are inherently linked. The EE concept refers to the ratio on which energy input translates into useful outputs in terms of performance or services (EP, 2015). EE improvements thus enable the use of less energy to perform the same task by eliminating energy waste. In the context of being “the single largest measure to avoid energy demand in the Net Zero Emissions by 2050 Scenario”, EE has been labelled “the first fuel” in energy transitions (IEA, 2022a). Without a 13% improvement in EE between 2000 and 2017, 2017 levels for global energy usage would have been 13% higher (IEA, n.d.). This underscores that EE improvements translate into a large bulk of energy savings. With RE being defined as “using the Earth’s limited resources in a sustainable manner” (EC, n.d.), EE facilitates more sustainable resource use by getting more out of existing energy resources such as fossil fuels. EE and RE connect over savings of natural resources that would have otherwise been extracted for energy production (COMBI, 2015).  

Despite this conceptual and reasoned interconnection, the spheres of EE and RE can be divided into two separate policy domains. As a relatively more established policy domain, EE levers have been central to a wide array of policy and research developments over the years. The large set of directives developed in the EU context underline relative maturity of the regulatory framework for EE. RE has also been gaining increasing momentum in policy domains, for instance through the circular economy principles of reducing, reusing, and recycling materials. 

The creation of synergies between those two policy domains is crucial as efficiency and resource issues must be addressed in an integrated way (E3P, n.d.). Life cycle thinking provides such a holistic analysis of energy and resource impacts along the entire value chain of products, processes, or services. Assessing the opportunities for EE and RE improvements at each lifecycle stage allows for striking the most optimal balance between the two parameters.

2. Case study: Electrification

The widespread electrification of energy supply and demand nicely illustrates the sometimes conflicting dynamic between EE and RE. The process of electrification indicates that electrical power generation replaces other energy sources such as those from fossil fuels. The electrification process generally collides with the adoption of renewable energy sources (IEA, 2022b). The most common manifestations of electrification cover electric vehicles, electric trains, and electric heating and cooling systems. Electrification is a crucial component of Net Zero emissions pathways due to its potential for decarbonising energy supply chains and reducing emissions. The adoption of electrification technologies can avoid 1 Gt of CO2 emissions in 2030, allowing the electrification transition to account for 7% of all abated emissions between 2020-30. Although the share of electricity in final energy demand has been increasing steadily, getting in line with 2030 targets will require a nearly double growth pace. A compounded annual growth rate of 3.5% is needed to boost the share of electricity up to 30% by 2030 and get on track for Net Zero (IEA, 2022b). With electrification being such an essential tool in the decarbonisation transition, the process is also closely monitored and scrutinized. There is consensus on electrification’s potential for reducing carbon intensity and reducing energy losses. However, resource intensity levels associated with electric energy generation trigger debate. 

2.1 Electrification and energy efficiency 

Electric technologies generally score high on efficiency parameters. According to the IEA (2022b) “Electrification holds great potential to reduce final energy demand because the efficiency of electric technologies is generally much higher than fossil fuel-based alternatives with similar energy services”. Significant energy gains can be made through rapid electrification powered by renewables, and such electrification will be a key component in the rapid acceleration of EE over the next decades (DNV, 2022). To illustrate, renewable energy power generation is even argued to be up to 100% efficient (IRENA, 2017), whereas fossil fuel power plants score only a scarce 30-40% (oil and coal) or 60% (gas) (DNV, 2022).  

2.2 Electrification and resource efficiency  

Whereas widespread consensus exists on the benefits of electric technologies in the contexts of EE gains and carbon intensity reductions, less agreement exists on the impacts of electrification on resource use. On the positive side, electrification is often rewarded for its role in reducing the demand for non-renewable energy sources. By facilitating the use of renewable energy sources such as wind, solar and hydropower, dependencies on earth’s finite resources are reduced. Moreover, electrification-related EE improvements also translate into reductions in energy and resource losses. However, the massive transition that defines the electrification process also triggers significant upheaval in resource industries. In fact, critical mineral supply shortages are identified as a high-risk factor in the widespread transitioning to electrific energy (Deetman, et al., 2021). To illustrate, the generation of one unit of terawatt-hours from wind or solar consumes respectively 200 to 300 percent more metals than gas-fired energy would (Azevedo, et al., 2022). Moreover, nine times more minerals are required for an onshore wind plant compared to a gas-fired plant (IEA, 2021). Figure 1 in the appendix further illustrates the high material intensity levels for electric types of power generation and transport compared to conventional alternatives.

