by Orange County Register Editorial Board · July 14, 2017
Few industries have been untouched by the state’s aggressive and far-reaching environmental regulations. Now it is looking to enhance its control over the auto industry.
Specifically, multiple legislative proposals would use the power of government to encourage the purchase of low-emission and zero-emission vehicles. Assembly Bill 544 would extend the sticker program that authorizes low-emission and energy-efficient vehicles to utilize carpool lanes to 2025. And AB1184 would authorize $3 billion for zero-emission vehicle subsidies through 2030 and $500 million a year in cap-and-trade funds for additional incentives for “low-carbon” transportation projects.
In 2012, California mandated that zero-emission vehicles must make up 15 percent of car sales in the state by 2025, or else auto manufacturers will be fined. To date, however, only about 300,000 such vehicles have been sold, and these sales comprised less than 2 percent of new cars sold in California last year.
In addition, a wealth of research has demonstrated that the benefits of such a shift are marginal, at best. A recent study of Canadian electric car subsidies, which total about $11,000 in the province of Ontario and $6,300 in Quebec, found that the programs were an inefficient way to reduce GHGs and not cost effective.
“It’s just a big waste,” study co-author Germain Belzile of the Montreal Economic Institute said. “Not only do these programs cost taxpayers a fortune, but they also have little effect on GHG emissions.”
Another new study of the Canadian subsidies found that subsidies lead to a zero, or even negative, near-term GHG benefit, as the carbon credit offsets manufacturers receive for producing EVs reduces the incentive to make the rest of their fleets more efficient. Similarly, a 2015 National Bureau of Economic Research paper found that electric vehicles may actually cause worse environmental impacts than traditional internal combustion engine vehicles.
And, based on a 2016 study by management consultant firm Arthur D. Little, even if every car on the planet was switched to an electric vehicle, total GHG emissions would decline by only 1.8 percent. Manufacturing emissions are higher for EVs because the process requires a significant amount of energy to produce battery cells and packs, and the electricity needed to operate the vehicles is typically generated by fossil-fuel-powered plants, the study noted.
Moreover, rebates are inefficient because they typically subsidize the wealthy, who do not need them and would have made their purchases without them. For example, an analysis by Edmunds.com found that more than 80 percent of those who participated in the 2009 federal Cash for Clunkers program would have purchased a new vehicle even without the program, and calculated that the $3 billion program cost taxpayers about $24,000 per vehicle sold.
Rather than micromanaging the auto industry to pursue policies with questionable environmental benefits and unquestionably negative economic benefits, California should butt out of consumers’ auto purchase decisions. If consumers believe that the greater costs of low- or zero-emission vehicles is justified for environmental or any other reasons — or if a rise in gas prices makes more fuel-efficient vehicles more attractive, the market will respond accordingly.