Cascadia Scorecard Weblog

Driving With Alcohol

Alcohol can lead to all kinds of unintended consequences, but who knew it could lead to energy independence? Apparently, the Brazilians did. Processing sugar cane into ethanol is expected to help Brazil meet its rising energy demands in a big way. According to an article in the New York Times, officials expect that within a year the country will become fully energy self-sufficient thanks largely to putting sugar in gas tanks.

Brazil's story is encouraging, but it's hard to know precisely what conclusions to draw for North Americans.

We can't buy Brazil's success by importing cane-based ethanol because our current policy regime all but disallows it. The US (and Europe too) slaps stiff duties on sugar imports--to the tune of 54 cents a gallon on cane-based ethanol imports, enough to render Brazilian ethanol at a competitive disadvantage.

We can't copy Brazil's success because our colder latitudes don't support sugar cane. Even Florida is considered only marginally productive for sugar cane and it comes at a horrific cost to ecological treasures like the Everglades. Hawaii produces sugar too, but its land base is far too small to meet American demand.

We can't imitate Brazil's success with northern crops like corn because producing corn-based ethanol is far too energy intensive.

Under the best conditions, corn ethanol yields only about 1.3 times as much energy as is required to produce it. Brazilian sugar cane, on the other hand, can yield 8 times as much energy; and producers think that efficiency can go to 10 times.

And even if we did somehow have access to Brazil's ethanol, our vehicle fleet couldn't take full advantage of it. But Brazil's can: more than 70 percent of cars sold in Brazil are "flex fuel" allowing drivers to alternate between ethanol and petroleum as price (or conscience) directs. Even better for Brazilian drivers, the flex fuel engines don't cost any more than conventional motors.

Sugar cane production is proving to be a boon to Brazil's economy, not to mention to its ecological footprint. (Nowadays, even the cane waste products are getting recycled back into various manufacturing processes.) But cane is not a free ride either: it's often grown on former pasture land and many fear that this will push livestock owners to clear more Amazon rainforest to make room. And cane growers are now pushing for genetically modified versions that will boost energy output and also resist disease and droughts. But GMO sugar cane may pose other unforeseen ecological problems down the road.

For me, the lesson from Brazil is two-fold. First, solving our biggest environmental problems (e.g. fossil fuel addiction and climate change) often forces us into other environmental compromises like deforestation and genetic crop modification. It's frustrating, of course, but real-world problems like energy consumption rarely offer no-downside solutions.

Second, there is not going to be any one-size-fits-all solution to the world's energy demands. Brazil can use sugar cane, but North Americans will have to figure out something else--something homegrown if independence is important. Conservation surely must be part of our effort to ratchet down reliance on oil, but we also must find local technologies and local resources for our energy needs.

Rage Against the (Hybrid) Machine

Some California drivers are getting all steamed up that they have to share the carpool lanes with single-occupant hybrids, like the Toyota Prius and Honda Civic, under a new state program.  Some of the complaints, of course, should be taken with a grain of salt.  Said one fumer in an online discussion group:  "These [drivers] barely go 65 mph and allow no one to pass them on the right... Talk about road rage!"  It's hard to feel much sympathy for someone whining about not being able to exceed the speed limit.

But I do think there's reason to be concerned that extra hybrids in the HOV lanes may be slowing down carpools & buses.  From the LA Times article:

"There's not enough excess capacity to absorb the hybrids," said James Moore, director of USC's transportation engineering program. "I think the foreseeable outcome here is that the congestion advantage we traditionally attribute to [carpool] lanes will disappear."

Promoting hybrids could help save fuel. But there's plenty of reason to believe that -- looking at overall efficiency of road transport -- filling the HOV lanes with hybrids could do more harm than good.  Seems to me that California was smart in limiting the number of hybrids allowed in the carpool lanes, and studying the effects before proceeding.

Hybrid Whiplash

What to make of this news from the Eugene, OR Register-Guard?

