Interactions Between U.S. Vehicle Electrification, Climate Change, and Global Agricultural Markets

Abstract

Future agricultural production in the United States (U.S.) and elsewhere is influenced by climate change and the proliferation of battery electric vehicles (BEV). The influence of the latter on U.S. farming is more pronounced due to the large share of U.S. maize currently being used for biofuels. Global commodity price increases triggered by declining yields due to climate change can be dampened by reduced biofuel use due to an accelerated increase of BEV sales. A higher market share of BEVs reduces the demand for maize ethanol which by itself reduces commodity prices but this decline in prices is dampened by the reduction of crop supply due to climate change. Using a global agricultural trade model, this analysis quantifies the effects of large-scale U.S. vehicle fleet electrification until 2050 under different Shared Socioeconomic Pathways (SSP) and Representative Concentration Pathways (RCP). The results show that a 100% market share of BEVs by 2050 leads to a smaller commodity price increase in the pres- ence of climate change compared to no climate change and baseline market shares. The 2050 price increase for maize under SSP2 (middle-of-the-road SSP) and enhanced CO₂-fertilization is 9.4%-35.8% (depending on the RCP) under the baseline electrification and -2.8%-21.9% under 100% BEV sales share by 2050. Price effects on rice, soybeans, and wheat are similar in direction but smaller in magnitude. Lower commodity price increases in the 100% BEV sales scenario also reduce cropland requirements with area changes ranging from -9.8 to -0.3 million hectares (ha) in SSP2 (with enhanced CO₂-fertilization) compared to -4.9-4.6 million ha in the baseline electrification scenarios. The accelerated market share of BEVs also (1) lowers the decrease in caloric intake for maize, rice, and wheat which has important food security implications in the presence of climate change and (2) changes trade relationships. Policy implications arise from the added effects on land-use change and food security of more BEVs besides the direct emissions reduction from reducing vehicles with internal combustion engines. Although, implications arise for farmers’ welfare with the reduction in biofuel demand.