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Do Proposed changes to ZEV Mandate further the cause of reducing air pollution in California or simply give car makers the chance to meet their own time tables?

Before the Storm - An Open Letter to the California Air Resource Board

An Open Letter To California's Air Resource Board

By David C. Navas

To the Board and other interested parties:

It is my hope to make constructive comments and propose improvements to your staff's proposed modifications to the ZEV program. It is clear to me that, if these modifications are adopted without change, any hope that the consumers of the state of California can participate in the process of cleaning the air by buying a ZEV evaporates. In my opinion, these rollbacks do more to remove the hope of a ZEV future for California than the 1998 rollbacks did. However, they contain a number of interesting suggestions, which, if more appropriately targeted, could in fact increase the long-term chance of success for the program.

Summary of Opinion

There are a variety of modifications which I feel are in error and introduce barriers to the meaningful introduction of ZEVs to the marketplace. Of particular concern is the hydrogen fuel-cell vehicle credit coupled with credits for delivery to “demonstration programs”. With 10 ZEV credits per vehicle, auto manufacturers can deliver a handful of fuel-cell vehicles to a couple of demonstration fleets and fulfill the mandate. Additionally, I feel that the 50-mile requirement is too low, the multiple increases for hybrid and PZEV vehicles are alarming, and the apparent disregard of the growing problem of the SUV is shocking.

Unfortunately, I cannot rationalize the stated objectives of these modifications to the clear results that they would have. Most in no way substantially improve the chance that the ZEV market as proposed for the year 2003 can be scaled to meet future requirements. Indeed, many can act only to decrease the chance that a ZEV market of any significant percentage will ever exist in California. While staff notes little change in near-term emissions, the effects of these modifications to the long-term viability of the program are not addressed. Perplexingly, in its place is a detailed analysis of the automaker-borne cost of the program.

In general, staff suggests that the rules of the game change yet again, allowing extra time for the automakers to satisfy these new rules. Because it hasn't yet been made clear that staff is willing to stick to any particular strategy or timetable, it isn't clear to me that automakers will take these new rules with any more seriousness than they took the old ones. I find this kind of meandering policy to be fundamentally flawed. While I'm sympathetic to the notion that markets change, and policy must change to reflect them, these proposed modifications are unevenly weighted to give advantage to automakers by ignoring the changes in the distribution of car sales between passenger cars and SUVs, while pressing ahead based on technical advances (and lack thereof) in the PZEV and BEV markets.

Detail of Opinion and Suggested Alterations

Adjustments to the rate and timing of ZEVs and PZEVs

Many of the changes to rates and timings are likely to be benign, and the increased focus on PZEVs may indeed incent higher US research in the area. However, increasing PZEV and early ZEV credits decreases the availability of battery EVs. This is clearly at odds with the objective to “ensure that an adequate number of battery EVs is available in the near term.” While modifying the timing on PZEVs may more closely match Ford and GM's timetable for introducing better pollution control devices, it isn't Ford and GM's timetable that should concern the ARB. Nissan, while nearly on the verge of bankruptcy, managed to tack on an additional two catalytic converters and produce a qualifying automobile (the Sentra CA -- which I own and use every day). I find it difficult to believe that GM and Ford would have to do a full redesign of any of their vehicles to accomplish the same thing.

In short, I fail to see the justification for these changes. The PZEV alternative has existed since 1998 (1996?), and it isn't the responsibility of the ARB to come to the rescue of under-funded research efforts made by US car manufacturers operating in a state of denial. The timeline has already been moved back a couple of times. A stand needs to be made at some point. If not now, when?

Modifications to the Incentive Structure

Classifying 20-mile range hybrid-electric vehicles as ZEVs

Allowing hybrid vehicles to qualify as zero-emission vehicles is a mistake similar in nature to Arizona's attempt to build interest in natural-gas vehicles by paying for bi-fueled vehicles. Consumers have shown an inclination for disregarding the alternative-fuel capabilities of bi-fueled vehicles. HEVs that aren't required to be plugged-in will face the same problem. As there is little that can be done to force consumers to use them the way the ARB would like to see them used, I don’t think this is a useful modification. There are already incentives for producing home-rechargeable hybrid vehicles. Hybrids should continue to qualify for these PZEV credits. The modification to allow them to gain full ZEV status serves none of the stated objectives, decreases the availability of pure battery-electric vehicles, and may serve to disenchant the California public in the same way as the Arizona public is with alternatively-fueled vehicles. CARB can call a hybrid a ZEV, but the public knows better, and the political fall-out from playing games with dictionary definitions is bound to be well-publicized. Can CARB really take that chance?

Modifying the ZEV range credit

Decreasing the required ZEV range to fifty is another ill-considered measure. Fifty miles is about the range at which most consumers refill their gas tank. To believe that an auto that gets a maximum of fifty miles would be acceptable to the public is to yield to the unrestrained enthusiasm of certain EV advocates. While fifty miles is undoubtedly sufficient for a majority of the daily use of vehicles, a quick check of public opinion will show you that it is not sufficient in the mind of the public. The program must evolve to encourage the development of vehicles that will gain widespread popularity, not just barely meet average needs. Otherwise, the program’s future is in jeopardy. Additionally, a 50-mile range vehicle may well have a practical range of 30-35 miles – an EV1 experience which need not be repeated to be learned from, surely. If 100 is too high, 50 is too low. Pick another number. In addition, the 275-mile top-range is far too low. It is lower than the range of most gasoline-powered vehicles. If you are willing to hand out 10 credits in exchange for range, you should pick a number at least in-line with the range of existing vehicles.

