Electric Vehicles and the Green Transition: A Not-So-Straightforward Tool in the Fight Against Climate Crisis

Kevin Batsinduka

With its bevy of tax credits for consumers buying an electric vehicle, the US Inflation Reduction Act of 2022 is fostering a big push toward green forms of transportation. This use of tax law is undoubtedly clever, but it’s less clear how “green” electric vehicles really are. Explored briefly below are the environmental and ethical concerns that electric vehicles pose for the time being, and alternative forms of green transportation governments ought to consider leveraging through tax policy. 

On August 16th, 2022, America’s Inflation Reduction Act of 2022 (IRA) came into effect, thereby setting in motion the IRA’s historic investments in environmentally sustainable forms of infrastructure, transportation and energy production. Among these investments is a suite of tax credits that incentivize individuals and businesses to purchase electric vehicles (“EVs”). The IRA features a tax credit of up to $7,500 for those purchasing new EVs, and a $4,000 tax credit for second-hand EVs.[1] America is not the only one betting on EVs to help achieve a green transition: Canada enacted a similar program in 2019,[2] and the vast majority of EU member states offer some form of tax incentive to buy an EV.[3] Supposing that EVs are destined to play a prominent part in the Global North’s green transition, the IRA’s use of tax policy invites a question: just how sustainable and ethical are EVs? Unbeknownst to many, the sourcing and production of EVs poses many ethical and environmental challenges that merit reflection. For some, these challenges are even serious enough to unsettle the notion that EVs are truly “green”.

The “Dirty” Provenance of Clean Cars

Current technology only allows EVs to be created by generating concerning negative externalities. Evidently, fuel-burning vehicles also create negative externalities, and any fair assessment of EVs must be comparative in nature. In any event, EVs produce worrying environmental harms. The batteries that power EVs are composed in part of lithium, a metal that can currently only be exploited through highly carbon-intensive forms of manufacturing. Indeed, according to some estimates, the mining and manufacturing process for transforming lithium into EV batteries emits 38% more carbon than the manufacturing processes used to create fuel-powered vehicles.[4] Lithium is acquired using energy-intensive mining tools and furnaces powered by coal, and, in an ironic turn, EVs tend to be made with the “dirty” energy that companies in the EV industry claim to be pulling human civilization away from.[5] Fortunately, in comparison to fuel-powered vehicles, EVs make up for their upfront environmental costs after approximately six to eighteen months of use.[6]  

These long-term forms of compensation for environmental harms still do not make up for how EV sourcing tends to affect local communities, though. Chile, for instance, has the largest reserves of lithium on the planet, and lithium extraction in certain regions of the country has threatened water supplies for many communities. This is because lithium mining and related extraction techniques require unfathomable quantities of water. The “evaporation ponds” used after lithium has been mined take up approximately 21 million liters of water a day—a huge source of stress for small Chilean communities in neighbouring areas that obviously need water.[7] Lithium extraction has also been found to contaminate the air, soil and water sources that these communities depend on.[8] Cobalt is another valuable metal used in EV batteries, and it also comes with a long list of ethical and environmental problems, such as “child labor, dangerous working conditions, community displacement, and water pollution from toxic chemical processing.”[9]

The IRA: The Start of a Sustainable Solution?

It is important to note that the IRA’s EV tax credits promote the sourcing and production of EVs in North America, and in this way the IRA helps ensure that disadvantaged communities in the Global South are progressively freed from the harms posed by the EV supply chain. The IRA’s tax credits can only be claimed if a portion of the EV vehicle in question is sourced and/or made in North America. More precisely, the IRA holds that “critical minerals used in EV batteries must meet a gradually increasing percentage of components extracted, processed, or recycled in North America or in countries that have free trade agreements with the U.S., starting at 40% in 2023 and increasing by 10% each year, up to 80% in 2026.”[10] As America shares a free trade agreement with Chile, the IRA technically allows American consumers of the tax credits to continue depending on Chilean lithium. Nonetheless, the IRA still constitutes a meaningful push to have more of the world’s EV supply chain transferred to North America in the coming years. Indeed, just as with the sourcing of EV materials, the IRA makes certain tax credits conditional on progressively higher and higher portions of EV battery components being “manufactured or assembled” in North America, with 100% of these batteries being required to be made in North America by 2028.[11]

Unfortunately, much of America’s own lithium deposits are situated next to marginalized communities. It is estimated that “79% of lithium and 68% of cobalt reserves and resources in the U.S. are located within 35 miles of Native American reservations.”[12] This is particularly concerning as many of these reserves are on or near Native American cultural and religious sites—like Thacker Pass, a “final resting place” for ancestors of Nevada’s Fort McDermitt Paiute-Shoshone Tribe.[13]Although production methods of EV components in America might be more sophisticated and sustainable than the methods currently employed in the Global South, EV production in America is likely to remain carbon-intensive for quite some time.

