May 1993

Electric Vehicles and Energy Policy, 1992-93:Environment and Economy Can Co-exist

by Perry Goldschein

While concern for the environmenthas gone from special interest to mainstream in the 1990s, at least one aspect ofthe environmental movement seems toremain the same. People place too muchemphasis on government action to solve ourenvironmentally related problems and toolittle emphasis on their own actions. Asconsumers, we demand and use the variousproducts and services that directly orindirectly pollute the air, land and water,create hazardous waste, cause globalwarming and destroy the Earth's ozonelayer. As Americans, we consume theseproducts and services in disproportionatelylarge quantities when compared not only tothe third world countries, but even to ourindustrialized counterparts. Nowhere is thismore apparent than in America's gluttonousconsumption of automobiles and oil.

To reduce our consumption of oil,the government is making it easier forAmerican consumers to purchase and usemore environmentally benign modes oftransportation. The Energy Policy Act of1992,' signed into law last October,provides tax incentives for consumers to buyalternative fuel vehicles. The Act alsopromotes electric vehicle research,development and demonstration, and aninfrastructure to support the sale and use ofelectric vehicles. In addition to the Federallaw, California requires that a certainpercentage of motor vehicles sold in stateproduce zero emissions by 1998.2Following this lead, several . othernortheastern states, required to meet Federalclean air standards, have indicated that theywill enact similar measures in the nextcouple of years.3 These combinedlegislative efforts will make electricvehicles, the only vehicles presently

producing zero emissions, 4 much moreaccessible in the near future.

This Article first compares theenvironmental impact of gasoline-poweredvehicles with that of electric vehicles.Second, the article analyzes and interpretsthe relevant sections of the Energy PolicyAct of 1992 promoting electric vehicleand infrastructure development,commercialization and use. Third, thearticle examines current events in theemerging electric vehicle industry and whatthe Energy Policy Act will mean to that

"As consumers, we demand and usethe various products and services thatdirectly or indirectly pollute the air,land and water..."

industry and to consumers. Finally, thearticle discusses other energy policies thatwould aid America's shift to electricvehicles and other, more environmentallyresponsible transportation technologies.

I. MOTOR VEHICLES AND THEENVIRONMENT

About half of the world's oil is nowconsumed by a fleet of over 500 millionmotor vehicles.' With nearly 200 millioncars and trucks in the U.S. alone, theNational Energy Strategy found that oil usein the transportation sector accounted fornearly 70 percent of the nation's total oil usein 1990.6 As recently as 1950, when therewere only 53 million motor vehiclesregistered in the world, their emissions wereof little concern.7 However, before theyear 2000 the planet will have a billionmotor vehicles.' Then, largely due to thepopulation growth of developing countries,

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this figure will rapidly climb toward twobillion. If all these motor vehicles were tobe gasoline and diesel fueled vehicles, thesheer volume of emissions would havedevastating environmental and health effects,not to mention the ancillary effects from oilexploration and transportation.9

.A. Gasoline-powered VehiclesHalf of all Americans live in areas

that do not meet Federal clean-airstandards. 10 The contaminated air that theybreathe can cause coughing, shortness ofbreath, chest pains and a myriad of otherpublic health problems including cancer."

"Driving gasoline and diesel fueledvehicles causes more of the nation's -and the world's - air pollution than anyother human activity."

The major culprit is automobile emissions.Driving gasoline and diesel fueled vehiclescauses more of the nation's -- and theworld's - air pollution than any otherhuman activity.12

Gasoline exhaust can cause eye andrespiratory-system irritation, and it containsa number of airborne toxics, includingbenzene, a known carcinogen.13 Recentestimates indicate that 182 millionAmericans face a health threat from ground-level ozone, the key ingredient inautomobile-induced smog. 4 In addition, arecent study by the University of California-Davis estimates that 25,000 people die eachyear from automobile air pollution,"5 andthe EPA estimates that toxic fumes fromautomobiles cause as many as 1,800 cases ofcancer every year. 16

Gasoline-powered automobiles alsoaggravate global environmental problems.A tank of gasoline produces up to 400pounds of carbon dioxide, a primarygreenhouse gas implicated in globalwarming. 7 Carbon dioxide induced globalwarming can increase crop failure, disease,

coastal flooding, severe storm damage,destruction of ecosystems and populationdislocation." The world's motor vehiclesnow produce 14 percent of all the carbondioxide derived from fossil fuels.19 Thecontribution from individual industrializedcountries is even higher, reaching a peak of24 percent in the U.S., where per capitaownership of motor vehicles is the highest inthe world.20 If we expect to reduce thiscontribution we will have to use alternativefuels to power our motor vehicles.

B. Electric VehiclesOf the various "clean" fuel options

under consideration today, electric vehicles(EVs) offer the greatest improvement in ourair quality. Methanol, for example, canreduce carbon dioxide emissions and totalairborne toxics, but produces considerableamounts of formaldehyde, a carcinogen andozone-former.2 ' Natural gas also reducestotal emissions, but not nearly as much asEVs.22

Even after factoring in the emissionsfrom the fossil-fuel burning power plants,the most common source of electric motorpower, EVs are the cleanest motor vehicles.EVs fueled by traditional coal-poweredelectrical utilities pollute 90 percent lessthan typical gasoline powered motorvehicles, and themselves emit zero percentpollution.' When powered by alternativeenergy sources such as solar or wind, orother nonpolluting sources, EVs wouldproduce no air pollution at all.

