“I think the (EPA) standards are a disaster,” says David R. Henderson, a research fellow at the Hoover Institution, a public-policy think tank based at Stanford University in California. “The thing is if someone buys an EV now, there are distorted incentives to do so. But at least people get to choose to do so. But mandates blow past all market signals and that’s one big argument against them.”
This is from Ken Wysocky, “Large-Scale Adoption of EVs Faces Logistical Hurdles,” Motor, June 20, 2023. Wysocky does a nice job of building an article around the thinking of Alan Reynolds, Jeffrey Miron, and me.
Wysocky ends with this:
Given all these barriers, is mass EV adoption within a few years realistic? For answers, Henderson suggests looking to California, where emission-free vehicles must account for 43 percent of new car sales by 2027.
“California is the canary in the coal mine,” Henderson says. “That’s a pretty tough goal to achieve by 2027.”
One possible way to achieve that goal is to dramatically increase the price of ICE vehicles to drive consumers to EVs, he notes.
“If that ever happens, I predict a huge consumer revolt,” he says.
I think the relative price impacts of this have been underreported. I may do a post on that soon.
Read the whole thing.
READER COMMENTS
Aaron W
Jul 1 2023 at 2:23pm
These are all very valid and fair criticisms of the current approach to electric vehicle adoption. What I feel is missing is good suggestions for an alternative approach. Namely, my reaction to this isn’t “stop EV adoption”, which I feel is implied by your criticisms (it may not be so if I read too much into it then I apologize). Rather, I would suggest we deregulate environmental law to make it easier to build more renewable capacity; furthermore, if getting the permits to build new mines is such a laborious process, we should deregulate that to streamline the process.
One of the twisted ironies of the environmentalist movement is that climate change has been a lode star animating so much activism, yet much of environmental law actively gets in the way of solving it. I wish there were more political momentum behind deregulating environmental (and zoning, etc.) laws to help fight climate change. However, it seems the opposition to the current approach to the issue either wants to pretend the problem doesn’t exist or is over exaggerated, or has valid criticisms (like this) but isn’t interested in offering alternative approaches.
David Henderson
Jul 1 2023 at 2:40pm
Thanks.
Yes, I think you read too much into my criticism. I did a lengthy piece for Hoover’s Defining Ideas laying out my criticisms, which is, no doubt, how this reporter found me.
My opposition is to mandated EVs and to subsidized EVs, not to voluntary non-subsidized adoption. On environmental law, I agree with you. We should radically deregulate so that it would be easier to build renewable capacity and mines, and I would go further and deregulate the building of pipelines, natural gas plants, and nuclear plants. And, by the way, repeal the Jones Act.
Here’s my piece on EVs, in case you missed it.
Aaron W
Jul 3 2023 at 12:34am
I figured I might be, so good to hear. Thanks for sharing your article. As a PhD chemist, you told me my favorite joke about economists. 🙂
Thomas L Hutcheson
Jul 2 2023 at 9:31am
The alternative to standards and subsidies for EV is very simple: a tax on net CO2 emissions.
David Henderson
Jul 2 2023 at 10:20am
It’s true that CO2 taxes are a better alternative. But they aren’t, as you say, “the alternative.” Moreover, they’re not clearly the best alternative. Your statement assumes that the best way to deal with global warming is to reduce carbon usage. But as I’ve written on this site a number of times, we don’t know that. There are two alternatives: geo-engineering and adaptation. Each may be substantially cheaper than CO2 taxes.
R
Jul 2 2023 at 4:31pm
But even geoengineering would require a subsidy of some kind right? There’s not really a purely profit-based motive for a geoengineering industry to exist (apart from possibly through private charity). And if it has to be subsidized, wouldn’t taxing the very emissions geoengineering reduce be an effective way to do it.
Mike Hammock
Jul 2 2023 at 10:07pm
I don’t think it makes sense to talk about any one solution as “the best” if we’re thinking in terms of efficiency. The most efficient solution is to do each of those things–carbon taxes, geoengineering, adaptation, and whatever else–up to the point at which the ration of marginal benefit to marginal cost is equal for each of them. That almost certainly means doing some of each.
Of course, a real-world government is unlikely to be capable of finding that optimal point.
David Henderson
Jul 2 2023 at 10:10pm
Why “almost certainly?” You seem to have a sense of the numbers here. Can you lay that out?