2.3 EVs: conflicting performance on energy and resource efficiency   

The specific case of Electric Vehicles (EV’s) underlines the conflicting tendencies between EE and RE in the context of electrification. EVs are a crucial element in transport decarbonization, but such centrality also triggers debate. Although this mode of road transport scores high on EE, there is more conflicting messaging on resource impacts (Bonsu, 2020).  Taking a lifecycle perspective reveals patterns of resource and energy consumption during different phases of a vehicle’s lifecycle and allows for a more elaborated comparison between EVs and ICEs. Although EVs are highly energy efficient and have the capacity to run on renewable energy, significant resource impacts occur in upstream segments of the value chain. In the production stage, material extraction and EV manufacturing require significant levels of energy consumption and resource input. To illustrate, EVs are between 3 and 4 times more efficient than ICEs (DNV, 2022). In terms of conversion ratio, EVs convert up to 85% of received energy into mechanical energy, whereas conventional cars have efficiency levels of less than 40% (NRDC, 2019). Yet, six times more minerals are required for an EV compared to a conventional ICE car (IEA, 2021). Figure 2 in the appendix further illustrates the significant differences in resource use between conventional vehicles and electric vehicles. However, over the entire lifecycle, “experts broadly agree that electric vehicles create a lower carbon footprint over the course of their lifetime than do cars and trucks that use traditional, internal combustion engines.” (Choudhury, 2021). Yet, these findings still illustrate that the widespread adoption of renewables and energy efficiency improvements do not discard the need for a continuous analysis of impacts along the complete lifecycle of innovative technologies. Lifecycle analysis shows that especially the production of lithium-ion batteries – from the mining of raw materials to manufacturing and transportation – is very energy and resource intensive (Parajuly, Ternald, & Kuehr, 2020). This subsequently allows policy makers to develop targeted policy solutions. 

3. Discussion and Policy Recommendations 

Transitioning to clean energy systems requires balancing different criteria, including those of energy efficiency and material efficiency. The electrification example, and more specifically the EV case study, underlines that certain technological improvements can be valid from an EE angle but score lower on impacts from resource use. Adopting a lifecycle perspective provides more insights on impacts beyond the use-phase. Moreover, such thinking allows for seeing the interplay between different performance indicators – such as those of resource and energy efficiency – in different parts of the value chain. Analysis shows that most electrification technologies, and amongst them EVs, have high resource requirements in their production phase. Although these negative impacts are largely offset by superior energy efficiency in the use-phase, such knowledge on impact hotspots does enable policy makers with the knowledge for developing targeted solutions. 

A possible policy solution to the high resource requirements for EV battery production is provided by the circular economy principle of recycling. With over 100 million batteries expected to be retired before 2030, an increasing amount of EV batteries reach end-of-life. Providing policy incentives for the recycling of those batteries can reduce the primary demand for critical raw materials. Such recycling incentives can even be seen as an “opportunity to scale a supply chain that is more stable, more resilient, more efficient, and more sustainable than that of the fossil-fuel and internal combustion engine (ICE) vehicle industry” (Breiter, et al., 2023). 

However, providing policy resolutions for aligning EE and RE objectives in the context of electric car use should not veil the fact that a genuine sustainable transition involves behavioral change and sufficiency considerations. A traffic jam made up of EV’s remains a traffic jam. 

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Appendix 

Figure 1. High material intensity for renewable power generation technologies and electric vehicles compared to conventional alternatives (Azevedo, et al., 2022). 

Figure 2. Minerals used in electric cars compared to conventional cars (IEA, 2021).