In a report that's sure to be controversial, CNW Marketing Research of Bandon concludes... that, even though hybrid cars use less fuel, they require more energy - and are therefore worse for the environment - than conventional cars because their design and manufacture are more complex and the costs of disposal or recycling are higher for their batteries, electric motors and other specialized components. [Emphasis added.]

Hybrids use more energy than regular cars? Is this real, or just pro-SUV propaganda?

Now, just to be clear, I haven't reviewed the study myself. But the online materials that's CNW's made publicly available seem serious & fair-minded -- not like a cheap hit-job on hybrids, but rather a sober analysis that reaches some unexpected and counterintuitive conclusions.

That said, I think there's very good reason not to take the study too seriously. Not yet -- and not until the authors can answer some tough questions about what their study implies.

CNW does deserve credit for looking at energy costs over a vehicle's entire life cycle--not just what it consumes on the road, but also what it costs to manufacture, distribute, repair, and dispose of a car. But some of their numbers seem, to put it mildly, a little hard to believe.

According to the study's methods, a Honda Civic (not a hybrid, but a regular model) uses only about 30 percent of its life-cycle energy as gasoline. (See here for the chart.) About 10 percent each go to parts, manufacturing, repair, dissassembly, and replacement; and 20 percent go to other energy costs.

Let's say that's reasonably representative of other models -- that is, gasoline accounts for only about 30 percent or thereabouts of the life-cycle energy costs of owning and operating the average car or light truck. But according to the US Energy Information Administration, gasoline consumption accounts for 17 percent of total energy consumption in the US (see here for total consumption, and here for total gasoline). So that would imply that car manufacture, repair, recycling and other energy costs account about 40 percent of the total US energy supply.

Forty percent? That's just plain wrong. The entire US industrial sector only consumes 33 percent of the nation's energy. So the subset devoted to cars has to consume only a fraction of that.

Just so, it seems downright implausible that cars are responsible for some 57 percent of the nation's total energy use (17 percent for gasoline, 40 percent for manufacture, repair, recycling, etc.). Cars use a lot of energy, to be sure -- but I simply can't believe it's that much.

So that means either: the Honda Civic is a vastly atypical car, and uses substantially more manufacturing energy than most other cars; that I've misread the (limited) available data from CNW; or that the study's authors have some explaining to do if they're going to convince me that I should pay much attention to their results.

Poll: Americans Hate/Love Higher Gas Tax

Americans strongly reject new gas taxes. According to a new NY Times/CBS poll, 85 percent oppose higher federal gas taxes. Not too surprising--except that the very same poll also found something quite different...

Americans strongly reject support new gas taxes--so long as the tax revenue is earmarked for specific investments. The most popular investment? Fighting global warming. 59 percent would support a gas tax if the result was less climate change. Slightly less popular was reducing dependence on foreign oil: 55 percent supported the tax in that case.

So surely gas tax increases would be super-popular if they abetted core American desires like fighting terrorism and reducing income taxes? Uh, nope. Only 28 percent would support a higher gas tax if its intent were to reduce other taxes. And only 24 percent would support it as a measure to fight terrorism.

I'm not sure I understand what exactly the poll reveals. But my hunch is that when it comes to gas consumption we Americans are a conflicted bunch; and we tend to see our fossil fuel use in ethical or even moral terms. We're not necessarily interested in paying more for gas in order to take home bigger paychecks, or even to defend ourselves. But when it comes to offsetting some of the harm of gasoline use--things like climate change--we would support higher gas taxes with a landslide.