Mike Hammock
Jul 3 2023 at 1:52pm
I’m making a theory argument, not a data argument. It’s the standard condition for optimally using several inputs to produce anything, whether it’s a car, a crop, or policy to deal with climate change.
I know David’s familiar with this, but for those who are not: Suppose you’re using several inputs–let’s say three–to grow an agricultural crop: Labor, capital, and fertilizer. Each of these has a different marginal factor cost and a different marginal product. As you use more of one input, its marginal product falls due to diminishing returns. That is, the additional input helps, but it helps less than the previous input did. If you’re using all three inputs in the most productive way possible to achieve any given quantity of crop produced, these facts put together imply that you should use inputs such that the ratio of marginal product to marginal factor cost are equal for all inputs. Why?
Suppose they are not equal. Suppose, for example, that Labor has a higher ratio of marginal product to marginal factor cost than capital and fertilizer. This means that labor offers more bang for the buck in producing this crop; it gets more done, relative to its cost. That means the farmer can grow more crops at a lower cost if he or she uses more labor and less capital and fertilizer. As the farmer uses more labor, labor’s marginal product falls, and as the farmer uses less capital and fertilizer, their marginal product rises, until all three ratios are equal.
I’m saying dealing with the consequences of climate change is probably like this. We have multiple tools available. They’re all probably subject to diminishing returns at some point. They’re each costly. For the optimal solution not to involve some use of all three would imply that one solution is always and forever cheaper and/or more productive than the other two. That strikes me as unlikely. Is it really likely that, say, adaptation always offers more bang for the buck, under all conditions, so that the optimal amount of greenhouse gas abatement is zero? That there are no greenhouse gas emissions that are harmful enough, and can be eliminated cheaply enough, to be worth eliminating? I would be shocked if that were the case. It’s not impossible, of course.
Mike Hammock
Jul 3 2023 at 1:52pm
It looks like the message system ate my paragraph breaks. I’m sorry about the formatting.
nobody.really
Jul 1 2023 at 4:37pm
This statement puzzles me. It seems to imply that coal-powered generators follow load, so if demand for electricity were to increase in a given location, the local utility would increase the output of its coal-powered generators. Do any coal plants operate this way? I think of coal-powered generators as provide base load—that is, when a utility dispatches them, the utility turns the plants on full blast and leaves them running full blast until the utility turns them off (for maintenance, or for seasonal retirement). The plants don’t ramp up or down depending on changes in customer demand. In short: Yes, coal-powered generators emit CO2—but the amount they emit does not vary much with the amount of demand for electricity.
That said, today ever more utilities find that it no longer makes economic senses to operate their coal plants during off-peak seasons, so utilities shut them down for part of the year. If demand for electricity increased, I guess utilities might gradually dispatch the plants earlier in the spring and shut them down later in the fall—and that would marginally increase CO2 emissions.
Oil-powered plants can follow load—but they represent less than 3% of electric output in the US, and this amount is fading fast because the plants are ancient. As I understand it, oil plants mostly provide emergency back-up capacity.
David Henderson
Jul 2 2023 at 10:10am
Thanks. Do you have a cite for your claim about coal-fired plants?
nobody.really
Jul 3 2023 at 1:42am
Well, thanks for asking–because apparently my information was out-of-date.
This 2020 article confirmed my view that generally coal plants are not designed to follow load:
Nevertheless, coal plant owners find that they just can’t compete with cheaper sources of electricity–and now are sufficiently desperate for business that they ARE offering their plants to follow load, long-term consequences be damned. Thus the title of the article I linked to is “Coal plants increasingly operate as cyclical, load-following power, leading to inefficiencies, costs.” The article says that a recent study “really makes it clear that we’re asking coal plants to do things that they weren’t constructed to do, and that there are costs associated with that….”
Bottom line: Wisely or not, it appears that people are increasingly using coal-powered generators to follow demand. And if so, then the increased demand from EVs may well trigger more coal-powered generation.
MarkW
Jul 1 2023 at 6:16pm
Of course EVs in California won’t make up 43% of new car sales in just 3 1/2 years. But what will happen instead? The most likely possibility seems to be the CA government will push back the time frame. If they actually did try to hold to it, the only way EVs would account for 43% of the market by then is by vastly reducing the number of new cars sold in California. Perhaps in that case, Californians would go to Nevada to shop for ICE vehicles or a great number of late model used ICE cars would be brought in and sold in the state. But I can’t see the government and car dealer association accepting that outcome (and in most states car dealers have a lot of clout), so pushing back the deadlines seems almost inevitable. Certainly, given current budget realities in California, the government won’t be achieving the goal with massive subsidies.