Another environmental advantage tousing EVs is the elimination of accidents inthe transportation of fuel. For example, anyliquid or gaseous fuel used must be piped ortransported by tanker, train or truck. Suchtransportation leads to many containmentdifficulties -- spills and leaks are far toocommon, causing extensive environmentaldamage. 24

EVs also have practical advantagesover gasoline-powered vehicles, includingreduced maintenance needs, lower fuel costs

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May 1993 11

and the ability to recharge at home oranywhere there are standard electric outlets.In fact, combined fuel and maintenancecosts for EVs are about eight cents per milecompared with 20 cents per mile for gas-powered vehicles.' This is a difference of$1,200 for every 10,000 miles of vehicleuse. Maintenance is cheaper for EVsmainly because the electric motor has onlyone major moving part compared with thegas motor's 200 plus parts.26 TheCalifornia Energy Commission figures showthat by the year 2000, EVs will have a 4-1fuel cost advantage alone.'

Though EVs have variousdisadvantages, these are rapidly beingeliminated. Such disadvantages includeshorter driving range, lengthy rechargingtime, poorer performance (sloweracceleration and speed) than gas-poweredvehicles, little or no infrastructure (very fewcommercial service or recharging centers)and greater initial expense. Part III of thisarticle, infra, discusses substantialimprovements to these drawbacks broughtabout by the emerging EV industry.28

Despite the environmental and somepractical advantages of present EVtechnology, manufacturers have not massproduced EVs. In addition to the EVdisadvantages mentioned above, this lack ofmass production has been largely due todeeply ingrained consumer patterns and tothe strong ties between the automobile andoil industries.29 Now, however, localgovernments and electric utilities, as well asindustry, are responding to the new energylegislation promoting and mandating EVproduction and use.3 For these reasons,not only will manufacturers soon massproduce EVs, but improved technology andinfrastructure brought on by the newlegislation will make EVs a consumer optionequally viable to that of conventional motorvehicles.

H. THE ENERGY POLICY ACT OF1992

Prior to 1992, fourteen years hadelapsed since passage of comprehensiveenergy legislation designed, among otherthings,to reduce the nation's reliance onforeign oil imports." Energy policymakers felt restrained, and energy policyobservers frustrated, by the Americanpublic's lack of concern for energyissues.32 As long as a gallon of gasolinecost virtually the same as a gallon of bottledwater, it seemed the average citizen wouldnot believe that energy was a pressing publicissue.33

Operation Desert Storm placedenergy issues at the top of our nation'spolicy agenda once again in 1991. The Iraqi

"... improved technology and infrastruc-ture brought on by the new legislationwill make EVs a consumer option eq-ually viable to that of conventionalmotor vehicles."

invasion of its neighboring oil producer,Kuwait, caused oil prices to soar to over$30 a barrel, which some believe tipped theeconomy into recession. The warhastened members of Congress to introduceseveral pieces of comprehensive energylegislation, resulting in the Energy PolicyAct of 1992.11

A. Brief OverviewThe Energy Policy Act (the Act)

approved by Congress and signed into lawOctober 24, 1992, is the mostcomprehensive energy legislation everenacted.36 It addresses nearly everyconceivable energy issue from oil, coal,natural gas and nuclear power to energyefficiency and conservation, solar andphotovoltaics, hydrogen and fuel cells,wind, biomass and geothermal energies,alternative fuels, transportation, and globalwarming issues.37 The Act's goals include

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reduced dependence on foreign oil, a cleanerenvironment, greater energy efficiency andlower energy costs for consumers.38

The Act requires increasedconservation and energy efficiency to reducethe cumulative national energy demand,while facilitating a 20 percent increase in theuse of renewable energy and a 50 percentincrease in the use of alternative fuels by2010.31 It is expected to reduce oilimports by approximately 4.7 million barrelsa day (a one-third cut in petroleum imports),prevent nearly $400 billion from flowingoverseas, and save domestic electricityconsumers about $250 billion in the same15-year period.40 Of course, the Act alsoopens markets for new, alternativeautomotive technology.

B. Provisions Affecting ElectricVehiclesThe Energy Policy Act of 1992 will

significantly increase the use of alternativefuels, including electricity, and help todevelop a market for alternative fuelvehicles. Along with general funding foralternative fuel vehicle research anddevelopment, the act authorizes $575 millionin funding specifically for EV research,development and demonstration. 4 'Domestic auto makers competing to meetAmerican transportation, energy andenvironmental needs are favored and willenjoy a competitive advantage in newautomotive technology.' The Act willhelp U.S. companies capture more of thepossible $80 billion in sales of alternativefuel vehicles expected between now and2010.4'

1. GenerallyThe Act requires federal government

fleets to purchase a certain percentage ofalternative fuel vehicles by the year 2000. 44

It further requires alternative fuel providers,such as electric and natural gas companies,to begin purchasing a specified percentageof alternative fuel vehicles in the next few

years.4 The Act also provides for stateand local incentive programs and loanguarantees to encourage the purchase ofsuch vehicles.'

In addition, the Act includes threemeasures for cost sharing (non-Federalsources must share 50 percent of the costs)of public/private EV research, developmentand demonstration. The first measure is a$50 million, 10-year, 10-project effort todemonstrate EVs and collect data on theiruse.4 The second provides $40 millionover 5 years for infrastructure and supportsystems.48 The third measure is aseparate, comprehensive five-year researchand development program designed, amongother things, to advance batterytechnology.49

Finally, the Act includes taxprovisions designed to reduce the cost ofpurchasing alternative fuel vehicles and todevelop the necessary infrastructure. 0 Itprovides a tax credit to offset the cost ofpurchasing alternative fueled vehicles, whichis the greatest for EVs, and a tax deductionto encourage refueling facilitydevelopment.5 '

2. Provision SpecificsThe following paragraphs highlight

and interpret some of the more importantdetails of the provisions mentioned above.