Do Mess With Taxes

The basic point here (NY Times, registration required) is pretty good: the idea of coupling a gasoline tax increase with a cut in payroll taxes deserves a much closer look.  It makes sense as a policy -- gas taxes should be higher, and a payroll tax cut could help soften the blow.  Plus, pairing a tax increase with a tax cut seems to draw far broader political support than a straight-out hike in gas taxes:

The gasoline tax-cum-rebate proposal enjoys extremely broad support. Liberals favor it. Environmentalists favor it. The conservative Nobel laureate Gary S. Becker has endorsed it, as has the antitax crusader Grover Norquist. President Bush's former chief economist, N. Gregory Mankiw, has advanced it repeatedly.

Ok, so it's a good idea.  But I can't help myself -- I'm going to pick some nits.

First, I think it's going too far to claim, as the article seems to, that it will be easy to sell this kind of thing to the public. Voters seem to forget about tax cuts: for example, in the runup to the 2004 election -- and despite the administration's efforts to tout their income tax cuts -- US voters were more likely to say that their taxes had gone up over the previous 4 years than down.  On the other hand, everyone knows when gas prices go up -- it's emblazoned over every filling station.  So people will be reminded of the tax increase every day, but notice the tax cut they only see if they look carefully at their payroll records.  That's a pretty good recipe for outrage, unless you work really, really hard to explain to people what's happening.

Second, there are still some regressive effects here.  If you're a retired senior, you don't pay payroll taxes -- so you'll see no benefit from the payroll tax cut.  But you'll still be hit by higher gas taxes.  Same thing if you're unemployed.  (Undoubtedly the AARP, among others, will have a few things to say about this.) 

Third -- why just gas?  I know, I know, oil makes us vulnerable to foreign political shocks, sucks money out of the economy, yada yada.  But gas represents only 43 percent of total US petroleum consumption (see here for details); so we should be taxing all petroleum consumption, not just gas.  And more broadly, natural gas and coal are both major greenhouse gas sources -- coal even moreso than gasoline.  Coal-fired power plants are also bad news for air quality, and put mercury in our fish.  And natural gas production within the US is headed in the same direction as oil--down--which means that soon enough our natural gas imports will start sucking serious money from the economy, just as oil imports do now.  All of which suggests to me that a broader tax on carbon, or natural resource use, would be better than just a tax on gas -- and might even allow for steeper payroll tax cuts.

And finally -- gas taxes are all well and good.  But they're not the be-all-end-all when it comes to promoting fuel efficiency.  Pay by the mile car insurance and feebates get even less air time in policy circles than tax shifting -- but arguably would be just as effective, if not moreso, at promoting fuel conservation. Obviously, I'm always glad to see gas taxes discussed in a public forum.  But it would be even niftier to see other worthwhile ideas get some attention.

Hybrid Hype: Incentives Gone Wild

Hybrid cars are good for us, right? So policymakers should provide incentives--things like tax breaks, access to HOV lanes, and free parking for hybrid drivers.

Well, not so fast, says a great article in today's Washington Post. [Free registration req'd.] There's growing reason to believe that those incentives for hybrids will make things worse--actually generating more gasoline use, not less. That's because many of the incentives confuse the means for the end.

Reducing fuel use (and attendant ghg emissions, air pollution, etc.) is the goal; getting drivers into hybrids is simply one instrument in pursuit of that goal.

But one of the more popular incentives to boost fuel efficiency has been to encourage hybrid ownership by offering hybrid drivers access to HOV lanes, even when the drivers are alone. And as the article rightly points out:

An incentive -- whether it's access to a carpool lane or cut-rate financing -- still aims to put another car on the road, and that undermines efforts to encourage carpooling.

Giving over HOV lanes to hybrids is probably counterproductive. In Virginia, where allowing hybrids in HOV lanes was pioneered, officials are worried that solo drivers in hybrids are clogging the high-capacity lanes and thereby discouraging carpools (because carpooling is no longer any faster than driving alone). In fact, 25 percent of all Virginia HOV lane users are hybrid drivers. And despite their hype, hybrids are not so fuel efficient that they can offset the fuel efficiency of an ordinary car with two or three riders. So the fuel efficiency of Virginia hybrids may become illusory as the vehicle fleet actually consumes more gas because drivers give up carpooling.