Blackbeard
Jul 2 2023 at 7:44am
New York, where I live, is also phasing out ICE vehicles on an unrealistic timetable, albeit not as unrealistic as California. And no, you cannot just go to another state and buy an ICE car there because you won’t be able to register the car in New York.
Dylan
Jul 2 2023 at 7:28am
Forgive my skepticism, but I’ve been hearing many of these same arguments for the last 15 years, initially claiming that we would never be able to get to even a fraction of the current penetration of EVs, and then always moving their estimates upward as they were proven wrong time and time again.
A couple of points. One, contrary to the claim in the article, the idea of lifecycle emissions for EVs is one that has gotten a lot of attention. This study estimates that the emissions break even point for a new EV is after 1 year of driving on average, taking into account the additional energy use it takes to produce the vehicle and battery and the current mix of electricity generation in the U.S.
Two, I realize you don’t control the framing of your quotes in the article, but the piece on rare earth metal availability sounded downright Ehrlichian. Anyone care to place a wager on the price of a basket of 5 rare earth metals a decade from now?
David Henderson
Jul 2 2023 at 10:28am
You write:
Do you have a cite or two for the claim about not gettin a fraction of the current penetration of EVs? Also, did the claims take into account the fact that governments would subsidize EVs and regulate to require them?
Thanks for the link to the study. I’ll take a look.
You write:
You’re right that I don’t control the framing. You’re also right that this view is, as you say it well, “Ehrlichian.” Re the wager, I’ll think about it. As I’m sure you realize, when Simon made that bet with Ehrlich and his two colleagues, no major government had a policy that would require a huge increase in demand for any of the five commodities. So this is a bit different.
Dylan
Jul 2 2023 at 2:07pm
I wish I could find them. There was one guy in particular on Seeking Alpha that was very negative on BEVs, the arguments shifted over the years, but he started out saying they were basically impossible, but also made variations of just about every argument that was made in this post. There was another columnist that I think wrote for Bloomberg, but I’m having trouble finding those pieces since they put in the paywall.
True, there are some differences, but I’d also suggest that the policies under discussion also don’t require a huge demand for any particular commodity. They require substantial fleet average reduction emissions, but they don’t mandate how we get there. EVs seem like the most likely way, but it could be with a different battery chemistry or it could even be something like hydrogen powered cars. Markets are still free to respond to the price signal and come up with better solutions on how to reach that goal.
For the record, I’m against these mandates and, like other posters, think that they will be softened, extended, or removed entirely as we get closer to the date. Still, I grant you that government intervention could put the thumb on the scales and cause prices of these rare earth metals to go up in a way they wouldn’t under other circumstances. Still, I’m willing to entertain the bet if you are.
Billt
Jul 2 2023 at 7:55am
EVs and ICEs really aren’t too much different. Both require 4000 lbs of material to build and lots of energy to operate. Both need to be able to cruise at 70 mph and meet crash test standards. This limits how much difference there can be in their environmental impact.
We can have a lively discussion of oil drilling vs. lithium mining, but the answer isn’t that different. I suspect that the overall difference in environmental impact is a factor of 2 or 3. Contrast that to the difference in carbon emissions between a coal plant and a nuke.
If environmentalist were serious about reducing carbon emissions they would favor finding alternatives to automobiles. Fix zoning laws so people could live closer to work. Cutting several thousand miles off of your commute will swamp any difference between EVs and ICEs. Change laws so electric bicycles could travel just a little faster (currently they are limited to 20 mph) making them more practical. Bicycles weigh about 50 lbs. With aerodynamic fairings they could get the equivalent of several hundred mpg.
Please note that i’m not saying I’m in favor of any of the above. I’m just pointing out that there are options other than EV vs ICE.
David Henderson
Jul 2 2023 at 10:31am
You write:
Good points. If the laws were changed to allow electric bicycles to travel faster, though, something that I favor, I would want tighter restrictions on those bicycles traveling on pedestrian walkways. Where I live, they’re starting to become a hazard.