Alternative Fuels - General (TitleIII). Section 303 requires federal fleets toobtain at least 5,000 alternative fuel vehicles(AFVs), which include EVs as well asvehicles powered by natural gas, alcoholfuels and hydrogen, in fiscal year 1993;7,500 AFVs in fiscal year 1994; and 10,000vehicles in fiscal year 1995. Of the totalnumber of vehicles acquired for federalfleets after 1995, at least 25 percent must beAFVs in 1996, 33 percent in 1997, 50percent in 1998, and 75 percent in 1999 andthereafter. The term "federal fleet" means20 or more "light-duty motor vehicles"(cars, vans and/or small trucks under 8,500pounds) owned by the Federal government

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May 1993 13

and located in a major metropolitan area(1980 population greater than 250,000).

Section 304 requires Federalagencies, "to the maximum extent possible,"to arrange for fueling at commercialfacilities that offer alternative fuels-for saleto the public. To promote use of AFVs inFederal agencies (including the PostalService), the Administrator of GeneralServices may charge lower rates to agenciesfor leasing AFVs than for leasingcomparable conventionally-fueled motorvehicles (Sec.306; ends 3 years afterenactment).

Alternative Fuels - Non-FederalPrograms (Title IV). Section 405 requiresthe Energy Secretary to establish a publicinformation program on the costs andbenefits of AFV use. The program willobjectively compare AFV characteristicswith gasoline-fueled motor vehicles,including environmental performance,energy efficiency, cost, maintenance,reliability and safety. Section 406 requiressimilar information on uniform productlabeling for alternative fuels and vehicles.A combination of Federal agencies includingthe Federal Trade Commission will monitorthe labeling requirement, which will aidconsumers in comparison shopping.

Section 409 requires the EnergySecretary to establish guidelines forcomprehensive State AFV incentives andprogram plans designed to accelerate theintroduction and use of AFVs. To beeligible for Federal information and financialassistance, each State's plan must describein detail a progressive schedule andcoordination efforts to "introduce substantialnumbers" of AFVs in such State by the year2000. Details must include, among otherthings, an examination of exempting AFVsfrom State sales tax,5" special parking atpublic buildings, airport and transportationfacilities, and the ability to recharge electricmotor vehicles at public locations.

Availability and Use of... [AFVs](Title V). Section 501 requires those whose

principal business involves alternative fuelsto make a certain percentage of newlyobtained motor vehicles AFVs starting inmodel year 1996. Thus, many electricutilities, as well as others whose principalbusiness is "generating, transmitting,importing or selling electricity," willpurchase or lease EVs in the near future.For model year 1996, 30 percent of newlyacquired light duty motor vehicles must beAFVs; for 1997, 50 percent; for 1998, 70percent; and for 1999 and thereafter, 90percent. Businesses affected are those with50 or more motor vehicles in the UnitedStates and 20 or more in a majormetropolitan area.

Electric Motor Vehicles (Title VI).Subtitle A of Title VI provides up to $50million for an EV commercial demonstrationprogram. The Secretary of Energy mustsolicit proposals from manufacturers,utilities and/or distributors to demonstratetheir EVs and associated equipment (Sec.

"... electric utilities, as well as otherswhose principal business is "generating,transmitting, importing or selling elec-tricity," will purchase or lease EVs inthe near future."

611), and then select from the proposingapplicants (Sec. 612). The selectedapplicants will be reimbursed for a discountthey provide to their EV users (e.g.,customers or employees; Sec. 613) on thepurchase or lease of those EVs. In return,the EV users will provide the selectedapplicants and the Secretary withinformation regarding the. operation,maintenance; performance and use of theEVs for 5 years (Sec. 612). The discountpayments may be up to $10,000 but cannotexceed the greater of the price differential orthe price of a "comparable conventionallyfueled motor vehicle." Non-Federal sourcesmust share at least 50 percent of costsdirectly related to the program, with

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exceptions under the Secretary's discretion(Sec. 614).

Subtitle B of Title VI authorizes upto $40 million for an EV infrastructure andsupport systems development program. Ina process similar to that of Subtitle A, theSecretary of Energy will solicit proposalsfor research, development, demonstration orcommercial application of an infrastructureand support systems program (Sec. 621,622). The projects may address, amongother things, EV servicing, equipment andmaintenance; the installation of chargingfacilities; rates and cost recovery for utilityinvestments in infrastructure; and thedevelopment of safety and health procedureguidelines related to battery charging,watering and emissions (See. 622). Selected"persons" will receive financial assistancefor their projects.

Revenue Provisions (Title X1X).These provisions deal with a variety of taxincentives for individual and businesstaxpayers. Section 1913 provides a taxcredit equal to 10 percent of the cost of anyqualified EV up to $4,000. To qualify, thevehicle must be powered primarily by aportable source of electricity (e.g. batteries),

"... the Act will increase alternative fueluse by the equivalent of 660,000 barrelsof oil a day by 2010, an increase of over50 percent from current levels."

and cannot be acquired for resale purposes.The taxpayer must be the original user.Section 1913 also provides deductions forEV recharging stations for the cost of theproperty up to $100,000.

