Part 1 discussed the pointless and hopelessly impractical $300 million battery prize proposed by the presumptive the GOP nominee. McCain also offered another hot gimmick this week:
My administration will issue a Clean Car Challenge to the automakers of America, in the form of a single and substantial tax credit based on the reduction of carbon emissions. For every automaker who can sell a zero-emissions car, we will commit a 5,000 dollar tax credit for each and every customer who buys that car. For other vehicles, whatever type they may be, the lower the carbon emissions, the higher the tax credit. And these large tax credits will be available to everyone — not just to those who have an accountant to explain it to them.
Now that is both silly and unmanageable. First off, a zero-emissions car would either be a pure electric vehicle or a hydrogen fuel cell car. Neither of those are the kind of near-term or even medium-term solution that we need, that we should encourage, or that we are likely to get (and whether they were actually zero-emissions would depend on how the hydrogen or electricity is made, as discussed below). The serious players are all pursuing plug-in hybrids, as they should be (see “This just in: Hydrogen fuel cell cars are still dead“). Those are not zero-emissions.
Second, “the lower the carbon emissions, the higher the tax credit” is absurd. Once again, Senator McCain and his energy advisers betray how little they understand the issues involved. Let’s look at the two most plausible reduced-emissions fuels: biofuels and electricity. Each of them would be both a bureaucrat’s and an accountant’s nightmare.
Consider a flexible-fuel vehicle running on a gasoline-biofuels mixture. Biofuels have roughly the same carbon “emissions” as gasoline. Oops! It is only when you do the life-cycle analysis, and subtract the carbon that the biomass removed from the air in the first place, that you get a carbon savings over gasoline. But there’s the rub. The calculation of the life-cycle emissions of biofuels is perhaps the most hotly-debated subject in the entire energy/climate arena (see, for instance, “About those two studies dissing biofuels“). And that’s assuming anybody can even prove they are always purchasing the same, consistent mixture of gasoline and biofuels. You’ll need more than an accountant to figure out the carbon savings here.
Then consider a plug-in hybrid. Here the carbon emissions depend critically on how you use the car (short-distance driving versus long-distance driving) and where you get your electricity (which varies from utility to utility). So let me ask the IRS, the new bureaucracy that the Senator will set up for this gimmick, and my accountant (because I’ll need a good one) the $5000 questions:
If I purchase 100% renewable energy, how much of the $5,000 tax credit am I entitled to? What if I charge the car up one third of the time at work, which purchases regular grid power? What if I go on a long trip and use gasoline almost exclusively — do I need to rebate part of my credit? What if I drive on vacation to a national park for two weeks and use their electricity?
Yes, we need to put out a subsidy for plug-in hybrids — but that subsidy won’t be based on some bizarre calculation of what carbon emissions are. It will be based on a (hopefully simple) formula based on the range of the vehicle in all-electric mode and the fuel efficiency of the vehicle running on gasoline. A guess will have to be made on the percentage of travel done on electricity versus gasoline, but that isn’t much different than the EPA’s guess on city versus highway driving for determining the overall mileage of your car.
Given that the per mile cost of driving on electricity is perhaps a factor of five lower than the per mile cost of driving on gasoline, however, we can be reasonably confident that people will keep the vehicle charged up and drive on electricity as much as possible.
Political aside: I know McCain likes to use the word of “America” a lot [Note to McCain campaign -- we get it, you're an American and who really knows what that other guy is?], but what precisely does he mean by “issue a Clean Car Challenge to the automakers of America”? Is he talking about the big Three (well, biggish Two) American automakers? Or all companies who make cars in America? In any case, it would be hard not to allow any company who sold cars in the country to get the tax credit applied to its cars.
One final point — this part of McCain’s speech is also muddled:
Ninety-seven percent of transportation in America runs on oil. And of all that oil, about 60 percent is used in cars and trucks. Yet the CAFE standards we apply to automakers — to increase the fuel efficiency of their cars — are lightly enforced by a small fine. The result is that some companies don’t even bother to observe CAFE standards. Instead they just write a check to the government and pass the cost along to you. Higher end auto companies like BMW, Porsche, and Mercedes employ some of the best engineering talent in the world. But that talent isn’t put to the job of fuel efficiency, when the penalties are too small to encourage innovation. CAFE standards should serve large national goals in energy independence, not the purpose of small-time revenue collection.
Okay, so are you proposing much more onerous government penalties for noncompliance? Or do you think losing your little $5,000 tax credit is going to mean anything to Porsche and its buyers?
This paragraph is like some old guy complaining about kids running in his yard and ruining his garden. [Note: It is purely coincidental that I used this analogy. I am not implying that McCain is too old to be a good President.
I am implying that he should stick to gardening.] Yes, Porsche sells a small number of high-end, gas guzzling cars. How exactly do you propose to stop them? We could slap an enormous fine on them. Or just ban cars that don’t meet a certain threshold of efficiency. Or maybe this isn’t really a big deal in the grand scheme of things, Senator.
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