Similar purchasing decisions nearly sent the neighboring state of Arizona into bankruptcy. What was originally intended as a modest $3 million initiative to encourage the use of alternative-fuel vehicles quickly led to a half-billion-dollar boondoggle that some called The Great Pickup Stick-Up.
The state offered consumers generous rebates and tax credits that, coupled with federal incentives, slashed the price of pickup trucks equipped with alt-fuel converters by more than half. Consumers only had to pledge to burn 100 gallons of propane or condensed natural gas—a few refills—but there was nothing stopping them from filling up with gasoline. As a result, what was originally intended to reduce pollution by targeting the worst-offending vehicles led far more people to purchase them.
As word of the subsidies spread, car dealers increased prices of popular truck models as demand rose, and consumers added all the expensive accessories they could think of, knowing that taxpayers would pay for them. Large corporations such as car rental agencies took the opportunity to purchase entire fleets of vehicles at half the usual cost. Many Arizonans disconnected their alt-fuel systems immediately after having them installed, with little fear of penalties since it was all being done on the honor system.
The botched policy led to political scandal and even criminal probes.
The program's main political sponsor, former State House Speaker Jeff
Groscost, was found to have purchased two new trucks of his own under
the program, had close ties with manufacturers of alt-fuel conversion
kits, gave interested parties a direct hand in writing the law, and
received tens of thousands of dollars consulting for the program's
potential beneficiaries in the natural gas industry.
In an emergency session, the Arizona legislature voted to shut out 10,000 to 15,000 of the program's participants, saving $400 million. But some of these angry shutouts filed a class action lawsuit demanding that Arizona abide by their original agreement.
Unlike Arizona, California isn't subsidizing consumers to buy alternative fuel vehicles. Instead, it's punishing producers.
In 1990, the California Air Resources Board decreed that, starting in 2003, 10 percent of all cars sold in the state (roughly 170,000 vehicles) would have to be zero-emission electric vehicles (ZEVs). In 1996, that requirement was reduced to 2 percent (22,000), though automakers were still required to make up for the 8 percent in extremely low-emission vehicles (LEVs). Two years from the deadline, there are roughly 2,200 electric cars operating on California's roads, mostly owned by novelty seekers or affluent environmental activists. There is no sign that automakers will be able to meet the deadline, despite the threat of being fined $5,000 per unsold vehicle.
Although there has been extensive research into battery technology, electric cars remain relatively uneconomical, costing about $20,000 more than their conventional counterparts. Top-of-the-line batteries can take a car 100 miles between charges, but cost $250,000. GM's two-seat EV-1 gets 75 miles to the average charge, but its lead-acid cell battery still adds 60 percent to the cost and weight of the car and takes 5 hours to recharge.
With all the auto manufacturers frantically chasing after a major share of a tiny market, General Motors sued the state of California for regulatory relief, contending that building ZEVs was 150 times costlier than other pollution abatement strategies such as eliminating diesel fuel and encouraging gas/electric hybrid vehicles. Worn-out batteries are also difficult to dispose of, and it is a stretch to refer to electric vehicles as "zero-emission" when the generating plants they rely on emit pollutants.
Cars powered by hydrogen fuel cells operate under a similar set of trade-offs as electric vehicles. While hydrogen burns without pollutants and releases even more energy than fossil fuels, it's not lying around waiting to be stuffed into high-pressure bottles, but rather must be detached from natural compounds such as methane gas or water. Current fuel-cell technology relies on hydrogen extracted from methane, in a process that emits large quantities of greenhouse gases. Domestic sources of methane are far too small to support demand for use in automobiles, and those hoping America would achieve some measure of energy independence would have to confront the fact that the U.S. would have to rely on foreign sources such as Russia, Iran, and other Middle East nations. Alternately, releasing hydrogen from water involves electrolysis, a highly inefficient process that would probably require burning more carbon-based fuels than the use of hydrogen would save. The only sustainable way to produce such quantities of hydrogen would entail large-scale investment in nuclear power plants—a prospect that, oddly enough, is not favored by proponents of zero-emission vehicles.
There are hints that hybrids offer the best long-term alternative, and some conventional gasoline vehicles are also getting arbitrarily close to the zero-emission standard due to computer-enhanced emission control. (Dramatic fuel-efficiency improvements can be achieved from allowing increased use of diesel fuels, but diesel releases more controversial particulate matter.)
The push for alternative vehicles has also had perverse consequences, according to a study by Resources for the Future, an environmental research group. Technology mandates lead to inflated sticker prices fleet-wide, causing consumers to delay their purchase of newer, cleaner conventional vehicles, and thus raising auto emissions across California in what is called the "jalopy effect." And even if California meets its quota, it will reduce auto emissions by a mere 1 or 2 percent.
There are signs that California will do everything it can to allow automakers to fulfill their zero-emission quotas, including redefining success. One credit-earning option would allow automakers to market what are called "neighborhood vehicles" for use in closed speed-bump communities and on roads with speed limits under 35 mph—golf courses, for example. To expedite production of these vehicles, they have been exempted from federal safety standards, allowing them to travel on public roads as well. That means safety experts will have nothing to say at the prospect of Ford's tiny two-seat Think City, which is made of plastic and takes 30 seconds to reach a top speed of 60 mph, trying to merge onto the average California highway.
[Ed.: New York enacted a similar mandate as California's, requiring that 10 percent of vehicles sold in the state use alternative fuels. Massachusetts, Vermont, and Maine are considering similar proposals.]
