This is about a half hour long, but I promise you, you won’t regret watching, if only for the terrific glimpse at what Venice, CA, was, before it redeveloped.
Role of Motor Vehicle Lifetime Extension in Climate Change Policy
Shigemi Kagawa, Keisuke Nansai, Yasushi Kondo, Klaus Hubacek, Sangwon Suh, Jan Minx, Yuki Kudoh, Tomohiro Tasaki, Shinichiro NakamuraEnvironmental Science & Technology 2011 45 (4), 1184-1191
From the abstract:
Vehicle replacement schemes such as the “cash for clunkers” program in the U.S. and the “scrappage scheme” in the UK have featured prominently in the economic stimulation packages initiated by many governments to cope with the global economic crisis. While these schemes were designed as economic instruments to support the vehicle production industry, governments have also claimed that these programs have environmental benefits such as reducing CO2 emissions by bringing more fuel-efficient vehicles onto the roads. However, little evidence is available to support this claim as current energy and environmental accounting models are inadequate for comprehensively capturing the economic and environmental trade-offs associated with changes in product life and product use. We therefore developed a new dynamic model to quantify the carbon emissions due to changes in product life and consumer behavior related to product use. Based on a case study of Japanese vehicle use during the 1990−2000 period, we found that extending, not shortening, the lifetime of a vehicle helps to reduce life-cycle CO2 emissions throughout the supply chain. Empirical results also revealed that even if the fuel economy of less fuel-efficient ordinary passenger vehicles were improved to levels comparable with those of the best available technology, i.e. hybrid passenger cars currently being produced in Japan, total CO2 emissions would decrease by only 0.2%. On the other hand, we also find that extending the lifetime of a vehicle contributed to a moderate increase in emissions of health-relevant air pollutants (NOx, HC, and CO) during the use phase. From the results, this study concludes that the effects of global warming and air pollution can be somewhat moderated and that these problems can be addressed through specific policy instruments directed at increasing the market for hybrid cars as well as extending lifetime of automobiles, which is contrary to the current wisdom.
Food-Miles and the Relative Climate Impacts of Food Choices in the United States Christopher L. Weber, H. Scott Matthews Environmental Science & Technology 2008 42 (10), 3508-351
Despite significant recent public concern and media attention to the environmental impacts of food, few studies in the United States have systematically compared the life-cycle greenhouse gas (GHG) emissions associated with food production against long-distance distribution, aka “food-miles.” We find that although food is transported long distances in general (1640 km delivery and 6760 km life-cycle supply chain on average) the GHG emissions associated with food are dominated by the production phase, contributing 83% of the average U.S. household’s 8.1 t CO2e/yr footprint for food consumption. Transportation as a whole represents only 11% of life-cycle GHG emissions, and final delivery from producer to retail contributes only 4%. Different food groups exhibit a large range in GHG-intensity; on average, red meat is around 150% more GHG-intensive than chicken or fish. Thus, we suggest that dietary shift can be a more effective means of lowering an average household’s food-related climate footprint than “buying local.” Shifting less than one day per week’s worth of calories from red meat and dairy products to chicken, fish, eggs, or a vegetable-based diet achieves more GHG reduction than buying all locally sourced food.
My brilliant colleague, Richard Green, an economist, is acting like an economist about CAFE standards over on his blog. I have a retort, though an addled one. Peter Gordon, another brilliant and genteel colleague of mine, has also weighed in. Economists agree: a carbon tax is the way to go.
CAFE stands for Corporate Average Fuel Economy standards. It’s one of those regulations that people tend not to understand terribly well because the rules are complicated. Here’s a nice overview by NHTSA.
President Obama, like just about everybody else for the past 20 years, wants to raise CAFE standards. For passenger vehicles, Obama wants to go from 25 mph to 39 mph by 2016 (that gives us 5 years to get there).
The rules pertain to a harmonic mean fuel economy of the fleet of cars that a manufacturer produces in a given model year. During the SUV craze (which doesn’t seem to be over if west-side Los Angeles is any indicator), US manufacturers could cash in on gas guzzling SUVs because they were not really considered passenger cars (defined by a weight of 8,500 pounds). The original limit was intended to keep farm and industrial equipment exempt from regulation, such as medium-duty trucks used by farmers and contractors. The wrangling over getting a set of light-duty truck fuel standards (for urban SUVs, used almost exclusively as commuting vehicles) took us a decade, and the damage was done. SUVs not subject to the standards have already penetrated the US fleet, where they will stay on average for 7 to 12 years. We have to make sure those glitches are gone if any revamped regulation–at all–is to be effective in raising fuel economy.
The penalties for CAFE noncompliance have also not risen concomitant with inflation. BMW and Mercedes famously have paid CAFE fines just about every year from 1983 to just recently (2008, largely because of the recession affecting their US sales). Right now, I believe manufacturers have to pay $55 for each vehicle they sell per each 1 mpg below their fleet target. Those types of penalties can be relatively small, and for luxury importers like BMW and Mercedes, they can easily pass those costs along to their buyers.
Automakers can get thus around the law–that’s a problem. And in addition, some economists have argued that by forcing fuel economy, cars became less safe than otherwise:
Lave, Charles and Lester Lave, “Fuel Economy and Auto Safety Regulation: Is the Cure Worse than the Disease?” Pages 257-290 in Essays in Transportation Economics and Policy: A Handbook in Honor of John R. Meyer, edited by Jose Gomez-Ibanez, William B. Tye, and Cliffor Winston, Brookings Institution Press, Washington D.C., 1999.
(aka one of my favorite transportation books of all time).
The argument: cars had to get lighter and thus they got less crash-safe.
