Course:ECON371/UBCO2010WT1/GROUP7/Article8

www.energyandclimate.org/alternative-fuel-vehicles.html

Summary: The article, “Alternative Fuels and Alternative Fuel Vehicles” highlights some of the problems with AFVs and the obstacles associated with their attempted entry into mainstream transportation. The first problem the author notes is with some of the attributes of the vehicles themselves. These vehicles have some problems that conventional vehicles do not have . Therefore, in order for these vehicles to succeed often the government must intervene with incentives to help the AFV industry. The second problem is that these vehicles are not cost effective in terms of fuel efficiency. Relating to the first problem the author proposes that there are issues with AFVs that are stopping them from being successful. The first issue is the first high cost of a vehicle. An example is the high price of hybrid cars compared with the gasoline versions of the same car, or a even a lower cost fuel efficient car. The second problem is a fuel storage problem. The limited range of electric cars or the limited battery capacity of hybrids is a big deterrent of buyers. Safety and liability is also an issue with AFV vehicles. Some electric cars are quite tiny and cannot absorb a lot of interest, and a fuel additive such as MTBE has been deemed unsafe. High fueling costs and limited fuel stations are problems five and six. The issue of not having enough stations is clearly a chicken an egg problem; without enough cars on the road there is no incentive to build fueling stations, without any fueling stations there is no point in buying electric cars. The last reason, he gives is the improvement in conventional fuel vehicles. With new technology gasoline and diesel cars are becoming far more fuel efficient and therefore make it less and less practical to buy an expensive AFV vehicle. The author also notes that initiatives put in place by Canadian and Californian parliaments to replace gasoline vehicles with AFVs by at least 30% have miserably failed. The actual replacement of these vehicles is less that 1%. The article concludes with some optimism for AFVs , by pointing to select hybrid cars that do not need fueling stations as they can be charged at home and also use conventional gasoline. The savings in fuel from these vehicles coupled with government incentives can offset their high prices, and the greenhouse gas emissions are substantially lowered.

Analysis: The first thing to note is that an environmental policy was put in place and evidently failed. This of course was the promotion of substituting conventional fuel cars with AFVs. Perhaps if more time had been spent on cost-benefit analysis the another policy rather than this one would have been initiated as it is clear that regardless of the cost of this policy there has been almost no benefit. Using the cost benefit model in the present is also applicable. As the author states AFVs are a fairly expensive technology to how much efficiency they produce. A different policy might have been to put money into the researching of our existing fuel technology and the improvement of it efficiency. Incentives to buy fuel efficient cars also might have been a better policy to implement. However hindsight is 20/20 and some policy failures cannot be seen. One policy that should be explore is that of standards. Standards would force every vehicle on the road to adhere to a certain emission level. This would give vehicle owners and vehicle producers to drive and make low emission cars. AFV might progress more quickly in that case. Taxing car emissions would have the same effect as standards. However putting standards or taxing emissions poses the problem of measurement. It may be a very difficult and/or expensive progress to try and measure every car on the roads emissions. Technology here is the problem and as the article points out it is also a problem with AFVs Technology is not quite developed enough to put AFV on in mass numbers on the road. Some technologies do take longer to mature so as stated before for present governments and companies should direct there resources towards fuel efficient gasoline vehicles and AFVs that are practical in the present such as hybrids. However it is important to keep in mind that AFVs like the early stages of electricity and the computer, technology is not always productive or efficient at the beginning. There are always growing pains of technology however this does not mean that is not worth it, it would be hard to find a handful of people who don’t find electricity or the computer a useful tool.

Prof's Comments

Important issues here include technological innovation and incentives. The incentives seem to work for hybrids. The fuel savings, the purchase subsidy, and the good feeling of driving a greener car are enough to get many buyers on board. For hybrids, these are the only costs. For electric, add some of the other costs.

A good approach for this analysis would have been to take the list of barriers in the article and discuss them in the context of MD and MAC, and consumer incentives (supply and demand).