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On Are Electric Cars a Niche? Or Able to Beat Conventionals?

Neal,

You present a good analogy between the historical growth of hybrid sales and future sales of plug-in/electric vehicles. As you note, battery costs for plug-in/electric vehicles are much higher than they are for hybrids. You seem confident that battery costs will fall dramatically. (From my perspective, battery costs are the most important issue when it comes to PHEVs; charging time and other issues like size and weight will also be extremely important for full electrics.)

How quickly do you expect the costs will fall? You say you predict by 2015 the average EV/PHEV range will approach 200 mi,, which would imply battery costs about half those of today's levels, assuming the costs for the vehicles remained constant. So you don't have to pull numbers out of thin air, you could just say if you think McKinsey's estimate of $200/kWh by 2020 seems reasonable - or too optimistic or pessimistic: http://www.plugincars.com/lithium-ion-battery-prices-drop-160-kwh-2025-123193.html

James  

 

November 21, 2012    View Comment    

On Should Washington Extend Tax Credits for Wind Power?

Tom,

I believe your suggestion to phase out subsidies is very reasonable. However, I don't think it is politically likely. With budgets that have to be made every year and a contentious political environment, it is difficult to clearly follow a subsidy phase-out schedule over a number of years.

I believe a subsidy phase-out would either be accelerated (eliminating the subsidy early) or continued indefinitely despite the law (think of the yearly "doc fix" that keeps payments to Medicare providers higher than the law says they should be: http://www.washingtonpost.com/blogs/ezra-klein/post/faq-the-doc-fix/2011/11/22/gIQAnv6wkN_blog.html).

Please let me know if you are familiar with any subsidy that was slowly phased out rather than abruptly eliminated.

James

 

 

November 21, 2012    View Comment    

On Fuel Economy Standards: Is the Most Important Energy Policy of Obama’s Administration at Risk?

I appreciate comments like these that focus on the content of the post.

 

I agree that fuel economy standards would be incredibly unpopular if they led to vehicles that forced consumers to spend “30% [more] to get better mileage that will make the vehicle smaller, less safe, and 1/2 the horsepower.” However, there is no indication the standards will have such a dramatically negative impact, particularly with that horsepower number. The EPA/NHTSA final rulemaking concludes reports that vehicles should cost $1,870-$2,120 more in 2025 than those today with no change in performance (see the Fact Sheet). I suspect you are skeptical of that finding, so I can refer you to the most critical paper I’m familiar with, the Center for Automotive Research’s “The U.S. Automotive Market and Industry in 2025,” which is says that vehicles would be about 30% more expensive, as you believe, but without any change in horsepower. Finally, it seems really doubtful to me that 13 major automakers could have endorsed the standards if they were likely to lead to such dramatic changes in cost, size and performance as you suggest.

 

Predicting the impact on vehicles is central to your later comments on recessions and jobs. Depending on the assumptions about vehicles, there easily could be more jobs – if fuel savings outweigh the new cost of vehicles (EPA/NHTSA estimates this to be about $4,000 over the lifetime of the vehicle, at a 7% discount rate), that additional money can go elsewhere in the economy. The industry today is able to have excellent North American profits even though average fuel economy of new vehicles has been steadily increasing and sales are still depressed from their pre-recession levels of around 16 million/year.

 

The IBD editorial incorrectly states the standards are more aggressive than they actually are. For instance, it’s true that the vehicle window sticker for the smart car says 36 mpg. However, the mileage from the perspective of CAFE standards is significantly higher at around 49 mpg (see equation here). The standards in the 1970s, which were signed by Republican President Ford, not Carter, demanded much faster improvements of about 6.2%/year than those currently proposed, leading to significant vehicle and horsepower downsizing.   

 

As for your point about those who need to tow equipment, vehicles with larger wheelbases are required to meet weaker standards, and the fuel economy increase for light trucks (2.5-2.7%/year initially) is less than it is for cars (3.8-3.9%/year), both of which should minimize the impact. Additionally, since it seems at the end that you just support more modest fuel economy standards, I want to make sure you are aware that there is a built-in “mid-term evaluation” after model year 2021 – in fact, the standards from 2022-2025 are not even legally binding at this point – which could limit or halt further increases if some of the devastating consequences you suggest actually pan out.

 

September 1, 2012    View Comment    

On How CBO Got it Wrong on Fuel Consumption and the Highway Trust Fund

Deron,

Have there been any proposals to try to implement a per-mile tax through vehicle insurance? If so, is there a sense of whether it would be helpful?

I know there are usage-based or pay-as-you-drive insurance programs. I figure there may be a benefit from somewhat obfuscating exactly what tax people are paying, rather than having them pay a separate bill. This would be roughly similar to the common practice of paying property tax through a monthly mortgage payment.

 

 

 

May 11, 2012    View Comment    

On Methane: When Agendas Trump Facts

Robert,

I am intrigued by this point in your blog post:

"That short-term temperature increase is predicted to happen no matter what replaces coal: Wind power, solar power, or even just shutting down coal plants and not replacing them. This isn’t a guess on my part, the study’s author confirmed that for me."

Did you ask him if this is true even for coal plants with scrubbers that should have much lower emissions of pollutants such as SO2? Upon first coming across his paper, I assumed his conclusions might be true for the world as a whole, but not as pertinent to plants in the U.S. (at least those that participated in SO2 trading). 

 

 

September 30, 2011    View Comment    

On US Petroleum Imports by Country

You're absolutely correct, although by net imports in 2010, Saudi Arabia ranked second and Mexico was fourth behind Nigeria: http://www.eia.doe.gov/dnav/pet/pet_move_neti_a_ep00_IMN_mbblpd_a.htm

April 26, 2011    View Comment