Measures to drive adoption of super efficient cars in the U.S.

Measures to drive adoption of super efficient cars in the U.S.

Rhett A. Butler, mongabay.com

April 11, 2007

To reduce its growing dependence on foreign oil the United States could implement relatively low-cost measures to put millions of super efficient vehicles on American highways, said energy efficiency expert Amory Lovins of the Rocky Mountain Institute in a speech at Stanford University. The measures could significantly cut oil usage, help fight climate change, and make U.S. roads safer.

Lovins said there are five ways the U.S. government can help reduce our dependency on oil: (1) stimulating demand for very efficient vehicles; (2) building “vibrant 21st century industries” by sharing research and development risk; (3) lowering risk of investment for new manufacturing plants through loan guarantees; (4) supporting the development of domestic energy supply infrastructure to shift from hydrocarbon to carbohydrate fuel sources (biofuels); and (5) removing barriers to efficiency through coherent policies and elimination of perverse incentives and subsidies.

This article summarizes Lovins’ comments on how to stimulate demand for very efficient vehicles (1). Future articles will cover Lovins’ other points. An earlier article is available at U.S. can cut oil imports to zero by 2040, oil use to zero by 2050

How the government can stimulate demand for very efficient vehicles

Lovins stated that demand for very efficient vehicles can be stimulated through “feebates”; leasing to low-income customers, while scrapping inefficient vehicles; and promoting smart military and government fleet procurement through “golden carrot” strategies.

Feebates

The feebate is a rebate based on the efficiency of a vehicle. Lovins said that the government would annually set a fuel economy benchmark called the “pivot point”. Vehicles more efficient than the pivot point world receive a rebate from the purchase price while less efficient cars would pay a corresponding surcharge on their purchase price. Essentially feebates function as a transfer of wealth from buyers of gas guzzlers to buyers of fuel efficient vehicles. Last month California Assemblyman Ira Ruskin, D-Los Altos proposed just such an approach in a state bill. The legislation has won the support of the Silicon Valley Leadership Group, a business organization that includes the some of the world’s most influential tech companies, including IBM, Google, Apple and Cisco.

Low-income scrap-and-replace program

In addition to feebates, Lovins said that a “low-income scrap-and-replace program” could create a new million-car-a-year market for U.S. car dealers while at the same time dramatically improving fuel efficiency and safety by removing the most inefficient and unsafe cars from roadways. The initiative would also improve the economic prospects for millions of low income Americans who could suddenly afford safe, low-cost cars.

“Affordable and super efficient personal mobility, especially if offered in many states or nationwide, would bring life-changing benefits to low income Americans, especially in areas poorly served by public transit:”

Smart government fleet procurement

Noting that nearly four million vehicles make up the federal, state and municipal fleet, Lovins said that smart procurement procedures could speed the transition to more efficient vehicles.

He argued that this shouldn’t be difficult using existing government procurement programs “to pull better technologies into production by guaranteeing to buy a certain number of them, for a certain number of years, at a certain minimum price, if they meet certain specifications substantially more advanced than anything now available”. He terms this strategy the “Golden Carrot”.

He noted that private firms are already using Golden Carrots, citing Wal-Mart’s mandate for more efficient trucks that will save the retail giant $330 million a year in fuel costs.

Lovins said that innovation could also be driven by a advanced-technology contest. Such prizes, usually offered by governments and entrepreneurs, has a long history of jump-starting new technologies, including the U.S. car and aviation industries and even space flight ($10-million Ansari X-Prize), by attracting investment worth many times the actual value of the prize.

Lovins recommended “a federal “Platinum Carrot” prize for the first U.S. automaker that can produce and sell into the market 200,000 uncompromised 60-mpg gasoline-fueled midsize SUVs (or their attribute equivalents in other subclasses), meeting the most advanced emission and safety standards and capable of total gasoline/ethanol fuel
flexibility.”

Further reading