July 25, 2016 Categories: California Fossil Fuels Low-Carbon Fuel

Consumers Win From California’s Clean Transportation

If you read this blog regularly[1], you have probably noticed that the phrase “California has been a global leader in climate policy” appears rather frequently. The repetition of this statement is partly to demonstrate my firm grasp of the obvious and partly to recognize California’s critical role in global climate policy. Climate change may be the most dire challenge facing the world in the next few decades and if not for California’s leadership, we would be in much worse shape than we are. Critics of California’s climate policy overstate the costs of this leadership, asking how much consumers should pay to maintain this leadership position. If you ignore the ever-warming elephant in the room and focus on the near term economic impacts, this is a fair question. Fundamentally changing our energy economy will require real investments in clean energy.

Over their full lifespan, sustainable energy technologies have an innate cost advantage compared to fossil fuels, since they require no fuel. Still, it is perfectly fair to ask whether these benefits justify our investment. A recent report from the Consumers Union seeks to answer this question. It evaluates the costs of, and savings from California’s sustainable transportation programs by modeling likely fuel consumption and vehicle fleet scenarios with and without the effects of California’s transportation policies, including the Low Carbon Fuel Standard, Zero Emission Vehicle Mandate, tailpipe emissions standards and Sustainable Communities Strategies.

The report concludes that the combined effects of California’s sustainable transportation policies will save consumers billions of dollars by switching away from the oil company oligopoly to cleaner, renewable fuels; these savings easily exceed the investments in clean transportation required to produce them. Californians will save billions more from reducing the health and climate impacts from transportation. The report also evaluates the effects on different income groups and finds that lower income families often benefit more from these policies because the fuel savings represent a bigger fraction of their budget and their communities currently suffer more than rich ones from vehicle-related air pollution, and so have more to gain from cleaner air. Far from being too expensive for us to afford, sustainable transportation is also more affordable transportation.

Before we discuss the results of this report in depth, let’s pause a moment and consider the source. The Consumers Union is the publisher of Consumer Reports magazine and an avowedly non-partisan and non-commercial organization. The consultants who did much of the work, ICF International, are a well-respected energy research firm that has recently been employed by both the fossil-fuel industry and environmental organizations[2]. All of this is to say that this report is as free from bias as any you’ll find on such a highly politicized subject.

The report has several key findings:

 

The average household will save $1,200-$1,500 on fuel each year.

 

Even when you consider policies which add a “polluter pays” fee onto gasoline, such as the cap-and-trade program, California’s policies have dramatically improved the efficiency of the vehicle fleet and will continue to do so. These fees add further incentive for efficiency and reward companies that have brought clean, efficient products to market.

Consumers save by powering their travel with electricity rather than gas.

Fueling a car with electricity is significantly cheaper than fueling it with gasoline. Source: U.S. Dept. of Energy eGallon tool. Data accurate as of 25 July, 2016.

In addition, an ever-increasing number of people are replacing gasoline with electricity from the electrical grid, through battery electric vehicles and plug-in hybrids. The lower cost of electricity and higher efficiency of electric motors means this is a substantial savings for consumers, as well as better for the climate.

California Consumers Are Less Exposed to Oil Price Fluctuations

 

Petroleum markets are volatile. California’s is especially so, aging refineries, limited pipeline connections to other regions and, allegedly, price manipulation  by oil companies. Price swings hurt consumers and businesses, by unexpectedly stressing budgets and complicating long-term plans. No matter whether you think prices should be high, to reflect the damage gasoline causes to the environment, or low, to minimize the financial impact on struggling businesses and poor families, everyone agrees that volatility is bad news for the economy. California’s policies have decreased the lowest income groups’ exposure to fuel price volatility by over 40%.

 

Reduced Congestion Burns Less Fuel and Gives People Hours of their Lives Back

 

If you, like more than 80% of California’s population, live in a major city, you are probably acquainted with traffic jams. LA’s worst-in-the-nation traffic consumes 90 hours per year of its residents’ precious time. California’s Sustainable Communities Strategies instruct local transportation planning agencies to emphasize transit-friendly, walkable and bikeable communities, to reduce the need for people to commute. While these policies cannot solve the traffic problem, they have improved the situation significantly. The report predicted that the average Californian will suffer 20 hours per year less congestion in 2030 because of these policies than what they would have otherwise. At a conservative value of our time, that’s $6 billion dollars of productivity that would otherwise have been lost to traffic over the next 15 years.

 

Lowers the Damage from Air Pollution

 

Burning gasoline doesn’t just contribute to climate change, it releases many harmful air pollutants, such as particulates (soot) and chemicals that contribute to ozone formation. Because people mostly drive near populated areas, these pollutants are emitted where they can do the most harm, near homes, schools and businesses. California’s policies incentivize reduced fuel consumption and shifting to cleaner sources of energy, reducing these burdens. ICF estimates that the health benefits of these reductions are around $1.3 billion per year, from lower health care costs and fewer sick days.

Similarly, every ton of carbon dioxide emitted harms people through things like sea level rise, crop failure, wildfires, etc. Current research estimates that damage to be worth somewhere between a few dollars to a couple hundred dollars per metric ton of carbon dioxide, depending on the assumptions you make and how broadly you define “damages”. Most estimates center around the $40-50 range. Avoiding these damages is worth a few hundred million to a couple billion dollars per year, depending on which estimate you use.

 

A Great Deal for Californians

 

There are also quite a few other, more difficult to quantify benefits from sustainable transportation. Walkable and bikeable communities improve public health, unify neighborhoods and increase property values. Reducing gasoline consumption reduces global oil prices and protects the national economy from oil-induced recession. Electric vehicles help the grid accommodate renewables, while biofuels can support struggling farm communities.

All in all, the critical question isn’t whether our sustainable transportation policies are worth the cost, the question is why aren’t we doing more?

 

 

 

 

[1] Thanks!

[2] Including NextGen Climate America, which contributed to the Half the Oil: Pathways to Petroleum Reduction on the West Coast report.

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