The disadvantages of the above two modifications pales in comparison to the damage resulting from the rise in hydrogen fuel-cell credits. Allowing 10 credits for fuel-cell cars will, for all practical purposes, completely eliminate the possibility that any battery electric vehicles will ever be produced. If automakers can build one-tenth the number of cars, and offload them exclusively to fleet operators, the result will not only be zero ZEV public availability, but also zero improvement to the hydrogen and/or electrical-recharging consumer infrastructure of the state. Without direct ties to improve the real shortcoming of fuel cells – the lack of a widespread refueling infrastructure – any fuel-cell program is doomed to ephemeral demonstration projects. While this fate might suffice for the short-term, surely the Board can see this suggestion for the dead-end that it is. Even though I have a non-trivial investment in Ballard Power Systems (a fuel-cell company), I think the over-emphasis on fuel cells plays to a wildly optimistic view of the future, rather than being grounded in known fact. See below for my comments regarding SUVs for an alternative way to encourage fuel-cell vehicles and research without concomitant detriment to the ZEV program.

Additional credits for longer road-worthiness of BEVs

Although well intentioned, giving extra credits for vehicles that last beyond three years is like giving extra-credit for meeting expectations. BEVs should only count towards full credit if their vehicles stay on the road as long as the 'average' car. This is much more in keeping with the PZEV requirement of extended warrantees. While I see no benefit in allowing the automakers to sell the same car multiple times over the course of multiple 2-3 year leases, neither do I see the advantage in giving them extra credits for keeping them on the road for as long as existing gasoline-powered automobiles. Indeed, in practice, there is little difference. Instead, I suggest a phased-in requirement: that zero-emission vehicles maintain a 3, then 5, then 10-year presence on the road, guaranteed by warranty as the PZEV program requires.

Credit multiplier based on vehicle efficiency

Certainly, credit multipliers for higher vehicle efficiency serves to get higher-efficiency cars on the road more quickly. However, efficiency must be measured well-to-wheels. CARB has already suffered the fallout of calling electrically-recharged vehicles ‘zero-emitting’. Critics point out (in often exaggerated fashion) that BEVs just move the emissions elsewhere. Measuring just vehicle efficiency is another such mistake that should be able to be corrected quite easily by creating fuel-specific multipliers to correct for the well-to-pump inefficiencies.

Allowance for vehicles that aren't sold

How can you allow vehicles that never reach the consumer to participate in fulfilling the ZEV mandate? Vehicles that aren't for sale aren't available. It is a mistake of unimaginable magnitude to allow automakers to gain 100% of the benefits of a ZEV program (fulfilling mandates as well as gaining favorable press) without contributing to the future ZEV infrastructure. If automakers want to earn points, they need to take their vehicles to the public, not just deliver them to one-off, unrepeatable, unscalable demo sites. The point of this mandate is not prototype vehicles, it's cleaner air.

Requiring vehicle placement

Requiring vehicles to be available is at least a step in the right direction. Again, vehicles that aren't sold shouldn't really count, as they aren’t cleaning the air while they sit in a parking lot. However, we have a problem with availability that requires giving credit to automakers for effort. Requiring vehicle placement should probably increase as time moves on. At some point, effort shouldn't count at all, only sales. Perhaps a suitable modification would be to decrease the credits available to cars that don't sell in later years.

Issues not addressed in staff suggestions

SUVs

Since 1990, the market for automobiles has changed drastically. The public is buying far heavier vehicles while shunning the lighter vehicles born of the last energy crisis. The SUV plays a pivotal role in increasing vehicular emissions, decreasing vehicle efficiency, and increasing strain on the state’s ability to deliver sufficient fuel to the consumer. Just as clearly as the technical landscape has changed for ZEVs and PZEVs, the landscape of actual car sales has changed.

While it’s clear that the landscape has changed, nothing in the staff report addresses this change. My suggestion is to create a mandate specifically targeting the SUV market segment, extending the ZEV mandate to cover this previously ignored segment, while allowing fuel-cell and hybrid vehicles to count only towards this piece of the mandate. This segment would get an extended deadline (several additional years). This suggestion recognizes that the fuel-cell and hybrid drive-train are likely to be a better match for the large-truck market than the small-car market; increases the research into fuel-cell vehicles and fuel delivery; addresses, in some part, the problems that the SUV poses on the market; and allows the auto manufacturers to research the viability of these vehicles without impinging on the success of the existing 4% ZEV mandate. Given that the fuel-cell, hybrid drive-train, and SUV are new developments, it makes sense to give this market additional time to mature. Tying the current ZEV mandate in with completely unproven fuel-cell technology, however, would seem to set the ZEV schedule back at least half a decade when battery breakthroughs were just as promising as fuel-cell breakthroughs appear today.

Tradable credits

I believe it was AC Propulsion that suggested that if automakers could not meet these commitments, then they should be allowed to purchase credits from companies that build cars that do. Obviously this was a self-serving suggestion; nevertheless, I am heartily in favor of such an option and am surprised that staff did not suggest it. It allows new, possibly California-based, automaker-startups to gain a toehold in the competitive auto market, and it alleviates the automakers’ complaints about lead-time-to-market. I can see no downside to it, and would like to see it, or something like it, at least mentioned somewhere.

Review

As the CARB is no doubt aware, watered-down mandates can be dangerous to the welfare of environmental programs. Each concession brings with it loopholes which consumers and manufacturers alike are likely to take advantage of. Each loophole begins to turn public opinion against these programs. Each change in direction and guidance leaves affected companies bewildered. A strong, steady hand is required in the near term to garner the payoffs that CARB has stated they wish to see. Criticism from both sides is inevitable. I plead with you, as my last hope that I'll ever breathe clean air in this state, to stand your ground. A ground swell of support in this and other states should indicate that the public currently supports you.

My most sincere wishes for success,

Times Article Viewed: 5392
Published: 01-Jan-2000

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