General Provisions; Reduction of OilVulnerability (TITLE XX). Section 2025, thelast EV-related provision of the Act,requires the Secretary of Energy to conducta cost-shared research and developmentprogram on EVs and associated equipment.The Secretary must conduct the program incooperation with the electric utility industry,

the automobile industry and batterymanufacturers, along with others theSecretary considers appropriate. The 5-yearcomprehensive plan will include a"prioritization of research areas critical tothe commercialization" of EVs, includingthe advancement of battery technology.

It is too early to determine the exacteffects these provisions will have onreducing oil use and emissions from motorvehicles. However, the Department ofEnergy has estimated that the Act willincrease alternative fuel use by theequivalent of 660,000 barrels of oil a day by2010, an increase of over 50 percent fromcurrent levels.53 If the effects of currentand pending state legislation were added, theestimate would be much greater. Suchcombined effects are already noticeable inthe recent developments that are bringingpopular EV use closer to reality.

i. CURRENT ELECTRIC VEHICLEDEVELOPMENTS AND THE ACT'SEFFECTS

The Energy Policy Act began to havesome impact even before it was passed.Responding to provisions of the Act asdebated in Congress over the last year or so,and to recent and pending state legislation,researchers and manufacturers have steppedup their efforts to develop a competitivelyviable EV. Many breakthroughs in EVtechnology and new EV-related businessventures have recently been announced,particularly since passage of the Act. Inaddition, the number of presently availableEVs from the smaller manufacturers isgrowing and their quality is improving.

A. BatteriesBattery technology has been one of

the main hurdles to commercializing EVs.With current battery technology, the best ofthe commercially available electric carsclaim to get no more than 150 miles percharge -- a relatively limited range. 'Because recharging generally takes severalhours, EV use has been limited to

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May 1993 15

environmentalists and enthusiasts. Anotherbattery-related problem limiting EV use ispoorer acceleration. 55

The first electric cars to be mass-produced will probably use lead-acidbatteries, although other types -- includingnickel-cadmium, sodium-sulfur, and nickelmetal hydride - are also being studied.56

All have disadvantages. For example, somelead-acid batteries weigh too much,57 andSodium-sulfur batteries are lighter, but canget dangerously hot.5"

A recent breakthrough in batterydevelopment by Lawrence BerkeleyLaboratory researchers could double therange of EVs. 59 LBL scientists have morethan doubled the cell life of the nickel-zincoxide battery, which offers twice as muchenergy density -- and therefore twice therange - of conventional lead-acidbatteries.' This improved battery wouldallow practical EVs to travel as much as 250miles between charges, compared with the100 or so common to lead-acid-propelledbatteries. 6'

In another recent development,Argonne and U.S. Advanced BatteryConsortium, a partnership of Chrysler, Fordand General Motors, are beginning a three-year, $7.3 million cooperative research anddevelopment (R & D) agreement to producean advanced lithium metal sulfide battery. 2

The joint venturers believe that EVspowered by such a battery might achieveacceleration and range capabilitiescomparable to gasoline-powered cars. Thebattery may provide as much as five timesthe energy per pound as current batterytechnology.63

The Act will ensure that the EVindustry stays busy with battery developmentfor some time. It provides extensivefunding for R & D that should aidsubstantially in the advancement of batterytechnology. Section 2025, the Federal R &D program, singles out the battery as anitem "critical to the commercialization" ofEVs. Development of more advanced

batteries, encouraged by the Act, willeliminate range and acceleration problemsand will create greater consumer interest inEVs.

B. Charging Systems/InfrastructureRecharging EV batteries poses

another challenge. The necessary EVinfrastructure includes commercialrecharging stations, recharging units orelectrical outlets in parking lots at malls,restaurants and workplaces, and at-homecharging. 5 Until recently, commercialrecharging stations were not viable becauseof the length of time needed to recharge. Inthe last several months, however, the auto

"Chrysler Corp., which will build 50electric minivans in 1993, and NorvikTechnologies, Inc., have developed asystem that charges EVs in as little as 10minutes."

manufacturing industry and one aircraftcompany have reduced recharging timeexponentially.

Chrysler Corp., which will build 50electric minivans in 1993, and NorvikTechnologies, Inc., have developed a systemthat charges EVs in as little as 10minutes. 6 This extremely quickrecharging time discounts the importance ofEV range, allowing for the commercialviability of EVs prior to a new generation ofbatteries. Chrysler hopes to make itscharging system an industry standard, eitherlicensing the technology or selling thesystems directly to other manufacturers. 67

However, it may be competing with NissanMotor Co. which has also developed aprototype super quick EV recharging stationand has started experimental operations.68When operated at its maximum output,Nissan's version can recharge batteries tonearly full capacity in 15 minutes.

Calstart, a public-private consortium,is attempting to interest automakersworldwide in buying EV components

......... Vl.. 1. . 3.

developed and manufactured inCalifornia.69 One of the consortium'sgoals is to oversee the opening of 160 EVcharging stations statewide by 1994.70Hughes Aircraft Co., a subsidiary ofGeneral Motors, devised the chargingsystem to be used at these stations, but thesystem will be usable for electric carsproduced by any manufacturer.71 Similarto the charging systems developedindependently by Chrysler and Nissan, theHughes system can provide an adequatecharge for most one-way trips in about 15minutes.

