RAND Argues Cleaner Air Aspirations May Be Wrong-Headed -- California Capitol Hill Bulletin -- Volume 10, Bulletin 2 -- January 30, 2003

Zealous pursuit of a new policy that mandates an increase in production and usage of zero emission vehicles in California may be headed in the wrong direction, suggest Lloyd Dixon and Steven Garber, senior economists, and Isaac Porche, an engineer, at RAND. In their article, published in the Fall 2002 issue of Rand Review, the authors argue that the state's new policy on cleaner air, which places a heavier emphasis on California's Zero Emission Vehicle (ZEV) program and departs from the Voluntary Accelerated Vehicle Retirement (VAVR) program, is unwise, can only be achieved at a tremendous cost, and diverts resources from less costly alternatives.

Begun in 1994, the VAVR program removes some cars and light-duty trucks 15 years old or older from the road by paying auto-dismantlers to buy and scrap them. It applies to about 2 percent of such vehicles in the state. The cost of the program was estimated at $100 million per year for ten years, or $1 billion over a decade. The state, having been unable to find money to fund the program, instead moved to a more vigorous implementation of California's ZEV program. Under ZEV, auto manufacturers are required to sell at least 4,000 vehicles that emit zero pollution in the state in 2003, with the mandated number of emission-free vehicles scheduled to increase gradually until finally being capped in 2015. The Bush Administration supports zero-emission cars, and that support may lead to increased funding for state research efforts.

The authors, however, argue that the ZEV approach takes desperately needed resources away from, and is much costlier than, the VAVR program, and call for a return to buying and scrapping old, polluting vehicles. The authors also make six recommendations to California lawmakers. They advocate reviving the VAVR program, eliminating the zero-emission vehicle production requirements or delaying them, or allowing fewer numbers of fuel-cell vehicles to satisfy the requirement in the early years, and discarding the goal of reducing emissions down to zero. In addition, the authors suggest requiring passenger cars and smaller light-duty trucks to meet partial zero-emission vehicle (PZEV) standards since the ZEV requirement is "at best a very risky bet on cost-effectiveness grounds". They also think that the state should focus on emission standards and not technology mandates.

For more information about this report, please visit RAND's website: www.rand.org.

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