The Takeaway: Trains, Trams, and other Transit

In light of these environmental and ethical drawbacks of the EV industry, it is important for governments to ensure that they continue to invest in other forms of green transportation, such as public transportation. Rail travel, for example, requires far less rare metals than EVs, emit far less carbon than EVs as they transport more people, and they do not require as much electrification infrastructure (e.g., personal charging stations in homes and cities)[14]. Before following America’s lead with the IRA, other governments ought to note that EVs are not a silver bullet in the fight against climate change, and policies promoting other forms of green transportation should always be borne in mind.

Kevin Batsinduka is a 2L BCL/JD student at McGill University’s Faculty of Law. He has a nascent passion for tax law fed by his earlier interest in distributive justice and related topics in political philosophy. When he isn’t puzzling over provisions in the Income Tax Act, you might catch him at Verdun Skatepark trying to forget about missed readings and impending assignments. A special thanks to Marina Lor for her integral support in preparing this article.

[1] “Clean Energy for All” (2023), online: The White House <https://www.whitehouse.gov/cleanenergy/>.

[2] The Canadian federal government’s iZev program offers individual Canadians rebates of up to $5,000 for EVs and Canadian businesses much weightier tax write-offs. See “Incentives for purchasing zero-emission vehicles” (2022), online: Government of Canada <https://tc.canada.ca/en/road-transportation/innovative-technologies/zero-emission-vehicles/light-duty-zero-emission-vehicles/incentives-purchasing-zero-emission-vehicles>.

[3] “Overview – Electric vehicles: tax benefits & purchase incentives in the European Union (2022)” (2022), online: European Automobile Manufacturers' Association <https://www.acea.auto/fact/overview-electric-vehicles-tax-benefits-purchase-incentives-in-the-european-union-2022/>.

[4] Oliver Balch, “The Curse of 'White Oil': Electric Vehicles' Dirty secret” (2020), online: The Guardian <https://www.theguardian.com/news/2020/dec/08/the-curse-of-white-oil-electric-vehicles-dirty-secret-lithium>.

[5] Lizzie Wade, “Tesla's Electric Cars Aren't as Green as You Might Think” (2016), online: Wired <https://www.wired.com/2016/03/teslas-electric-cars-might-not-green-think/>.

[6] “Cleaner Cars from Cradle to Grave” (2015), online: Union of Concerned Scientists <https://www.ucsusa.org/resources/cleaner-cars-cradle-grave#.Vv0_OhIrKRt>.

[7] Maeve Campbell, “In Pictures: South America's 'Lithium Fields' Reveal the Dark Side of our Electric Future” (2022), online: Euronews <https://www.euronews.com/green/2022/02/01/south-america-s-lithium-fields-reveal-the-dark-side-of-our-electric-future>.

[8] “Lithium” (2013) at 2, online (pdf): Friends of the Earth Europe <https://www.foeeurope.org/sites/default/files/publications/13_factsheet-lithium-gb.pdf>.   

[9] Tim McDonnell, “Can Tesla help solve one of the thorniest ethical problems with electric vehicles?” (2020), online: Quartz <https://qz.com/1901367/can-tesla-help-solve-electric-vehicles-cobalt-problem>.

[10] Energy Innovation: Policy and Technology and Sara Baldwin, “Inflation Reduction Act Benefits: Electric Vehicle Tax Incentives For Consumers And U.S. Automakers” (2022), online: Forbes <https://www.forbes.com/sites/energyinnovation/2022/09/07/inflation-reduction-act-benefits-electric-vehicle-tax-incentives-for-consumers-and-us-automakers/?sh=b3ed225117e1>.

[11] Ibid.

[12] Samuel Block, “Mining Energy-Transition Metals: National Aims, Local Conflicts” (2021), online: MSCI <https://www.msci.com/www/blog-posts/mining-energy-transition-metals/02531033947?te=1&nl=climate-forward&emc=edit_clim_20221011>.

[13] Protect Thacker Pass, “Do not be fooled by Lithium Nevada’s publicity tactics” (2022), online: Protect Thacker Pass <https://www.protectthackerpass.org/do-not-be-fooled-by-lithium-nevadas-publicity-tactics/>.

[14] India Burgess, “Decarbonising the Transport Sector Through Efficient Public Transport Systems” (2023), online: Earth.Org <https://earth.org/save-the-world-with-public-transportation-and-not-electric-cars/>