California is also the place whereelectric utilities and cities are showing that

"..the City of Sacramento, in coopera-tion with SMUD, has opened somepublic parking lots equipped with elec-trical outlets for charging EVs, believedto be the first of their kind in the na-tion."

they can help develop the necessary EVinfrastructure. For instance, the SacramentoMunicipal Utility District (SMUD) beganoffering a discounted off-peak rate for EVowners to charge their cars on November 1,1992.2 SMUD has also opened over 50public EV recharging stations, with plansfor up to 250 within the year.73 Inaddition, the City of Sacramento, incooperation with SMUD, has opened somepublic parking lots equipped with electricaloutlets for charging EVs, believed to be thefirst of their kind in the nation. SouthernCalifornia utilities and cities are takingsimilar measures.

These recent developments ininfrastructure are among the most importantto EV commercialization. As previouslymentioned, lack of an infrastructure,including quick recharging facilities, hasbeen one of the primary obstacles to popularEV use. Also as explored previously, theAct furthers infrastructure development

through tax incentives, R & D and FederalEV fleet patronage, among other things.Section 1913 provides the largest incentiveto businesses, with up to a $100,000 taxdeduction per location to install batteryrecharging stations. Considering thisincentive along with those provided toconsumers by the Act and state legislation toplace EVs on the road, a significantinfrastructure could be established veryrapidly. With an infrastructure in place,consumer demand would allow largemanufacturers to start commercializing EVs.

C. Large Auto ManufacturersOne GM executive summed up the

American auto industry's primary concernwith EV development when he said that"uncertainty and rapidly changingtechnology makes major capital investmentat this time high risk."7I However, afterthe legislative efforts of 1992, the Detroitauto manufacturers know that they have nochoice. Thus, General Motors has agreed tostudy the feasibility of sharing research withFord and Chrysler to speed development ofAmerican electric automobiles.75

GM will test its "Impact" EV thisyear through utilities and the Department ofEnergy. 76 Ford will deliver 100 of itselectric Ecostar trucks to utility companiesthis year and Chrysler will deliver 50 of itselectric TE vans to several utilities groupsacross the nation.' Despite the Detroitautomakers' promises, they probably won'tmass produce EVs for at least another fewyears. The companies have also beensecretive about their EV prototypes' costsand performance capabilities.

Calstart hopes to attract the largeauto manufacturers to California for theparts they will need to purchase in the nearfuture.78 In its efforts to develop aCalifornia EV technology market, theconsortium has developed a showcaseelectric car with components from at least17 California companies. Calstart believesit can convert some of the resources of

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California's declining aerospace and defenseindustry to the emerging EV industry.79

The Act will not do much to expeditethe date EVs are mass produced -- that hasbeen taken care of primarily by theCalifornia emissions standards 0 -- but itwill help to maximize the quality,convenience and economy of the EVsDetroit first introduces to the mass market.The various provisions for R & D, safetyand consumer standards, electric utility ratesand tax incentives will help to ensure thosecharacteristics. This, in turn, may promptgreater sales than required by Californiastandards. Meanwhile, consumers who areinterested in shopping for EVs in theimmediate future must turn to the smallmanufacturers.

D. Small Manufacturers Have EVsAvailable NowPrimarily because large auto

manufacturers are hesitant to invest in avolatile EV market, some smallermanufacturers have had success in sellingcars converted to electric power. One smallcompany recently even marketed its ownoriginally designed EVs. These smallcompanies are adding valuable technologiesto the EV market and are also able torespond to changes in technology muchmore quickly. The new legislation favorsthis adaptability because of the continuingEV technology improvements it promotes.For these reasons, if they can maintain somedesign advantages, these companies may stillbe around after the Detroit auto makers areforced to mass produce EVs beginning in1998.81

A prime example is Solar ElectricEngineering, Inc., a Santa Rosa, Californiacompany that refits gasoline cars withelectric motors. Solar Electric has joinedwith a Florida firm, Consulier Automotive,in building an original convertible-topelectric sports car said to have a top speedof 100 m.p.h. 2 The car body is made ofa strong, light-weight material designed by

Consulier that improves EV performance.Solar Electric now has dealerships in LosAngeles (Green Motor Works), Sacramentoand Santa Rosa. Solar Electric's standardEV sales have consisted primarily ofconverted Ford Escorts and Pontiac Fieroswith solar panels, both of which areconsiderably less expensive to produce thanits convertible. The EVs are priced startingat under $20,000.

Another small EV manufacturer, ACPropulsion Inc. in San Dimas, Californiaconverts the frame of a Honda CRX toelectric power.8 3 This car has a chargingsystem that can be plugged into a standardwall socket to recharge up to 90 percent ofa battery's capacity in about an hour.14 Itoutperforms most gasoline-powered cars, aswell as electric cars, sprinting from zero to60 m.p.h. in 7.8 seconds. It has a topspeed of 85 m.p.h. and a range of up to 130miles according to California Air ResourcesBoard tests.15

Various other small companies willalso convert gasoline-powered vehicles toelectric power or sell conversion kits. TheAct's two biggest immediate contributions tothese small manufacturers, as well asconsumers, involve its tax provisions insection 1913. The up to $4,000 federal taxrebate (credit) on initial cost beginning June30, 1993, will help to stimulate demand.And section.1913's $100,000 tax deductionfor recharging stations is a much neededbreak for capital-poor smaller companies.

"... small companies are adding valu-able technologies to the EV market andare also able to respond to changes intechnology much more quickly."

Finally, for those manufacturers selected bythe Energy Secretary under Title VI,Subtitle A, discounts passed on to customerswill promote greater EV sales.

7'20p'pcVi i n

IV. CURRENT POLICY DEBATEWhile the Energy Policy Act creates

many beneficial policies regarding the waywe use energy in our daily transportationneeds, it omits important policies as well.86

More sweeping energy measures involvingtransportation should be legislated, such asa carbon-based energy tax and higherautomobile mileage standards.8 Thesemeasures would benefit both theenvironment and the economy. Theeconomy would benefit in two importantways. First, these measures would reduceoil imports and thus the trade deficit.Second, a carbon-based energy tax wouldfavor alternative energy sources, aiding,

"More sweeping energy measures involv-ing transportation should be legislated,such as a carbon-based energy tax andhigher automobile mileage standards."

among other things, the new multi-billiondollar business of the future -- the AFVindustry. The environment would benefitbecause these measures would reduce totaloil consumption and emissions by improvingautomobile efficiency. Also, because fossilfuels are taxed under a carbon-based energytax and renewable energies are not, use ofthe cleaner renewable energies wouldincrease while use of fossil fuels woulddecrease.

Some energy policy analysts haveargued that higher mileage standards forautomobiles are necessary and could savenearly 2.5 million barrels of oil consumptiona day in the U.S. 9 Along with an energytax, this is a financially feasible proposalwhich would significantly reduce oilconsumption.' The automobile and oillobbies have worked hard to keep thisproposal from being legislated, though, anddebate over higher mileage standards almostdelayed passage of the Act.9'

Policy analysts have also argued thata narrower gasoline tax, as opposed to acarbon tax, is warranted as a means of

reducing oil use and emissions.'However, President Clinton has proposed anenergy tax based on British thermal units, aunit of heat energy.93 The BTU tax, partof the president's broad economic package,would require initial producers, transportersand storers of natural gas, coal and nuclearpower to pay a levy of 25.7 cents permillion British thermal units.' Oil wouldbe taxed at 59.9 cents per million BTUs,which translates into a tax of about 8 centsper gallon of gasoline.9' Renewablesources of energy, such as solar andgeothermal energy and biomass fuels, wouldnot be taxed.96 Thus, this tax is alsoenvironmentally responsible, promotingenergy conservation and renewable energy,and reducing oil use and emissions. 97 Atthe same time, it should disperse energy taxeffects so as not to burden any one industrymore than necessary.98

All of the industrial nations, each onelooking to the other, have debated an energytax over the last couple of years. WhenJapan hosted an international meeting on theenvironment recently, it was expected toagree to a carbon-based tax to reduce carbonemissions.99 Instead, a report by theMinistry of International Trade and Industry(MITI) suggested that Japan mayunjustifiably harm itself by adopting acarbon tax."° MITI was worried that ifthe carbon tax lacked internationalconformity, "it would invite the internationalmigration of industry." ' 0'1 MITI was alsoconcerned that the tax would make Japanless competitive, dragging down economicgrowth. 102

Japan's attitude would be different ifthe Bush administration had not adamantlyopposed all forms of energy tax for similareconomic reasons. Japan had previouslyexpressed interest in a carbon-based energytax, and the European Community (EC) hasfavored a carbon tax but looked forinternational consensus from the otherindustrial countries. 3 Thus, both Tokyoand the EC are watching with interest to see

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MaY 1993 15

whether the U.S. Congress will supportPresident Clinton's proposed energy tax."°

A MITI official expressed the wayAmerica's industrial counterparts view thesituation when he said: "Japan accounts forabout 15 per cent of global GNP, but onlyfor 4.8 per cent of [carbon dioxide]emissions; the U.S. accounts for about aquarter of GNP and a quarter of theemissions. " 11 The U.S. produces themost carbon dioxide emissions of anycountry, causing some resentment in theinternational community because the U.S.has refused to cap those emissions or taxcarbon users. °0

Carbon Dioxide Emisssions -

1989

United States 22.3%USSR 17.4%China 10.9%Japan 4.8%W. Germany 4.4%India 3.0%United Kingdom 2.6%Canada 2.1%Poland 2.0%Italy 1.8%Others 28.7%

Source: US Carbon Dioxide InformationAnalyzing Center

The EC believes that Canada wouldfollow the United States if Clinton's BTUtax proposal becomes law and that Japanmay also."°7 As a precondition to the ECadopting a carbon-related energy tax, the ECEnvironment and Taxation Commissionersrequire adoption of comparable energy taxesby the other industrial countries -- theUnited States, Canada and Japan.' ECofficials find that Clinton's proposal drawsthat reality a step closer. Such a consensus

among the industrialized nations wouldmaintain current international trade positionswhile allowing for substantial progresstoward global carbon emission reductiongoals.

It is now apparent that U.S. energypolicy has greater implications than everbefore. Oil imports account for about halfour nation's trade deficit; energyconservation and pollution-control costs areweighing heavily on most industrializednations; ° and our industrial competitorsare looking to the U.S. to set the globalenergy policy trends for the nextdecade. 10 For these reasons, the quest toremain globally competitive should notinhibit U.S. energy policy as it has in thepast.

CONCLUSIONMost scientists and energy experts

seem to agree that we are in an inevitabletransition from a fossil fuel based economyto an alternative energies based economy.Politics, economics, public health and theenvironment all require this transition. Forthese same reasons, the transition must beexpedited and this may cause short-termeconomic pain. Policies that risk placingfinancial burdens on American citizens andAmerican businesses in the short-term arevery difficult to legislate, even when theywill benefit us in the long run. Indeed,most U.S. environmental and energy lawsare directed at certain industries as opposedto all businesses or individuals -- legislationdirected at the latter has consistently metsubstantial opposition.

However, the legislation now inplace makes it easier for us to exerciseresponsibility in our energy use choices.Not just the government, but we asconsumers and citizens must also takeresponsibility. We can demand andeffectuate beneficial changes through ourconsumption habits as well as our activeconstituency. If we are to avoid hypocrisyin demanding that our government adopt

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environmentally, politically and Peny Goldschein is a graduating 3L at Kingeconomically responsible policies, we should Hall. He will be forming an alternativealso choose wisely by considering all the energy consulting partnership, G&Geffects our energy choices have on society. Consulting, which will focus on electricThe use of electric vehicles is one wise vehicles among other issues.choice having wide-ranging beneficialeffects.

ENDNOTES

1. Energy Policy Act of 1992, Pub. L. No. 102-486; U.S.C. Advance Legislative Service, 1992.2. California mandates that 2 percent of all vehicles sold by major automakers produce zero emissions beginning in 1998, which translates toabout 40,000 vehicles. See Vlae Kershner, High Hopes Riding on Electric Car, S.F. CHRON., Nov. 30, 1992, at A-i. By 2003 it will be 10percent. Electricity is the only power source that meets the zero-emission requirement.3. Id. New York subsequently adopted similar standards, though these were set back by a Federal court ruling in Motor Vehicles Manufacturer'sAssoc. v. New York State Dept. of Environmental Conservation, F.Supp. (NDNY, 1993), Slip. Op. Jan. 21, 1993. About 10 other northeasternstates are also considering them.4. Id. "Zero emissions" refers to what the vehicle itself produces; most EVs draw their electricity from electric utilities, many of which burncoal for power. However, even using this source of electricity, electric cars pollute 90 percent less than gasoline-powered cars. See infra note23 and accompanying text.5. See Bleviss and Walzer, Energy for Motor Vehicles, SCI. AM., Sept. 1990, at 103.6. See Richard H. Rosenzweig, The Energy Bill, 131 PUB. UTILmES FORTNIGHTLY 16 (Jan. 1, 1993), at 17.7. Christopher Lehmann-Haupt, Books of the 71mes; Coast to Coast in an Ecologist's Dream With Wheels, N.Y. TINES, Dec. 24, 1992, at C13,col. 1 (quoting NOEL PERRIN, SOLO LIFE WITH AN ELECTRIC CAR).8. Id.9. The United States has steadily increased its use of foreign oil. Today, over 50 percent of the oil used daily in the United States is imported.Consumer, Environmental. Community Groups Announce Campaign Aimed at 'Gas Guzzlers', U.S. Newswire, 11/13/92 (LEXIS On-lineServices) [hereinafter Gas Guzzlers]. Accompanying this increased dependence is political pressure to drill in environmentally sensitive areassuch as the Arctic National Wildlife Refuge and the Outer Continental Shelf. In addition, even now oil spills dump hundreds of millions ofgallons of oil and other petroleum-based products into the world's oceans, irreparably damaging hundreds of ecosystems around the globe everyyear. See also infra note 24.10. The Fuels of the Future, CONSUMER REP., Jan. 1990, at 11.11. Id.12. Id.13. Id.14. Gas Guzzlers, supra note 9.15. Id.16. Fuels of the Future, supra note 10, at 11.17. See Bleviss and Walzer, supra note 5, at 103.18. Gas Guzzlers, supra note 9.19. Bleviss and Walzer, supra note 5, at 103.20. Id.21. CSAA adds electric ERS truck to itsfleet, MOTORLAND/CSAA, Oct. 1992, at 39.22. See The Fuels of the Future, supra note 10, at 13.23. See Mike Pulley, The Future Pulls Up Quietly, THE Bus. J. - Sacramento, Nov. 16, 1992, Sec. 1, p. 1. The only pollution generated byEVs comes from the electric power plant or source from which the vehicles draw their energy. See also supra note 4.24. U.S. waters continue to be vulnerable to spills like the one off the Shetland Islands in the North Sea on January 5, 1993. Oil Spills: U.S.Risks Accidents Like One In Scotland, Environmental, Federal Officials Say, Int'l Env't Daily (BNA), Feb. 8, 1993. A Liberian-owned tankerran aground in high seas, losing virtually all of the 24 million gallons of North Sea light crude oil it was carrying. The spill was twice theamount lost in the Exxon Valdez accident in Alaska.25. C AA, supra note 21, at 39.26. Id.27. See Steve Rosenthal, Switch on The Electric, S.F. EXAMINER, June 21, 1992, (Sunday Magazine) at 5.28. See infra, notes 59-85 and accompanying text.29. See Energy, Environmental Groups Pledge Supportfor BTU Tax, Brace for Industry Opposition, DAILY REP. FOR EXECuTIVES (BNA), Feb.19, 1993, at 32.30. See infra notes 53-79 and accompanying text.31. See Rosenzweig, supra note 6, at 16.32. Id.33. Id.34. Id.35. Id.36. NEWENERGYPOLICYACTTO BENEFIT MANYINMID WEST, PR NEWsWIRE, Washington Dateline, Oct. 26,1992 (paraphrasing formerSecretary of Energy James Watkins).

