Bad Incentives For Green Choices

"...free EV charging? Free parking? Higher speed limits for EVs? Discount air travel for EV owners? Complimentary massages?"

A particularly entertaining post on ridiculous incentrives - from economist Severin Borenstein.

Bad Incentives For Green Choices | Energy Economics Exchange:

When we subsidize cleaner electricity, we may get the relative price of green versus brown electricity right, but we get the relative price of electricity versus everything else in the economy wrong.
The fundamental problem is not that green energy has positive spillovers — running your A/C on solar power doesn’t make others better off — but that brown energy has negative spillovers. Thus, when we subsidize green instead of taxing brown, we end up making electricity too cheap overall.[2] Green electricity subsidies also fail to account for how much GHG emissions they actually prevent. Is that wind turbine crowding out coal-fired generation, a gas-fired plant, or another wind turbine? The answer determines the value of the green power, but is not reflected in today’s subsidies.
While renewable electricity standards and subsidies are the big gorillas of green behavior rewards, there is a plethora of smaller reward systems that create further problems. They offer some indirect benefit that creates a new set of distortionary incentives. A perfect example was in the news earlier this year when Los Angeles International Airport (LAX) cancelled its free parking for electric vehicles — which began in the 1990s when EVs were as rare as $4 gas — because the program had become “too successful.”
The advantage of electric vehicles is that they put out less pollution (yes, even counting the electricity generation process), but only when they are moving. Why would anyone think that subsidizing EV parking at LAX gives the appropriate incentive to buy and drive an EV? In fact, it lowers the overall cost of travelling by air, which is itself a GHG-intensive activity. Complimentary massages for EV owners would probably make more sense.
The advantage of electric vehicles is that they put out less pollution (yes, even counting the electricity generation process), but only when they are moving. Why would anyone think that subsidizing EV parking at LAX gives the appropriate incentive to buy and drive an EV? In fact, it lowers the overall cost of travelling by air, which is itself a GHG-intensive activity. Complimentary massages for EV owners would probably make more sense.

Read the entire article at Energy Economics Exchange: