Plug and Pay

Yesterday's photo-op at an Indiana RV factory for the purpose of announcing more federal assistance for the electric vehicle industry came just a few days after Nissan debuted its Leaf electric car, which might become the first mass-market EV in the world. Cars powered by batteries alone or a combination of batteries and conventional engines look like one of the most promising long-term solutions to the dual problems of energy security and climate change. But precisely because of their potential to have such a large impact, it's vital that the economic arrangements for their energy consumption are put on the right basis from the start. Among other things, that means avoiding the temptation to provide free public recharging for them. If we get this wrong, we risk negating much of the energy and greenhouse gas benefit these cars offer. We could also inadvertently deter the substantial private investment in recharging infrastructure that would be needed to make EVs fully competitive with cars running on liquid fuels.

Against the backdrop of $2.4 billion in new subsidies for EV and battery manufacturers and federal electric vehicle tax credits ranging up to $7,500 per car, my concerns about collecting for the electricity actually used by the first few mass-production EVs might seem disproportionate or even eccentric. After all, how much juice can a few battery cars use, compared to our factories, office buildings, and billions of home appliances? Initially, very little and eventually still less than you might imagine. If every vehicle-mile traveled in the US were driven in an EV averaging 3 miles per kilowatt-hour (kWh), US electricity consumption would only increase by about 27%. The impact on emissions is much harder to assess, however, since it depends heavily on which generating technologies deliver the power used by EVs, and that in turn depends to a large degree on the time of day when they are recharged. Charge up at 3 AM, and you might be getting zero-emission wind power that would otherwise go to waste. Charge up at 3 PM, and you are almost certainly going to be drawing on a gas turbine somewhere--probably a fairly inefficient "peaking" unit--or a coal power plant. To put that in perspective, let's look at the emissions from two comparable cars, under both scenarios.

For our baseline, consider a Prius-type hybrid that gets all of its energy from the fuel that goes into its tank. At 50 mpg, its emissions from gasoline amount to roughly 40 lb. of CO2 per 100 miles. For an EV getting 4 miles per kWh and recharged with wind power, they would be essentially zero. However, the same car recharging during mid-peak or peak electricity demand would trigger power plant emissions between 35 lb. ("peaker" turbine @ 12,000 BTU/kWh on natural gas) and 53 lb. (average US coal plant) for every 100 miles. In other words, while the hidden emissions from an EV would in the worst case still be lower than those of the average car in America today (around 80 lb. CO2/100 mi.), they could be substantially higher than from an ordinary hybrid that never plugs in. So if we want EVs to repay the substantial national investment we're making in them by reducing our fossil fuel consumption and greenhouse gas emissions, we will want them to recharge as little as possible during daylight hours, particularly in the late afternoon, at least until wind, solar and geothermal power account for a much higher share of our annual electricity generation than the 1.6% they contributed last year.

Paying for the electricity to recharge plug-in electric vehicles involves major cultural and behavioral shifts. The price of gasoline is one of the most visible, ubiquitous and transparent prices in our society. You stand at the pump and see the dollars going into your tank. But when you recharge an EV at home, unless you have a separate electric meter, you're going to have to sift through a power bill with a welter of distribution, fuel and non-fuel supply charges plus various state and local taxes and fees to see what it actually cost. At the current national average rate of around $0.11/kWh, a typical driver might only see an extra $27 a month, a big savings compared to the typical gasoline bill even at the current $2.55/gal. The extra power cost could easily get lost in seasonal usage fluctuations and rate changes. The impact would likely be more noticeable for utility customers in places with sharply graduated rate structures or time-of-use rates. For many people, however, even if they don't charge up using someone else's electricity--their employer's, their town's, or the local Starbucks'--it could look nearly free.

That would have implications for companies that are building vehicle recharging infrastructure that would need to recoup their investment on a per-kWh basis or, like Better Place, charges per mile of usage in a manner similar to cellphone service contracts. Those investments won't happen and the companies involved will go out of business if consumers regard the electricity for their new plug-in vehicles as effectively free and resist paying as they now do for fuel.

How this will all turn out is anyone's guess at this point, and I emphasize "guess." Until there are at least hundreds of thousands of these vehicles on the road, in the hands of many ordinary consumers and not just unrepresentative deep-green or "gear-head" early adopters, we can only make assumptions about how they will really be used. Still, it seems safe to predict that recharging that was free or regarded as free would get used more, resulting in more trips, more miles traveled, and eventually more energy consumption and emissions.

California's New Standard

A column in yesterday's Wall St. Journal reminded me that I had neglected to comment on the latest revision in California's targets for low- and zero-emission vehicles (ZEV.) These regulations are important signals to auto makers, and to the other states that have typically followed California's lead on environmental matters. I was struck by two facets of the new rules, both deserving at least a brief mention here.

First, at a time when the principal focus of US environmental debate is shifting away from tailpipe emissions of local pollutants--SOx, NOx, etc.--and more to the regulation of greenhouse gas emissions, the California Air Resources Board (CARB) persists in drawing the envelope around the vehicle itself, rather than its entire energy system, and thus its well-to-wheels emissions. That's consistent with CARB's mission; after all, even if they drive super-ultra-low-emission cars, 18 million Angelenos are going to create some smog. Still, the number of annual Health Advisory days in the L.A. Basin, the lowest level of air quality alerts, is now lower than the number of severe Second-Stage Alerts prevailing when I first moved there in the late 1970s. Even though L.A.'s air quality is worse than federal standards, the trend is positive, in spite of enormous population growth over the same period. Isn't it time for CARB to abandon the outdated pollution-shifting rationale behind the ZEV standard and focus mainly on the reduction of lifecycle emissions per mile? Otherwise, they risk fostering such foolishness as cars with internal combustion engines burning hydrogen produced from natural gas, resulting in higher well-to-wheels emissions than gasoline.

It also struck me that the requirement for automakers to produce 58,000 plug-in hybrids per year, starting in 2012, may be too low, rather than too high. I'm no fan of mandates such as this, but spreading that quantity of vehicle sales among a half dozen large manufacturers will likely not result in a profitable model line for any of them. 58,000 cars per year is barely enough for one successful model, let alone one requiring vastly more R&D and retooling than a conventional car. And while Fred Krupp of the Environmental Defense Fund was surely correct in his observation in his WSJ op-ed yesterday that, "a lot of people will make a killing" solving global warming, I think it's equally true--and even more important to note--that our chances of solving global warming will be low, unless there is a lot of profit in it.