Same goes for other popular incentives: tax breaks and free or reduced-price parking. These incentives encourage people to drive by making it cheaper.

And if some incentives are wrong-headed, it's because they seem to miss the reason why hybrids are good in the first place. If we want to reduce fuel use, it's hard to see why hybrids deserve special tax breaks that are not afforded to buyers of other fuel efficient gas-powered cars (some of which are actually more efficient than certain hybrids). What's so special about hybrids?

But wait! Incentives catalyze the market. That's the basic argument for hybrid-centric policies. The idea is that by encouraging people to get into hybrids now, we'll reduce fossil fuel consumption down the road, when hybrid cars become cost-competitive.

There's some merit to this line of reasoning, but it's starting to seem outdated. The market for hybrids is scorching hot and growing--it probably doesn't need to an additional catalyst. Hybrid sales in 2005 were 10 times higher than in 2001 (and 20 times higher than 2000) and the growth looks set to continue. Incentives are probably a contributing factor, but high fuel prices are probably a much bigger reason.

What's more, the incentives may actually be counter-productive to the real goal. As we've seen, HOV lane access encourages solo driving; free parking and tax breaks make driving cheaper. (Plus, there may be weird counter-intuitive problems that arise from buying certain kinds of hybrids.)

The bottom line is that there's nothing especially laudatory about hybrid cars in and of themselves. The only thing special about them is that--generally speaking--they burn less gas per mile than internal combustion cars. But as the hybrid market diversifies into SUV and Lexus flavors, there's increasingly less reason to lionize hybrids per se. What really matters is fuel efficiency--plain old unsexy fuel efficiency, whether the car runs on gas, electricity, LNG, switch grass, or tiny elves.

I'm not saying that all incentives should disappear, but the incentives should be for fuel efficiency, plain and simple. It doesn't do much good to encourage buying a hybrid Ford Escape when a vanilla Civic is far more eco-credible. Efficient hybrids will still benefit, as will other fuel-sipping cars--just the kind we want on the road.

And there's an asterisk here too: the incentives shouldn't conflict with other instruments to reduce fuel use. Allowing solo drivers into carpool lanes makes about as much sense as slapping a surcharge on bus fare or bicycles to fund rebates for hybrids.

So what kind of incentives would work to increase the fleet's fuel efficiency? Feebates. Gas (or carbon) taxes. Pay-As-You-Drive insurance. Blah, blah, blah. Plus, lots of other stuff that would help make driving a choice, not a necessity.

Futility Revisited

Apparently I didn't do such a good job in this post explaining why I found this New York Times article on higher-mileage, gas-electric hybrid SUVs so troubling.  So I'll try again.

To recap -- the Times article claims that, under the system governing vehicle fuel economy in the U.S., selling a hybrid Escape lets Ford sell an additional Lincoln Navigator without running afoul of federal standards.  In other words, while buying an Escape may mean that you're driving a more efficient vehicle, it doesn't mean that the average fuel economy of all the Fords on the road will change one whit. 

A couple commentors said this is bunk.  But I think the article is onto something.  Take a look at the fleetwide fuel economy for Ford's light truck fleet over the last few years for which I could get data:

2000:  21.0 mpg

2001:  20.5 mpg

2002:  20.7 mpg

2003:  21.3 mpg

Now, remember, the CAFE standard for light trucks over this period was 20.7 mpg -- that is, the average mpg for all the light trucks that Ford sold had to be 20.7 or more, or the federal government would levy a fee on each vehicle.  From the numbers, it's pretty clear that Ford has been doing its level best to keep its light truck fleet at or near 20.7 each year -- maybe a little above or below, but not enough to incur any penalties (under CAFE rules, exceeding the standards in one year lets you dip below them in subsequent years).

