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Are electric car subsidies a good idea?

Scott Tong Oct 19, 2010

Are electric car subsidies a good idea?

Scott Tong Oct 19, 2010


JEREMY HOBSON: We are just a couple months away from expiration day
for some key subsidies for fuel-efficient cars.
Specifically, tax breaks for hybrid vehicles and charging stations for plug-ins.

From the Marketplace Sustainability Desk, Scott Tong reports.

SCOTT TONG: Here’s how a station works. Early adapter Rob Neighbour of suburban Washington has already got one in his garage. Neighbor pulls in his home in a special edition Toyota RAV4 EV — for electric vehicle. He walks over to a four-foot metal box, and pulls out what looks like a ping-pong paddle.

ROB NEIGHBOUR: And I put the paddle right into the car, which is a lot like putting an 8-track in a tape deck.

Voila, car starts charging. But the charging station costs $2,000. A federal tax credit covers half the costs, and before it expires in January, Jay Friedland at the advocacy group Plug-in America wants Congress to renew it.

JAY FRIEDLAND: If you look at all the technologies, electric drive — actually running the wheels to the ground on electricity — is the most efficient way to do it.

Electric cars are a favored child of the government. It also gives loans to alternative-fuel car developers and credits to buyers of plug-in vehicles.

MICHAEL LEIBREICH: There is an element of picking winners, there’s no question.

Analyst Michael Leibreich is with Bloomberg Clean Energy Finance.

LEIBREICH: In the scramble for clean energy, sometimes that’s gotten a little bit forgotten.

He wants the market to pick winners, not the government. Cause what if a different fuel turns out better? What if tomorrow’s game-changer isn’t even a car?

“INDIANA JONES AND THE LAST CRUSADE:” You must choose, but choose wisely.

We all remember the Indiana Jones movie, where Evil Nazi Guy picks the wrong Holy Grail? Historically, the feds have chosen poorly too, says energy subsidy analyst Doug Koplow. Take biofuels: Washington has poured millions into energy from plants — even though Koplow says the planting process can eliminate forests and land for growing food. A net minus to the planet.

DOUG KOPLOW: My concern is that a lot of these narrowly targeted, parochial subsidies will miss the bigger picture, and therefore make it much more difficult to solve the underlying problem.

Koplow prefers policy that’s neutral, say taxing carbon emitters to reflect the true cost of carbon pollution. That treats all the alternatives fairly. But for now that’s politically impossible, so electric car companies say keep up the subsidies for us as a way to do something now.

In Washington, I’m Scott Tong for Marketplace.

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