As a result, CAFE has few friends other than environmentalists, and many environmentalists I think have stopped advocating around car technology in favor of advocating for Smart Growth or the New Urbanism. After all, raising fuel economy just makes cars less expensive to use, and that flies in the face of the ideas behind these two urban models.
So here are my problems, in a set of bullet points:
1) Yes, absolutely, a carbon tax or simple higher petrol taxes would accomplish the same thing as revamped CAFE standards, and at lower cost. However, I don’t see how a tax would avoid the same safety issues that Lave and Lave (1999) talked about. The basic engineering principles mean you go lighter if you want to use less fuel; we don’t have any strap-on technologies analogous to the carburetor in 1980s or fuel injection that we can turn to. The alternative would be more hybrids, which are also lighter.**
2) Tax aversion pretty much seems to be controlling the world of US policy right now. I’m told that any and all taxes, even ones that would be good for us like most Pigouvian taxes, are off the table, forever and ever, amen.
3) So that means we are left with fuel economy regulation or…nothing?
4) Nothing may have fairly steep consequences. By far—BY FAR–the most effective thing we could for climate change emissions reduction in transportation is improving the fuel economy of the passenger fleet on the road for the next 20 years. Not even in analyses written by the most religious New Urbanist/Smart Growthy people can fudge the fact that most substantial, most immediate gains to be had in climate policy come from changing fuel economy as VMT changes marginally in response to built environment changes, and those built environment changes are happening slowly–even more slowly now that the recession has become permanent.
5) So, yes, it’s costlier and more convoluted to regulate cars via CAFE, but if it’s the only game in town, the additional costs associated with raising the fuel economy of the fleet becomes the price tag of tax aversion—not the fault of the second-best policy. It’s a legitimate democratic choice for voters to prefer to avoid taxation in favor of a costlier strategy. We can’t blame the costlier strategy for being costlier if the optimum isn’t the optimum according to voter preferences. I didn’t make up these rules: but Americans would rather pay more overall for fuel economy changes than pay taxes, well, that is what it is.
This “better than nothing” is the argument made to me for years about congestion pricing. Voters hate it; we aren’t going to do it. So we’re going to build lots of trains to alleviate congestion, and those trains will, in turn, be underused because we’re not pricing autos properly. But building and running half-empty trains is a “better than nothing” policy.
I’m not sure what the answer is. But it’s a debate worth having.
**See comments for Gabriel Rossman’s referral to the Continuous Variable Transmission technology, which would allow for fuel economy improvements without going lighter. (I still wonder, though, because the models where the CVT has been employed aren’t taking us up the economy notches that a harmonic average of 39 would need to go–the Cube, the Maxima, etc. Remember that this is a harmonic average. You have a number of ways of achieving it, and one of the most expedient is chopping off your lower tail of the distribution of models you are producing.)
UCLA’s Luskin Center for Innovation has a nice report out that is getting some press: LA is expected to be a leader in electric vehicle sales.
Here’s a quote from the KCET story:
What does that mean in actual numbers? In 2015, a 9% market share of new car sales is estimated to be 30,000, with a total of some 230,000 purchased through 2020. Those numbers sharply contrast sales this year. “The analysis predicts just over 2,000 electric vehicles will be sold in Los Angeles in 2011,” explained Luskin Center director J.R. DeShazo. “This number is due to the limited supply of electric vehicles; even if more residents are inclined to purchase them, it just isn’t possible right now.”
I’m sure the Luskin folks are right about LA being an early adoption area, but the long-term trends for energy costs in California are not cheap for any energy supply, electricity included. I wish I knew more about the grid in California, but I wonder how the infrastructure is really going to manage all the charging, even if it is happening off-peak. But I may be completely wrong here–I need to learn more about the basics of energy production in the state.
As one of my brilliant PhD students says, with an EV you are polluting residents of nearby states. Of course, you’re doing the same with your ICE vehicle (emissions can transport across large geographies).
It will be interesting to see how all this plays out.
There is some pretty good news on American demand for gas, not entirely unpredicted. It’s going down, and energy economists believe that the trend will continue–from National Public Radio.
The great thing about the story: it nicely illustrates all the ways that drivers can substitute different behaviors and technologies to save money before they take the step onto public transit: by changing cars, by shortening trips, by rearranging trips, etc.
This is not to say that I think transit usage hasn’t made a different. Long-term trends towards urbanization promise to redistribute a greater share of the whole population into metro areas. Combined with natural increase in already urbanized areas, we should see more riders riding more over the long term.
Davis, Lucas and Matthew Kahn. 2010. International trade in used vehicles: The environmental consquences of NAFTA. Economic Policy. 58-82.
Davis and Kahn set up a nice little set of models to help us understand what has likely happened in the durable goods market for vehicles. In comparatively higher income countries, used durables like cars are likely to get traded out to lower income countries–here, the US and Mexico. And since older durables emit more than new cars, they find that this robust trade in used vehicles increases lifetime emissions as Mexico consumers substitute away from transit use to used car consumption and those cars stay in use longer. An excellent paper: I highly encourage you to go read (and to spring for membership in the American Economic Association: you get lots of good journals and a calendar with economist centerfolds! One of my happiest investments this year.)
A couple of weak points: they say at the beginning that they establish that trade makes emissions go up in both countries. No, they actually show that emissions go down in the US but up in Mexico, and the increases in Mexico outstrip the reductions in the US. I don’t love the way they calculate emissions: they have to make some assumptions about the distribution of vehicle miles of travel, and I suspect that it is possible, given their analysis, that trade make makes VMT go up in both countries. Moreover, they note that costs of repairs are low in Mexico, yet they really don’t calculate how repairs can significantly improve engine performance. A car isn’t as good as new, but that doesn’t mean it stays a clunker after it’s traded. This may be particularly true depending on where the used car ends up in Mexico: Mexico City has different incentives and regulations for fixing up a car than other parts of the country.