There’s plenty of high-minded rhetoric at the UN climate change conference in Paris about getting serious about the threat of climate change. According to the Los Angeles Times, Secretary of State John Kerry is optimistic that, “even without a specific temperature-change limit and legally binding structure, a climate change agreement that negotiators in Paris are hoping to reach this week has the potential to change the world.”
Kerry said that if the more than 190 nations at the Paris conference sign on to a plan in which they have confidence, the private sector will take the reins and innovate new sustainable-power technologies that will ease climate change.
The theory seems to be that if we convince the market that we’re really, really serious about doing something about climate change, then patterns of innovation and investment will change, and we’ll create and actually invest in the kinds of things that will lead to big emission reductions.
But back in Washington, the new FAST Act, and our eagerness to hide from ourselves the true cost of our transportation, are making a cruel joke of that rhetoric. The signals we’re sending, in terms of policy and prices, are leading us to drive and pollute more—making it harder to do anything to solve an increasingly evidence climate crisis.
As every driver knows, the price of gasoline has plunged by more than a dollar per gallon in the past year. If ever there were a time when it might be politically possible to ask drivers to pay just a slightly larger fraction of the costs of building and maintaining the roads they use—not to mention the costs of polluting the atmosphere—you’d think it would be now. But you would be wrong.
Cheaper gas is already prompting Americans to drive more—but the damage will last much longer than the low prices. That’s because cheaper gas is also prompting people to buy heavier, dirtier, less-fuel-efficient new vehicles. According to the University of Michigan, the average fuel economy of the typical new car sold today has declined from a high of 25.8 miles per gallon last year to about 25.0 miles per gallon today. That may not sound like a lot, but it’s a scary development for several reasons.
For one, cars are long lived assets, so poor fuel economy today locks in a lifetime of inefficiency. The typical new vehicle lasts more than 15 years and chalks up more than 150,000 miles. Over its lifetime, a vehicle that gets 25 miles per gallon will consume about 186 more gallons of gas than a car that gets 25.8 miles per gallon.
To get an idea of what that means, let’s think about the number of cars that will be sold over the next five years—the lifetime of the FAST funding package. Currently, cars and light trucks are selling at an annual rate of about 17 million units per year. At that rate, Americans will buy about 85 million new cars over the next five years. If they all have a fuel economy of 25.0 miles per gallon (and they don’t become less efficient as they age) rather than the 25.8 miles per gallon of cars sold last year, they’ll consume an extra 15.8 billion gallons of gas over their lifetime.
That has at least two important impacts worth thinking about.
First, each gallon of gas produces about 19.64 pounds of carbon. So the additional gasoline burned by buying less efficient vehicles will lead to about 140 million more metric tons of carbon being emitted into the atmosphere over these vehicles lifetime. (For reference, that’s about the same as the total CO2 emissions of the State of Georgia in 2013—136 million metric tons). And that’s simply because because of the low, low price of driving, consumers opted for less fuel efficient vehicles.
And second, over the life of these cars, consumers will have to pay for that much more gasoline. At the current national average price of about $2.25 a gallon, that works out to about $35 billion more over the life of the vehicles purchased in the next five years. To put that number in context, recall the the subsidy for the FAST Act comes from diverting $58 billion from from reserves of the Federal Reserve system. So new car buyers will end up spending about 65 cents more on gasoline for their less efficient, more polluting cars for every dollar shifted from the banking system to subsidize roads.
Transportation continues to be one of the principal sources of greenhouse gases. So while the world’s leaders, including those from the US are making serious-sounding noises in Paris about finally needing to something about climate change, the bipartisan policy consensus in Washington is to continue a system that insulates drivers from the costs of their actions, and by doing so encourages more driving, less efficient vehicles and more pollution.
Secretary Kerry is right: we need to send the private sector (and that includes consumers) clear signals about the seriousness of the climate change problem so that they make sound decisions about how to invest. But the short-sighted decisions we’ve made to continue to insulate car users from the costs of their decisions, coupled with the very low price of gasoline (which itself doesn’t reflect at all the damage that burning it does to the climate) is prompting Americans to drive more, and to buy dirtier, less-efficient vehicles that will only make it harder to tackle climate change.