Category — CAFE standards, auto bailout
In two recent posts (here and here), I examined EPA’s and the National Highway Traffic Safety Administration’s (NHTSA’s) rationale for establishing first-ever fuel-economy standards for trucks. Today’s post provides additional evidence that what the agencies call the trucking industry’s “under-investment” in fuel-saving technology is an unintended (although not unforseen) consequence of EPA’s ever-tightening diesel-engine emission standards. The declining fuel economy of 18-wheelers is a case of government failure, not market failure. Conveniently, EPA’s role in holding back heavy-truck fuel economy is never discussed in the agencies’ proposed rule.
The trucking industry is highly competitive, profit-margins are thin, and fuel is the single biggest operating expense. Consequently, truckers, especially those who haul freight long distances in “combination tractors” (semis), have a strong incentive to purchase vehicles incorporating cost-effective improvements in fuel economy. Hence manufacturers also have a strong incentive to produce such vehicles. Yet the average fuel economy of semis declined by 1.2% annually over the past decade, according to the Department of Energy’s Transportation Energy Data Book (p. 5-2).
How can this be? [Read more →]
December 28, 2010 6 Comments
Last week the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) issued a proposed rule to establish first-ever greenhouse gas (GHG) emission and fuel economy standards for “heavy duty” (HD) motor vehicles.
The proposed standards, which phase in during model-years 2014–2018, apply to three types of HD vehicles: (1) “combination tractors” (semi-trucks), (2) large pickups and vans, and (3) “vocational trucks” (a wide-ranging assortment of trucks and buses). The agencies estimate that the technologies needed to comply with the proposed standards will cost $7.7 billion but that the rule will generate $27 billion or $41 billion in net benefits (depending on whether future benefits are discounted at 7% or 3%).
Here’s the curious thing that jumps out at you from the getgo. Although the ostensible objective of the rule is to reduce GHG emissions and oil imports, the overwhelming share of the claimed benefits (fuel savings for truckers) has nothing to do with either climate change or energy security. For example, based on the unverifiable assumption that each ton of carbon dioxide (CO2) emitted has a “social cost” of $22.00, the agencies attribute only $2.3 billion — about 6% — of the rule’s net benefits to its CO2 reductions and climate impact (p. 355).
Sound familiar? Just as proponents of cap-and-trade tried to sell their stealth energy tax as a “green jobs” program when they couldn’t sell it as climate protection, so EPA and NHTSA now try to sell their save-the-planet-beyond-petroleum rule as a fuel-savings bonanza for owners and operators of big rigs, dump trucks, buses, vans, and pickups. [Read more →]
November 5, 2010 7 Comments
My op-ed in today’s USA Today is about President Obama’s proposed new fuel economy standards. Don’t like ‘em. Unfortunately, an editing snafu over at the newspaper inadvertently left out the fact that there are four models at present that meet the proposed new standard – the 2010 Honda Insight (41 mpg) and 2010 Ford Fusion Hybrid (39 mpg) were left off the list.
Space prohibited me from making an additional point. Even if there is no rebound effect, my colleague Pat Michaels finds that global temperatures will only be reduced by 0.005 degrees Celsius by 2050 and 0.0078 degrees Celsius by 2100 once you plug those emissions reductions into the computer models used by the IPCC. (These are thousandths of a degree, mind you.) Of course, proponents contend that U.S. action on fuel efficiency will lead to like action abroad. Well, good luck with that. But even if all of the signatories to the Kyoto Protocol adopted Obama’s proposed fuel economy standards, global temperatures would be reduced by only 0.038 degrees Celsius by 2050 and 0.071 degrees Celsius by 2100. If you tried to monetarize those benefits, you would be hard pressed to come up with an defensible number of consequence.
So what should be done instead? Nothing! [Read more →]
May 20, 2009 6 Comments
CO2 Regulation under the Clean Air Act: Economic Train Wreck, Constitutional Crisis, Legislative Thuggery
Call it an economic train wreck, a constitutional crisis, or legslative thuggery. Litigation-driven regulation of carbon dioxide (CO2) under the Clean Air Act (CAA) is all of the above.
The Supreme Court case of Massachusetts v. EPA (April 2, 2007) has set the stage for a policy disaster. Mass v. EPA’s second anniversary rapidly approaches, and in a Power Point presentation leaked to Greenwire last week, EPA reveals how it plans to respond to the Court. But first, some background on the case and the Pandora’s Box it has created. [Read more →]
March 19, 2009 23 Comments
Despite all the pressure on him, energy is the perfect area for Barack Obama to do nothing hasty. For decades, activists and foreigners have lamented the fact that the U.S. doesn’t have an energy policy. This is, of course, nonsense. Simply because we don’t have a big E big P Energy Policy doesn’t mean we don’t have one at all. Compared to most other countries, our energy policy is most notable for the things it doesn’t do, as in the doctors’ creed, “First, do no harm.”
And energy policy is now threatening to intersect with economic policy, first, as rising unemployment suggests to many that renewable energy subsidies offer an attractive use of funds but also as the government considers assistance for the US automobile industry (at least the home-grown sections of it). But in offering money to the Big Three, politicians are being urged to set certain conditions, such as ‘guidance’ concerning appropriate uses of the money. [Read more →]
December 29, 2008 5 Comments