One of my engineering professors once said “there’s a right and wrong way to scratch your ear. The wrong way is like this,” reaching over the top of his head with his right hand to his left ear. “If you want to scratch your ear, do it this way,” raising his left hand directly to his left ear. The principle – for example, to carry a load to the ground by putting a column directly under it where possible – is exquisitely important in the formation and design of public policy and violated by the CAFE (Corporate Average Fuel Economy) approach to energy efficiency. Wading into the discussion earlier today; I love my fellow bloggers even when they are wrongwrongwrong, pant pant pant…
The layers of complex, tortured programs (whose implementation is a bureaucratic nightmare) that we are assembling to reduce oil imports and greenhouse gas releases are scratching our ear the wrong way, but at a Plastic Man level. For one thing, CAFE is only approximately related to actual fuel use, because manufacturers get to count cars as though they were all driven the same amount, and they are not. CAFE does exactly nothing to encourage the most effective thing we can do to slow global warming, which is to drive less.
For another, vehicles that operate on biofuel rather than gasoline holed it below the waterline, so a patch was applied: the CAFE credit for a vehicle designed for ethanol is increased as though that car will be driven on ethanol a lot, but of course E85 fuel is only available here and there, so the policy instrument is still further divorced from the desired effect. The inevitable complexity of calculating and applying CAFE rules invites undermining it with exceptions of all sorts, especially including the exemption of light trucks and SUVs that the manufacturers achieved. Why do we want to suppress petroleum use in a car but don’t care if it’s burned in a pickup? CAFE is part of a leaky policy flotilla, sailing along with the ridiculous 50c ethanol subsidy, on which we are slapping patches without end.
This is the time, with the Stern report out and Gore’s movie still working on public consciousness, to go for the right mechanism for the task, a simple and transparent device that makes attempts to slip spanners between these or those cogs visible: a carbon charge. This charge, imposed on every pound of fossil carbon going through the market (but not atmospheric carbon captured by a plant and sold in, for example, ethanol) will immediately infuse the energy system with efficient incentives to use this scarce resource (atmospheric capacity to accept C) where it does the most good. It will go on working as technologies and habits arise that we can’t imagine now, and therefore can’t explicitly include in a regulatory model like CAFE. It’s adjustable up or down in small increments as we observe its effects without threatening the sudden obsolescence of large amounts of capital or requiring an instant change in living habits from those who have good reason to go slowly. It rewards better behavior instantly without requiring anyone to invest in anything bigger than a good pair of shoes or a bicycle.
Why would we favor a coercive, directive, rigid, and sloppy policy instrument like CAFE standards in preference to something simple, precise, effective, and perfectly targeted? For some reason, my right-thinking green friends have a verbal tic that makes them say “…of course, that’s politically impossible” every time they admit a carbon charge trumps every greenhouse gas reduction alternative. But they’re wrong, and will be wronger if they stop repeating this bromide. It’s no more politically impossible than an excise tax on beverage alcohol. Let’s stop retreating before we even see a flake of Moscow snow.