So how does the company fine-tune its vehicle sales to fall right at the CAFE standard?  By tweaking its pricing, offering deeper discounts to ramp up sales of higher-mileage pickups and SUVs, while still selling as many hulking SUVs--vehicles with terrible gas mileage but huge profit margins--as it can without running afoul of the standards.

My point here is that the introduction of the 35 mpg Escape, by itself, probably doesn't change this dynamic.  Ford is legally required to maximize its profit -- otherwise it faces the threat of a shareholder lawsuit.  So it's got an incentive to use whatever means it can to keep the high-profit SUVs moving off the car lots.  And that means that selling more Escapes won't necessarily boost the overall efficiency of the vehicles Ford sells.  Higher gas prices might boost fuel economy; stricter standards might as well.  But as nifty as the high-tech hybrid Escape may be, buying one won't guarantee that Ford's overall mileage is moving in the right direction.

Obviously, the existence of the Escape has spinoff benefits.  Among them, it undercuts the car-makers arguments that major improvements in vehicle efficiency are technically impossible.  Hybrid SUVs show that the feds could probably lift CAFE standards for light trucks above 30 mpg without forcing automakers to do much, if any, R&D.  True, the big auto manufacturers could always say that they can't afford to make trucks more efficient.  But they can't say that they don't know how.

But there's yet another perverse market effect hidden in the Escape.  CAFE has two tiers, with a higher mileage standard for cars than light trucks.  To the extent that the Escape (a light truck) attracts buyers who'd otherwise go for a Taurus (classified as a car), it could tilt Ford's overall mix away from cars and towards trucks -- which, paradoxically, could lower the average fuel economy for Ford's entire vehicle fleet.  (Sheesh, this stuff is weird.)

So, all this goes to say that a system can have unpredictable results that undermine the best intentions of any one individual.  That's not a reason to throw up one's hands in despair -- but it is a reason to think that changing the system is even more important than making the right kinds of purchases.

Principles of the State of the Union Address

I hadn't intended to join the cacaphony of bloggers and pundits who are Monday-morning-quarterbacking the State of the Union address. But NEW's all-star board member, Laura Retzler, asked a great question last night that I've been puzzling over since: what's NEW's take on Bush's plan to end the nation's addiction to oil?

It later occurred to me--too late to answer Laura--that my reply should have been rather obvious to me. NEW is developing a concise statement of values and principles, that will orient and unify our research. Among these values are two that are especially germane to energy security: "make prices tell the truth" and "build complete, compact communities."

In his speech Bush called out technological innovation as the primary way to break the addiction. Certainly he's right that technology should play an important part in diversifying our energy portfolio--especially certain types of biofuels, new clean energy sources, and lighter-weight vehicles, for just a few examples that NEW promotes. Yet technological solutions may not be the surest path to ending our addiction.

That's where NEW's principles come into the picture.

"Making prices tell the truth" is especially important. The price of gasoline does reflects only the direct costs of extracting, refining, and distributing it, not the full costs that are externalized to society, such as air pollution, climate change, and even entanglement in unstable regions. By the same token, "free" parking often carries with it high costs, similarly externalized. With a smart restructuring of parking incentives, including parking taxes, there's reason to believe we can achieve substantial gains in both energy efficiency and conservation.

Another of the principles, "build complete, compact communities," would improve home energy consumption and render driving, which has high energy demands, optional or even irrelevant for many people. We already know that compact urban development with good transit and pedestrian alternatives yields dramatic reductions in energy need, even while it boosts health for residents.

NEW's principles may not point to flashy promises of zero-pollution cars or safe nuclear energy. (And they may not come with strings attached to big subsidies.) But they point to hidden levers in our economy and society--small tweaks that can yield outsize results for energy security.

So that's may belated reply, Laura. Thanks for setting me to thinking about this.

*********

By the way, here's the full text of Bush's remarks on energy last night:

Keeping America competitive requires affordable energy. Here we have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world.