May 1993 21

37. Energy Policy Act, supra note 1.38. PRESIDENT BUSH SIGNS NA2T7ONAL ENERGY POLICY ACT, FOSTER NATURAL GAS REP., Oct. 29, 1992, Rep. No. 1900 at 1.39. Id. See also NEW ENERGY, supra note 36.40. rd.41. NEW ENERGY, supra note 36.42. rd.43. Id.44. Energy Policy Act, supra note 1, Section 303.45. Id, Section 501.46. Rosenzweig, supra note 6, at 52.47. Bush signs energy law; wants smooth transition, ELECTRIC LIGHT & POWER, PennWell Publishing Company, Dec. 1992, at 1.48. Id.49. Id.50. See Rosenzweig, supra note 6, at 52.51. rd.52. California already exempts EVs from the state sales tax and gives EV buyers a $1,000 tax credit. See Kershner, infra note 2.53. See Rosenzweig, supra note 6, at 52.54. See Michael Parrish, Picking Up Steam; Alternative Cars are Closer to Reality ifAuto Show is Right, L.A. TIMES, Jan. 2, 1993, DI, col.3.55. But see AC Propulsion's new model, infra notes 83-85 and accompanying text.56. See Parrish, supra note 54.57. Id.58. Id.59. See Davis Kramer, LBL Researchers Report Breakrhrough in Battery for Electric Cars, INSIDE ENERGY, Oct. 26, 1992, at 4.60. Id.61. Id.62. Boost Electric Vehicle Battery Performance, INSIDE R & D, Nov. 11, 1992, at 7.63. Id.64. Section 2025 also allows for development of new EV power sources such as fuel cells (hydrogen) and photovoltaics. Though these sourceswill be supplemental only for quite awhile, they are nonpolluting and could lead to completely pollution free transportation in the future.65. See Patrice Apodaca, Battery a Problem in Electric Car, L.A. TIMES, Nov. 10, 1992, at 5.66. Id.67. Id.68. Nissan develops speedy recharging stations for electric cars, Proprietary to United Press International, Dec. 4, 1992.69. See Kershner, supra note 2, at A-1.70. Id.71. Id.72. See Pulley, supra note 23, at 3.73. See Terry Jackson, Greening of the Auto Latest State Car Trend, SACRAMENTO BEE, Jan. 3, 1993, at A-1.74. Big Three May Join in Developing Electric Car, ALTERNATIVE ENERGY NETWORK ONLINE TODAY, Dec. 16, 1992.75. Id.76. Id.77. Id.78. See Kershner, supra note 2, at A-I.79. Id.80. Id. See also infra, note 81. The large manufacturers appear unlikely to mass produce EVs until the mandated 1998 California deadline tosell zero emissions vehicles.81. California has mandated that at least 2% of motor vehicles sold there in 1998 must produce zero emissions. See Kershner, supra note 2.Because EVs are the only vehicle producing zero emissions the big auto manufacturers, unable to ignore the California market, will have to massproduce EVs.82. See Parrish, supra note 54.83. Id.84. Id.85. Id.86. See Rosenzweig, supra note 6, at 52.87. Id.88. See supra note 43 and accompanying text.89. See Rosenzweig, supra note 6, at 55.90. Id.91. Id.92. Id.93. Presidential Address to Congress, (ABC News television broadcast, Feb. 17, 1993). A British thermal unit measures the amount of heatrequired to raise the temperature of one pound of water one degree Fahrenheit at or near 39.2 F.94. See Karen Geisler, U.S. ENERGY C1EF SEES 350,000 BARREL PER DAYREDUCTION IN OIL, REUTER ASIA-PACIFIC Bus. REP., Feb.19, 1993.95. Energy, EC ENVIRONMENT CHIEF GIVES CA U7OUS ENDORSEMENT TO CLINTON BTU PLAN, DAILY REP. FOR EXECuTIVES (BNA),Feb. 19, 1993, at 32.96. Id.

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97. Presidentia Address to Congress, see supra note 93.98. Id.99. ROBERT THOMSON, Business and the Environment: Japan hedges on carbon tar, FINANCIAL TIMES, Dec. 9, 1992, at 14.100. Id.101. Id.102. Id.103. See infra notes 107-108 and accompanying text.104. See Thomson, supra note 99, at 14.105. A MITI official has even shrugged off the Whitehouse's BTU tax, saying that it only brings the U.S. energy taxes to prevailing internationallevels. Energy Taxes: CLINTON B7T PLANRE-IGNITFS INTERAGENCY BA77LE YNJAPAN, INT'L ENV'L DAILY (BNA), Feb. 22, 1993.

*U.S. energy taxes have been way too low compared to other countries," he said.106. At a Dec. 7-11, 1992 meeting of nations that signed the U.N. Framework Convention on Climate Change, various countries called fortargets and timetables for reducing emissions of carbon dioxide. Environment, U.N. SUSTAINABLE DEVELOPMENT COMMISSION NOTWORLD "ECO COP,' INDUSTRY OFFICIAL SAYS, BNA DAILY REP. FOR EXECUTIVES, Dec. 18, 1992 at 244. A number of EuropeanCommunity member states as well as some developing countries sought to insert into the climate treaty caps on carbon dioxide emissions plusdeadlines for cutting releases of the greenhouse gas. The United States successfully blocked their efforts.107. Energy, EC ENVIRONMENT CHIEF, supra note 95.108. Id.109. NEWS ANALYSIS; THE SEARCH FOR CLINTON'S ENERGY OMENS, L.A. TIMES, Dec. 29, 1992, at D-1, col. 2.110. Id. Over the next few years U.S. energy policy is expected to influence and reflect worldwide shifts.