SO LONG ICE
California makes a big policy announcement to ban the sale of cars with internal combustion engines, so what?
California made the biggest waves in the climate news last week, announcing that it would ban the sale of passenger vehicles with internal combustion engines by 2035. The California Air Resources Board (CARB) voted for the new policy after a long comment period (https://abcnews.go.com/Politics/newsom-touts-californias-historic-vote-ban-sale-gas/story?id=88854801). Much of the coverage following this seems rather breathless. How is this possible? There won’t be enough charging stations. The power grid could collapse. Consumers won’t support it. Honestly, the reaction seems overblown. In Good Enough for the Climate (www.colorofcarbon.com), I talk about two principles that might help put CARB’s decision in context. First, the adoption of new technologies accelerates over time. Change happens slowly then fast. Second, as the climate crisis moves forward, we can expect more stringent efforts to be made to curb emissions. Let’s unpack each of these a bit.
Electric vehicle sales currently account for 18 percent of vehicle sales in California. Getting from there to 100 percent in 13 years may seem like a lot (https://www.washingtonpost.com/climate-solutions/2022/08/25/california-electric-vehicles-ev-gas-powered-cars/). However, in 2019, electric car sales accounted for only 7 percent of sales. Market share has increased by 150 percent in 3 years. If it weren’t for supply challenges the increase might have been even higher. Wait lists for electric cars are long and choice has been limited. Delivery time frames for the Ford F-150 Lightning now stretch 3 years. Some of this is changing rapidly. A couple years ago, I was thinking about buying an electric car and thought it would be fun to test drive every production model that was readily available. It was a pretty short list of sedans, hatchbacks and a couple luxury SUVs. Today that number is 62 and it will double in the next 2 years (https://www.visualcapitalist.com/the-number-of-ev-models-will-double-by-2024/). When I bought my Prius Plug-in Hybrid in 2012, there were 8 models on the market.
None of this should surprise us at all. As technologies or products are developed, adoption can move very slowly at first. They might be unreliable. The need might be unclear. Knowledge of them isn’t widespread. They are expensive. Then as thresholds are reached, we reach an inflection point where change happens very fast. Here is a graphic that shows this for a variety of other products from Chapter 6 of Good Enough for the Climate.
Yes, the curves are all very different, but the trend is similar. Adoption tends to increase rapidly once certain threshold conditions are met. We’ve seen this in the renewable energy sector as well.
It’s also not surprising that California has imposed this policy as a prohibition or ban. As the impacts of climate change increase and the timeframe we make necessary changes becomes tighter, we can expect more of these types of policy choices to force consumer behavior. Economists dislike prohibitions and other policy mechanisms in this category. They are inefficient, limit the free function of the market, and inhibit consumer choice. However, we haven’t done a great job of incorporating the full cost of burning fossil fuels to get from point A to point B. Gasoline isn’t taxed at a sufficient level to cover the full cost of climate change. We don’t have a national carbon tax or anything like it. These and other policies would create market-based incentives that would nudge consumers towards more sustainable forms of transportation without banning the sale of ICE. In an ideal world these mechanisms might be preferred. However, it’s complicated.
As we’ve seen carbon taxes, gas taxes, taxes on the sale of ICE’s all might have equity impacts that are uneven. The pain of each would fall to some folks more than others. They can be unpopular and hard to implement. Market-based solutions also require sufficient scale and transparency that can be hard to achieve in certain circumstances. They also take time to work. Consumers may adapt to price signals in varying ways with unintended consequences. Prohibitions are simple. ICE cars spew GHGs, so poof, let’s ban them. As the time we have to respond to climate change grows short, we should expect more of these types of prescriptive policies. We are seeing bans on gas cooktops, furnaces and water heaters. There will be more to come. California’s ICE ban will likely be adopted by numerous other states. Policies at all levels of government will likely chip away at the problem. "The climate crisis is solvable if we focus on the big, bold steps necessary to stem the tide of carbon pollution," California Gov. Gavin Newsom said in a statement. (https://www.foxbusiness.com/politics/california-gas-car-ban-will-apply-to-virginia-too-due-to-2021-law). Expect more prescriptive policies to ramp up with the response.