In the debate on banning the sale of internal combustion engines from 2035, looking at energy efficiency alone is insufficient as economic efficiency is a broader concept that includes consumer preferences, writes Jan Schnellenbach.

Debate on an EU-wide ban on new combustion-engine car registrations for 2035 to reach climate-neutral mobility has reached a stalemate at the EU level, though it remains quite likely that a combustion engine ban will, at least eventually, see the light of day.

However, there are several reasons against such a ban. This is perhaps surprising since advocates of battery-electric mobility in its purest form repeatedly point to the high technical efficiency of this technology.

Particularly, unlike internal combustion engines, electric cars use up almost all the energy that is fed into the battery as electricity.

For e-fuel-operated combustion engines, electricity is used to produce climate-neutral fuels. Due to the conversion processes, technical efficiency is lower.

Simply put, you have to invest much more electricity to drive a kilometre in a car with a combustion engine using e-fuels than you would have to in a battery-electric car.

The efficiency of e-fuels may still be improved somewhat through innovations, but because of technical reasons, batteries will always be more efficient.

Can it still make sense to use a technology that seems technically inefficient? The answer is yes.

Economic efficiency is a broader concept than technical efficiency. In the framework in which economic efficiency is discussed, technical efficiency also plays a role, but does not necessarily have a dominant or even all-decisive importance.

Let’s take a simple, striking example to illustrate this: from a purely technical standpoint, our diet is about supplying the body with around 2,500 kilocalories a day to meet our energy needs as humans.

To do this, we should ideally just drink milk when it is available. Spending more time and energy to turn milk into yoghurt or even fine cheese is technically completely inefficient and simply a waste. The efficiency of the milk used in the process drops drastically as a result.

We do it anyway. While making cheese was initially a way to preserve milk, it is now a matter of taste for which some are prepared to pay the extra price that comes with the extra production costs.

But this does not only apply to milk and cheese. Economic efficiency always aims to serve consumer preferences and organise production in a technically efficient way, but under the secondary condition that the products serve given consumer preferences.

Pure battery-electric mobility does not yet meet some of the needs of potential users of this technology. In the case of passenger cars, this includes the very fast refuelling in a dense network of filling stations, which still offers an advantage for internal combustion engines, especially on long journeys.

Until a possible ban on combustion engines comes into force, a lot can still change, in terms of both technical capabilities and preferences.

Electric cars are also being further developed, and here too, there is still a lot of potential for innovation, especially with completely new battery generations. But even then, there may be further reasons for internal combustion technology.

If internal combustion engines are only powered by e-fuels produced from green electricity, then these engines will also be climate-neutral.

However, with Germany’s electricity mix as it currently stands, battery-electric cars are far from climate-neutral. Gas and coal-fired power plants still produce electricity that is very heavily polluted with CO2.

The advantage of e-fuels is that they allow green energy to be transported independently of transmission lines. Completely green e-fuels produced in sunny countries like Australia, Namibia or Saudi Arabia can be imported to Germany.

E-fuels thus help to solve the technical problem of transporting green energy over long distances, even from those parts of the world where renewable energy is abundant. Much like cheese once helped to make milk durable and easier to transport.

In this way, e-fuels can help to close gaps, for it is by no means certain that we will switch off our gas and coal-fired power plants fast enough to have a CO2-free electricity mix in Germany even by the middle of the next decade.

Then we would have to be happy about the opportunity to decarbonise transport not only with batteries but also with e-fuels.

In any case, this applies to the stock of internal combustion vehicles, which will still be driving around on our roads for a long time even after the ban on new registrations comes through. And it applies to heavy goods traffic, for example.

So, we will need e-fuels anyway. Against this backdrop, a ban on new registrations is only of dubious benefit in principle.

This is because such a ban sets incentives. Producers might be less inclined to invest in the further development and expansion of the supply of climate-neutral e-fuels.

On the consumer side, there is a risk that a wave of new combustion car registrations will take place before the ban, because many households will buy one last new combustion car.

Paradoxically, an internal combustion vehicle ban can lead to behavioural adjustments that tend to delay the time when the last internal combustion vehicles disappear from our roads.

Instead, it would make sense to integrate mobility into regular emissions trading at the European level. Then there would also be a binding cap on emissions in the transport sector, and the resulting emissions price could develop its efficient incentive effect.

Because of the price, consumers will then be incentivised to go for the economically efficient technology. At the same time, they do not want the state that seeks to interfere in every minute aspect of their daily lives.

Such an approach is thus bound to be more efficient than a ban because it uses the market as a discovery process instead of promoting a presumption of knowledge that makes the mistake of looking only at the isolated technical efficiency of efficiencies.

Above all, this approach would probably also be more acceptable to citizens because it preserves their freedom of choice and protects them from a policy that would seek to dictate lifestyles down to the last detail.