Clean Air Credits

This article discusses the clean air credit trade currently occurring between car companies unable to reach the zero-emission vehicle (ZEV) quotas in particular states and allow those falling short to avoid large fines. Nissan and Telsa motors have sold credit surpluses to Honda and Chrystler. Although ZEV technology has made substantial progress, are ZEV car’s commercially viable? John M. Broder recently test drove the award winning Tesla sedan along I-95 charging stations and quickly found the fully battery powered car was unable to reach expectations.  Chevy and Nissan have both struggled to reach their initial sales goals of the Volt and Leaf. Are the ZEV regulations unreasonably forcing car companies into producing cars that will fail in the market? Does the clean air credit trade give a false representation the regulation’s success? Does the original article fail to investigate the implications of the trade between companies?


7 Responses to “Clean Air Credits”

  1. This discussion is actually really interesting. I personally don’t believe that the world is ready for ZEV technology. People don’t care enough about the environment and for almost all cars, the costs end up actually being higher than the long-term benefit of saving on gasoline. Breaking even is quite difficult, and many people don’t keep a car around for long enough to do it. Unless someone is really passionate about the environment and eliminating public costs, that person isn’t likely to buy a car.

    The implications, as Jackie has briefly discussed above, include car companies dealing with severe losses. Investing in new technology, operations, materials, and even new labor are all extremely costly. It is easy for the EPA to put restrictions on companies to promote a healthy environment, but until people are told how they personally will be affected in terms of health and costs, rational people will not spend more than they have to.

    The first step for getting people to buy ZEVs is educating them about its importance. Most of us are more selfish than selfless. Why would we pay more to support someone else and hurt ourselves?

    A more pragmatic approach would be to push people toward hybrid technology. This is a much easier transition, although it is still difficult. This would also address the issues John Broder had with his car. We must think in a more logical manner in order to create real change.

  2. The ZEV regulations seem a bit too demanding to me. While some companies are able to meet regulations and have extra points, there are many that cannot and I don’t think that is necessarily from a lack of trying. It seems to me that the problem lies in consumers who don’t have the money to invest in a car let alone an expensive car that isn’t practical (outlets and charging stations aren’t available everywhere yet).

    Instead, it seems more reasonable to encourage car companies to make these environmentally friendly options available through incentives instead of punishments. Punishing companies at a time when the auto industry is already struggling seems counter productive. I do like that regulations are encouraging companies to create and push their environmentally friendly products (this is a good way of getting the general public educated through advertising and sales) but it should be done through incentives not punishment.

    I think that ZEV cars may be commercially viable and in the near future, but a lot needs to be done first. Consumers need to understand why the switch is important and the extra money they put out is worth it. Before that happens, we need charging stations everywhere and the technology to have an electric car that can handle long distance travel. We are still in the developing stages and because of this it seems unfair to punish companies who can’t manage to push a product that is more expensive and isn’t completely viable for the majority of consumers.

    The original article could have gone in to more detail about what the implications are when car companies are trading. I get the feeling that the topic is being avoided purposefully.

  3. This was a very interesting situation to think about. On one hand, pressure to decrease our impact on the environment is rising, as the earth warms and Americans see more destruction due to increasing weather severity. In addition, the United States is often criticized for its reluctance to contribute to mitigating climate change on the global scale. From this perspective, I think it’s great that governments within the US umbrella (in this case, in the state of California) are pressuring technological innovators to find solutions, and to find them fast. In a open market system, these auto companies might not be compelled to act in any way but in their own self-interest otherwise.

    That being said, the follow through of this approach does not really work out. Yes, experts in these fields are innovating creative and potential solutions that might have the ability to have a dramatic impact on American emissions. However, like Chelsea mentions, its shooting these same innovators in the foot.

    Without a viable market to consume these new technologies, automakers are almost incentivized just to pay fines, and not even invest in the research, development, and marketing that may cost them billions of dollars for a disheartening return.

    Although Chelsea proposes one solution to continue a path to making green autos more viable for auto companies, I think that the best thing the government can do is to give incentives to consumers to make this a usable and economically viable option. That could be subsidizing the cost of eco-friendly cars, or perhaps providing electricity services for recharge.

  4. “Eco-friendly” and “Realistic” are sometimes hard to get right. And that is expected, especially when one consider that our current system and logic were constructed in different times, when the environment was not a hot topic. I personally think that governments have a great whole in this paradigm shift (that is to adapt and transform our reality to fit our current needs, and this includes sustainability), and on this perspective, what California is doing is probably a step forward, changing some market rules and giving the car companies the chance to adapt to the new demand or to buy more time (buying the ZEV credits). Times of change are a great opportunity to try new ideas, and those who can think outside of the box have a clear advantage. And the consumer should be a more active piece in this process, since real people lives are being affected (either thought the use of cars or because their job is related to this industry somehow).

  5. I found the “Calif.’s tougher ZEV mandate sparks new market for clean-air credits” hard to read coming from the perspective of someone who it not very interested in cars yet cares about environmental issues. It was unnecessarily dull and lacked a human connection. I think that they could have portrayed the same information with a greater human connection to make the article more engaging for a wider audience. They also should have included something from the governments perspective on cap and trade regulations, maybe what other options are and why this cap and trade option was chosen, while explaining the pros and cons of each option. I find that cap and trade programs actually are advantageous to the market place because it allows some companies who would have to front tons of money to produce the “green” cars a cheaper option while other companies can maintain a specialize in “greener” car production and be financially incentivised to do so. I am of the belief that once more cars are made greener the price to buy them will decrease and their demand will increase. Meaning that I am not worried that presently their demand is low because once companies are incentivised to produce more green cares they should get more efficient at producing them and prices will fall while demand rises. In the mean time however, the government must front the initiative to incentives the realizations of the positive externalities for society.

  6. The term ZEV kind of bothers me. While the vehicle itself does not directly produce emissions, it’s important to point out how dirty a large portion of power generation is. Most energy is still coal based, and while there are filtration elements in place there’s a limit on what can be done on that end. There’s also an issue of the limits thermodynamics puts on the efficiency of energy transfer and transition. In the case of internal combustion engines, it’s chemical-heat-mechanical. Each step has an upper bound on efficiency (bounded by some equations I honestly don’t remember, but upshot is you never get above something like 30%). In the case of coal to electric car there are the additional steps charging the battery, and efficiency is duly lost in the power grid.

    Things like mass transit are much better options for reducing society-level emissions. Individual vehicle efficiency and emissions are, in my opinion, a bit of a smoke screen that distracts from more effective strategies that are worse for car company bottom lines.

  7. What I think is really interesting about this discussion is the hierarchy by which we (voters and policy-makers) have arranged resources. ZEVs are prioritized because we think of lowering emissions, and thus decreasing air pollution, as important. However, the externally of these vehicles and shift in policy, given the continued reliance on non-renewable energy sources, is that consumers who use cars like these will be using more energy. Unless, of course, an individual has solar panels on their house, or a wind turbine in the back yard, this use of electricity and energy is still drawing upon polluting and water-intensive energy production. Even if an area relies solely on renewable energy (which is very rare), this is in competition with other uses of energy.

    So, while it’s not fair to say that these cars have an ecological footprint comparable to that of a conventional fuel-combustion engine vehicle, it’s also not fair to say that they don’t have any. As Yash mentioned, I don’t think the country is ready for all-electric vehicles, not only because the consumer demand is still very low, but also because the technology isn’t developed enough to make them a cost-efficient use of energy and electricity yet.

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