The best way to break this addiction is through technology. Since 2001, we have spent nearly $10 billion to develop cleaner, cheaper, more reliable alternative energy sources, and we are on the threshold of incredible advances. So tonight, I announce the Advanced Energy Initiative, a 22 percent increase in clean-energy research at the Department of Energy, to push for breakthroughs in two vital areas. To change how we power our homes and offices, we will invest more in zero-emission coal-fired plants, revolutionary solar and wind technologies, and clean, safe nuclear energy.

We must also change how we power our automobiles. We will increase our research in better batteries for hybrid and electric cars, and in pollution-free cars that run on hydrogen. We will also fund additional research in cutting-edge methods of producing ethanol, not just from corn but from wood chips, stalks or switch grass. Our goal is to make this new kind of ethanol practical and competitive within six years. Breakthroughs on this and other new technologies will help us reach another great goal: to replace more than 75 percent of our oil imports from the Middle East by 2025. By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy and make our dependence on Middle Eastern oil a thing of the past.

Flat Liners

Interesting.  It looks as though gasoline consumption in the Pacific Northwest has more or less plateaued since 1998, when gas prices were at an inflation-adjusted low point.  Take a look, especially at the little flat part on the far right of the trend line:

Of course, this is based on partial-year data for 2005; actual consumption for the year may be a bit higher (because of a strong economy) or a bit lower (because of high prices).  But even if 2005 proves to be a bit higher than 1998 in the final analysis, it's still a surprising trend.  With the exception of the oil crisis/recession of the late 1970s and early 1980s, gas consumption has grown pretty consistently since the 1950s.  And per capita consumption of gas had barely budged since the early 1980s -- our consumption has been tightly correlated with total population growth.

But if these numbers are right, we're starting to see some concrete signs that high prices are begininning to bite.  From 1999 through last year, average per-capita gas consumption throughout the region fell by 7 percent.  That's not a huge amount, mind you.  But it's something.

It's too early to tell whether that trend will continue--whether we'll continue to be able to add new residents without increasing our total consumption.  I doubt it.  Still, the little flat part to the right of that graph gives me some reason to be hopeful.

Driving Puzzler

Eric Pryne of the Seattle Times today provides a welcome but puzzling update on a project we’ve been watching for some time.

The gist:

The 400 volunteers in the Puget Sound Regional Council's "Traffic Choices" study have been paying virtual tolls since July. Devices mounted on their dashboards track where they travel and transmit the information to a central computer. Charges are deducted from prepaid "endowment accounts."

Those accounts are just play money. But if there's anything left in them when the experiment ends in February, participants get to keep it — in real dollars.

That's the carrot. They can save money by not driving as much, by choosing less-congested highways, or by staying off the road at rush hour.

As we’ve argued for years, paying-as-you-go for driving, rather than in occasional lump sums, ought to be a powerful incentive to economize on miles, trips, and fuel.

Here’s the puzzler:

[Study director Matthew] Kitchen says interim results indicate that, as a group, the study's 400 participants actually are driving a bit more than they did before the experiment started. But they're also paying a little less than they would have if the tolls had been in force when researchers first began monitoring their driving.

That could mean the volunteers are avoiding roads with the steepest tolls at times, even if it takes them out of their way, he says. "But we may find something very different when we do a more detailed analysis," he cautions.

What’s going on here? You put a by-the-mile price on driving and people do more of it? That’s unexpected!

Study results won’t be complete for months, of course, and these preliminary trends may be a seasonal fluke, a statistical error, or an effect of some unrelated factor such as a fuller employment.

But it could also be that drivers are much quicker to change roads than to change modes, or to reorganize their weekly travel plans. Stated that way, it’s less surprising. Past experience suggests that it takes some time for people to adjust where they go.

Still, by the time the study is done, I’ll have to rethink some assumptions if drivers haven’t reduced their total miles driven as well as their peak-hour trips on high-priced, congested roads.