Power Vs. Policy

You have to wonder what’s behind some of the energy regulations because many of them don’t make sense.

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A trip to this year’s auto show in San Jose, Calif., was an interesting contrast to what’s being shown at CES. While there are a number of new cars hitting the market this year with greatly improved gas efficiency—notably from BMW, Honda, Chevrolet and even Cadillac—the vast majority of cars still list efficiency ratings of 30mpg or less. The flashiest cars remain in the teen range, with the real standout being the Bugatti Veyron, which running at full throttle flouts the definition of efficiency because it consumes gallons per mile.

Europe is in the lead for efficiency. While the most conspicuous gas guzzling cars are made in Europe—go figure—the Continent still consumes far less energy and has much tougher regulations than the United States, China, Russia, Japan and India—the top five consumers of energy in the world. Why? Because it charges more for gas.

California, which is at the forefront of energy conservation in the United States—the bleeding edge of Main Street—has made some very public overtures about rewarding and requiring new levels of efficiency in automobiles. It offers carpool lane stickers—a big time saver in metropolitan areas such as Silicon Valley and Los Angeles—to plug-in hybrids and electric cars and has set efficiency requirements for cars that have sent big carmakers home screaming.

It’s a nice gesture to people who can afford these cars, but like most regulatory policy things like carpool lane stickers don’t make much sense on a big-picture level. Anyone with a calculator and an Internet connection can figure out that the amount of time spent idling in non-carpool lanes will vastly overwhelm any savings in carpool lanes. (Even California is re-evaluating this, allowing non-stickered vehicles to use the carpool lanes in some areas for a fee.) And encouraging telecommuting just one day a week would drop energy consumption by 20%—more than even the most efficient vehicles could ever hope to achieve so quickly.

In the early part of this century, as fuel costs began rising, there was a big push for videoconferencing, telecommuting, and talk about more mass transit. There also was talk about more efficient gasoline engines, possibly new fuel sources such as hydrogen, and promises of super-capacitor recharging stations for electric vehicles. A decade later there is still talk about all of those things and more—Toyota reportedly is working on fuel-cell cars—but the majority of car buyers are still looking at cars that get 20-plus miles per gallon. Why? Because the numbers don’t add up.

It may be time to hand out calculators to policy makers in all governments—the basic kind that can eke enough power out of efficient fluorescent lights so they don’t require additional batteries. This isn’t just a California problem. It’s a global problem, and it needs to get solved from the very top of the largest energy-consuming nations everywhere. We see this in our own industry. While chipmakers can add lots of new power-saving features into chips, there has to be an economic reason for adopting them. And that reason has to begin at the policy level.