Colorado officials are painting a rosy picture of the impact on the economy and the environment from its low emission vehicle standards’ known as the Colorado Low Emission Automobile Regulation, or CLEAR.
State officials prepared an initial economic impact analysis of the regulations, which replicate California’s expensive auto emissions standards, in May. The analysis is overly optimistic of CLEAR’s impact that fails to consider the higher costs the policy will impose on poor, minority, and rural communities. In return for these costs, it is unlikely the policy will meaningfully reduce greenhouse gas (GHG) emissions.
In fact, new government mandates are unnecessary to reduce GHG emissions in the Rocky Mountain State. State data collected by the U.S. Energy Information Administration shows carbon dioxide emissions have been declining in Colorado since 2007.
The state analysis also made unrealistic assumptions when estimating the total greenhouse gas reductions that CLEAR will achieve. The state claims that 2.2 million metric tonnes of GHG emissions will be reduced between 2023 and 2030. But the analysis fails to account for the global emissions impact from producing electric vehicles.
According to Bloomberg, producing electric vehicles creates up to 74 percent more emissions than the production of gas-powered vehicles. So even though the daily use of electric vehicles emit less GHGs relative to gas-powered vehicles, those electric vehicles begin operations from an emissions deficit.
An emissions break-even point exists, consequently, which is when the lower annual emissions of the EV have covered the relatively higher emissions released when producing electric vehicles. Based on an analysis from Germany, the break-even point can be as long as 10 years compared to fuel-efficient gas powered cars.
Unfortunately, many EVs may not even be on the road long enough to reach the break-even point.
Take the problem of degrading batteries. Just like smartphones, the “full capacity” of an EV battery degrades over time. Worsening this problem, new data from AAA shows that the average driving range of electric cars drop by 40 percent when temperatures fall below 20 degrees Fahrenheit, and 17 percent when they climb past 95 degrees. These temperature extremes are within the seasonal norms across the state, meaning Colorado’s wide temperature variations will worsen the battery efficiency problem and further reduce the potential net emission reductions from CLEAR.
Accounting for all these factors, from a lifetime perspective, it is likely that electric vehicles will only enable slight net emission reductions at best.
Then there is the issue of costs. EVs cost more to purchase, but they do cost less to operate. A University of Michigan study found that the average annual cost of driving an electric vehicle in Colorado is $454, a little more than half the costs of operating a gas-powered vehicle. Yet, these annual savings are insufficient to economically justify an EV for most families.
Based on current finance rates, these annual savings imply that electric vehicle owners must own their car for more than 11 years before the operating cost savings exceed the higher purchase price of an electric vehicle. The more than 11 years needed to recoup an investment in an electric vehicle also coincides with the average age of an automobile in operation in the U.S., according to the U.S. Department of Transportation.
Colorado’s fight to lower emissions is a copy of California’s low emission vehicle standards. Instead of the overly-optimistic scenario estimated by the state, it is more reasonable to expect the same economic impacts California has endured. These include state electricity and gas prices that are among the highest in the country, and a crushing problem of energy poverty that helps make California an unaffordable place to live.
Policymakers in Colorado would be smart to demand honest answers from state government officials before rushing to impose a program that could have significant, negative impacts on hard-working Coloradans.
If they do, they’ll surely ditch CLEAR in favor of proven, free-market reforms that have successfully lowered emissions without hurting the economy.
Dr. Wayne Winegarden is a senior fellow in business and economics at the Pacific Research Institute, and author of a new brief on CLEAR. Download a copy of the brief at www.pacificresearch.org.