Last week, the Environmental Protection Agency (EPA) granted a waiver to the state of California to move forward with its Advanced Clean Cars Program.
The EPA waiver allows California to implement even tougher fuel efficiency standards than the White House announced last summer in an attempt to integrate more zero-emission vehicles into the market.
The promises of California’s program are similar to those touted by proponents of the federal fuel-economy standards: Clean up the environment by reducing emissions and save consumers money on fuel costs. The regulations are to assist in commercializing fuel cells (both electric and plug-in hybrid) and help meet the state’s goal of 15 percent of new vehicle sales being composed of these technologies by 2025.
The reality is that these regulations will drive up the upfront cost of vehicles significantly, and consumers will likely realize only a fraction of the fuel savings that the government claims. While California’s regulators admit that the regulations will cost buyers almost $2,000 more to purchase a new car, proponents argue that the regulations will also save drivers an average of $6,000 in fuel costs.
Consumers already place an extremely high value on saving money through fuel expenses, but they also consider a car’s safety, size, performance, price, and many other factors. Auto manufacturers, not the government, are much better equipped to meet the demands of consumers.
Included in California’s Clean Cars Program is the Clean Fuels Outlet Program, which “ensures that fuels such as electricity and hydrogen are available to meet the fueling needs of the new advanced technology vehicles as they come to market.”
Proponents of alternative-fuel vehicles often claim that no one will buy hydrogen or electric vehicles without the charging station infrastructure in place. This rationale justifies more subsidies for alternative fuel-powered vehicles, whether it is biofuels, natural gas, or electricity.
But these types of investments should be for the market to determine; otherwise, taxpayers are going to be on the hook for a infrastructure that consumers aren’t going to use.
If any of these technologies are economically viable and truly cost-competitive with gasoline, consumers will switch to different technologies, and government investments won’t be necessary. The transition may not occur as quickly as some politicians want, but markets solve the chicken-and-egg problem all the time. Diesel engines and fueling stations didn’t need subsidies. Neither did cell phones and cell phone towers.
Further, these regulations and subsidies particularly affect the poor by pricing them out of the market for new vehicles and forcing them to pay, through taxes, for the cost of the infrastructure and the subsidies to purchase the vehicles.
Once again, California is demonstrating what not to do when it comes to energy and environmental policy. The state’s Clean Cars Program is going to be another painful experience for consumers and taxpayers.