Should Michigan enact laws to subsidize alternative fuels? Should we mandate the use of electric cars or other vehicles that don't use gasoline?
Subsidies and mandates for alternative fuels are being discussed in Lansing now, thanks in part to a law passed by Congress four years ago. That law mandated that 75 percent of the half-million vehicles the federal government maintains be fueled by something other than gasoline by 1999. It also required that state governments start changing the composition of their own fleets to favor more alternative fuel vehicles (AFVs). One bill in Lansing would begin pushing the state's fleet in that direction, while an effort to make county governments do the same was abandoned at least for now. Another bill would give a special tax credit to buyers of AFVs.
A California law would have forced automakers to begin selling thousands of electric cars to the general public there in 1998, even though today fewer than 1,000 such vehicles are on the road in the entire country. By 2003, electric cars were to comprise 10 percent of all cars sold in California annually--at least 200,000 vehicles. In the face of withering criticism from scientists, engineers and economists, the state has backed off somewhat, and the 10 percent mandate will now take effect in 2005. General Motors, Chrysler and Ford, as well as the big automakers of Japan, will face fines of $5,000 for each car under the required threshold.
Electricity from batteries is one of several alternative fuels that some legislators want to force-feed the marketplace. Others include methanol, ethanol, and other alcohols, hydrogen, compressed natural gas, coal-derived liquid fuels, and liquefied petroleum gas. All of them are championed as fuels that will reduce oil imports, give the economy a boost, and cut pollution.
The truth is, skepticism about a product is warranted any time it takes special favors or penalties against the competition to gain acceptance for that product. The questions Michiganians need to ask are these: If alternative fuels are all that they are cracked up to be, why do politicians have to get involved? Why can't AFVs succeed on their own?
The case for any significant market presence for electric cars, it turns out, is more hype than substance. They are extremely expensive--costing between $28,000 and $48,000 to make. The batteries for them start at $1,500, and they must be re-charged for at least five hours after driving less than 150 miles. And while the cars themselves are nonpolluting, the General Accounting Office in Washington says the plants that make the power to recharge them may pollute the air more than gasoline-powered vehicles.
Another unintended consequence of requiring electric cars involves an environmental hazard related to batteries. Carnegie-Mellon University researchers maintain that when lead leakage from the production and reprocessing of large quantities of lead batteries is taken into account, electric cars would release far more lead into the environment than conventional cars using leaded gasoline!
Writing in the January 1996 issue of Technology Review, a team of experts from the Massachusetts Institute of Technology rendered this conclusive assessment of electric vehicles: "An attempt to legislate the results of the research and development process is . . . unrealistic and unworkable. It is one thing to goad manufacturers to stretch their capabilities within the framework of an existing technology, as was done for catalytic converters and air bags. It is quite another to force them into technologies whose possibilities are not known."
The other alternative fuels in use or on the drawing boards share at least some of the same problems. They require massive subsidies to hide their real costs and make them seem affordable, or they have limited application, or they cause substantial consumer inconvenience, or they generate unintended, harmful side effects. Time and technology may work the bugs out and make them economically feasible, but that process will be stymied or misdirected if the near-sighted bias of politicians overrules the marketplace.
In any event, cleaner fuels used in today's more efficient cars emit a small fraction of the pollution that cars did thirty years ago. Even without any conversion to AFVs, the new cars coming off assembly lines by the end of this decade will simply not pose a pollution problem worth worrying about. Alternative fuel mandates, analysts at the Reason Foundation in California argue, would price these new cars out of the reach of many Americans, particularly the poor, who would then keep their older, more polluting cars longer.
Patrick Bedard put it well in a December 1993 article in Car and Driver magazine entitled "Why Alternative Fuels Make No Sense." He stated, "The promises made for the alternatives to gasoline are very seductive. And you know how seductions turn out."
If Michigan legislators embark upon another dubious effort to micromanage the marketplace, we may all want to reach for both our wallets and our oxygen masks.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
Please consider contributing to our work to advance a freer and more prosperous state.