Billt
Jul 2 2023 at 11:16am
Unfortunately there are a significant minority of bicyclists that don’t have a clue about riding in traffic or with pedestrians. Riding on sidewalks is already illegal.
Large scale use of bicycles needs changes to the infrastructure. I’m not sure what the best approach is. My city (Syracuse NY) has put in a good number of bicycle paths on the side of roads. These paths seem to be mostly empty. Strong Towns and a few other sites have some ideas.
BS
Jul 2 2023 at 11:21am
Commuting is, I suspect, where the big gains are to be made. Reserved corridors for very lightly constructed (weight) vehicles capable of carrying at least one passenger and some cargo – something that is more than a bicycle, less than a car. One aim would be to reduce risk of encounters with heavier vehicles. Another would be to reduce risk by limiting speed to, say, 40 mph max – vehicles forbidden to use freeways/highways, but permitted to use all other (secondary) roads. How this could be done without bureaucrats insisting on adding collision survival features that creep the mass back up to that of a small car again, I don’t know.
john hare
Jul 4 2023 at 5:04am
One of the times I went broke I rode a (one speed) bicycle to work for a couple of months until I could get a car ($200.00 Datsun) again. This was in 1984 when I was a few weeks younger than I am now. 3.7 miles each way gives a bit of time to think. According to what I was able to find at the time, a healthy person could do 18 mph on a bike under some conditions. I forget the specifics except that 80% of the resistance was air and the rest mechanical and friction.
Bike travel on roads not designed for bike traffic can get a bit interesting plus dogs, weather and darkness after a 12 hour workday. I thought of enclosed bikeways with a mild tailwind. A 10 mph tailwind would have allowed 25 mph out of the rain, dogs, and motor traffic. During rush hour each biker would be contributing to the tailwind such that no power wound be needed to maintain it.
Being a few weeks older than I was then, pedaling 5 or 10 miles each way is less appealing than it was then. But I wonder if there would be application to electric bikes doing 30-40 mph under protected conditions. Use E-pass for monthly billing to maintain and profit the system.
Among the advantages I dreamed up were less pollution, healthier people, easy parking downtown, and lower commuting costs. Less road congestion for remaining autos. Plus faster net time to commute on a bike toll way instead of stop and go traffic.
Dylan
Jul 2 2023 at 2:24pm
This might be the first time I’ve seen you favor tighter restrictions on something! But, I understand where you’re coming from. I’ve been commuting by human powered bicycle for around 15 years in NYC. Over that period I’ve seen greatly increased infrastructure dedicated to bikes in the city, followed by a lot more people biking. Over recent years though, that’s been joined by lots of other types of transportation. Electric pedal assist bikes, electric scooters (both the stand up and sit down variety), electric skateboards, regular skateboards, weird one wheel contraptions, rollerblades, bike shares, and more. On the one hand, I’m a fan of all of the innovation around mobility and that people can pick the thing that works best for them, on the other hand I can tell you that it feels more dangerous on the streets now with all of these people sharing a fairly narrow bike lane with wide differences in the speeds that people are capable of.
steve
Jul 2 2023 at 4:53pm
I am a bit surprised too. Why wouldn’t it be sufficient to bring legal action against a biker who harms someone walking?
Steve
David Henderson
Jul 2 2023 at 5:23pm
You write:
Ha ha. It could be. I’ve never opposed speed limits except that I think some of them are too low. As long as government owns roads and sidewalks, there have to be some government-imposed limits.
Or maybe not. Steve asks, quite reasonably, whether a tort system could handle this situation. Maybe it could. Then we could get rid of speed limits and even laws against DUI. Worth thinking about. I wonder if Steve would go that far.
steve
Jul 3 2023 at 9:55am
Need to quadruple the size of our ED, ORs and ICUs first.
Steve
Vernon L. Smith
Jul 2 2023 at 9:01am
The industry started with EV (Edison had invented the battery) but Henry Ford invented the ICE which ran on alcohol—-no gasoline yet. The model T was such a consumer low cost success that it blew away the competition.
steve
Jul 2 2023 at 4:51pm
About 1/4 of all new car sales in China are now EVs and if you include hybrids it’s 31%. California’s goals are not realistic. We are nowhere near solving the charging issue.
https://www.teslarati.com/chinas-ev-market-hits-its-stride-with-1-in-3-sales-being-electrified/
Steve
Comments are closed.