May 4, 2005

A Little Rain on the Prius Parade

As an ardent environmentalist, it may surprise you that I am not entirely sold on the hybrid revolution that has been initiated by the wildly popular Toyota Prius. Before I explain why, let me be clear that I think the Prius is a great car and there are many reasons to buy it independent of its fuel efficiency (e.g. it’s very quiet, it drives well, and who can’t appreciate the button instead of the key ignition?). The fact that the Prius is now somewhat of a status symbol while sales of Hummers have dropped precipitously is an unambiguously great thing.

The Prius (and other recent hybrids) are being touted as extremely fuel efficient and therefore, as an effective means of decreasing our dependence on oil and our CO2 emissions. Sales are way up and a wide variety of government-sponsored rebates for the purchase of “green” cars are currently in the works. The fact is, however, that hybrids are not really much more efficient than many conventional gas cars that have been around for decades. At this point, from a strictly environmental standpoint it’s likely that the added cost is not justified.

The Prius is listed at 60mpg city and 51mpg highway, but these numbers are for “ideal” conditions and are not realized in practice. I know two people who own a Prius and they get low 40s on the highway and mid-high 40s in the city (I’ve been told that the Honda Civics hybrids get slightly better mileage). While very good numbers, particularly when compared to SUVs, this mileage is not much better than for conventional compacts. Many Hondas and Toyotas get close to 40mpg and even a number of American brands get in the mid-30s. So for a Prius we’re only really talking about a 10-20% increase in efficiency over many other less expensive models when driving on the highway. While the city mileage is certainly better, people drive far fewer city miles, and there are many more public transportation options in cities. So the improvement in city mileage doesn’t cut into the bulk of gasoline demand, which is for highway commuting.

Let’s look at an average commuter who drives 12,000 miles per year. If we’re comparing a Honda Accord to a Prius the savings in gasoline is in the range of 30-60 gallons a year. A gallon of gasoline emits about 5-6 pounds of carbon and I’ll round that off to 10 since there’s also energy used in gasoline production. So that’s 300-600 pounds of extra carbon a year.

(Note: I am ignoring the possibility that once consumers purchase a highly fuel efficient car they may actually increase their amount of driving since it has now become cheaper, and therefore, cut into some of the CO2 reductions brought about by the higher mileage. Also, I am not taking into account the extra energy that goes into producing the lithium battery for the Prius and the CO2 that results.)

Now the question is: With the sticker price of a Prius roughly $4,000 more than a standard Accord with similar features is this a good deal for 600 pounds less carbon? (I’ll go with the high number)

(Note: while hybrid owners save money in gas they also have to pay a lot for battery replacements so I’m going to assume these costs and benefits cancel each other out.)

The way to answer this question is to determine how much it would cost to decrease CO2 emissions by an equivalent amount in some other fashion. One excellent way to accomplish this is by planting trees. Although estimating the precise amount of CO2 sequestration from trees is extremely complex, the amount of trees needed to annually absorb 600 pounds of carbon is very small; a tiny fraction of an acre.

So here’s my conclusion: If decreasing CO2 in the atmosphere is your primary motive it’s much more efficient to forego the Prius (and buy an Accord, Civic, or Corolla- perhaps even a used one) and spend the extra money on tree planting and the general preservation of open space.

This takes us to a general point on the issue of CO2 emissions that seems to have gotten lost in the larger debate these days. With such a focus on hybrids and the complete lack of political will to increase mileage standards (which is the most important thing we should be doing on this front) the role of forests in carbon sequestration is no longer at the forefront in the public’s consciousness (when was last time we heard about preserving the Amazon Rainforest?). This is unfortunate because not only do forests and open space decrease CO2 in the atmosphere, but they also provide a host of other environmental benefits (such as biodiversity preservation and watershed protection), and payment for these services can be an excellent way to help the poor in developing countries (although of course we can also plant trees here as well). Some amount of global warming is now inevitable and many species are going to need large areas to roam in order to adapt to the shifting climate; therefore, habitat preservation and expansion should be a top priority.

In addition, there are literally dozens of home energy conservation options (retrofitting windows, purchasing more efficient appliances, better insulation) that would cut down CO2 by as much as driving hybrids for a fraction of the cost. Unfortunately, much of the resistance to implementing these commonsense and relatively simple fixes is due to the shortcomings of human psychology; it’s much more sexy and feels more substantive to buy a hybrid car than to make basic home improvements.

None of this is to suggest that fuel efficiency and hybrid technology are not important; they are. People who are investing now in hybrid cars are fueling the demand, which will hopefully lead to successive generations of new technology that will have much higher mileage, perhaps even approaching 100mpg. When this happens hybrid cars will clearly be worth the added cost on every dimension. In the meantime, I recognize that what’s optimum from an economic standpoint is not always what’s politically or socially most practical; consumer trends and human psychology are powerful forces. That said, I think the money being spent on consumer rebates for hybrids would be better spent on direct public investments in R&D for hybrid technology, the protection and expansion of the world’s forests and critical habitats, and paying people to make energy conserving home improvements.

J.S.

*Thanks a lot to James Manley, Duncan Callaway, and Meredith Fowlie for their insightful comments and to Molly Norton for reminding me to write about this issue.

P.S. For a really good use of hybrids check out this article on NYC taxis.

Jason Scorse

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