Rhinocrisy

It takes a special kind of mind to devise a scheme in which energy-efficiency incentives reduce the nation’s energy efficiency. Fortunately, Washington is blessed with just such gifted craniums, as shown by the hybrid car incentives in the energy bill.

As Saurabh notes immediately below, there are some very expensive (for the government) tax credits for purchasers of hybrid cars. He rightly complains that they are designed to benefit American manufacturers at the expense of the Japanese innovators, but that’s par for the course. A bigger problem is that they move substantial cash from the Treasury — which is to say, duties on Chinese spark plugs and whatnot — to people rich enough to buy hybrids.

There is evidence that existing incentives for hybrids are working — that is, gas prices, social conscience, and social status. There’s already a waiting list for the Prius, the most fuel-efficient hybrid out there.

Meanwhile, I’ve seen no evidence that owning a Prius reduces household energy use — there are plenty of anecdotes about buyers suffering from moral hazard-itis. That is, buyers know they are using less gas per mile, so they drive more miles.

The bill also includes direct subsidies to American carmakers to build hybrids — as if the invisible hand weren’t already bitch-slapping them in that direction.

Compare this to some other places where a bit of federal money could make a real difference. How about if the feds subsidized low- and moderate-income households to help them purchase new homes in dense walkable urban areas by expanding the “location-efficient mortgage” program? Imagine that — offering money to people to help them lead lives scientifically proven to use less fuel? Or maybe paying for insulation and storm windows for low-income rental units? Yes, it subsidizes slumlords, but it also saves lots of energy while improving comfort and health for the poor.

But wait, there’s more. The energy bill requires states to consider “high-mileage” hybrids to be high-occupancy vehicles, allowing them in HOV lanes. Great idea if your goal is to clog up the HOV lanes with cars that get 33 person-miles a gallon, thereby slowing down the people who are actually sacrificing a bit of comfort by car-pooling. A Ford Explorer with 4 people in it gets 60 person-miles per gallon. It deserves the HOV lane. A 1989 Civic with the A/C off can get 45 miles a gallon. Maybe it should deserve some privileges. A 2005 Chevy Silverado hybrid with an automatic transmission gets 19 mpg highway — now that’s who I want to reward! (NOTE: I JUST TRIED TO FACT-CHECK THIS PARAGRAPH BY READING THE 1,700-PAGE ENERGY BILL. I DON’T SEE THE HOV-LANE STUFF IN THERE, SO MAYBE IT DISAPPEARED AT THE LAST MINUTE. SOMEONE SHOULD TELL THE LA TIMES.

In any case, the overall fleet fuel economy is now allowed to remain fixed at its current level until at least 2010. Which means that every hybrid sold allows Detroit to sell another Hummer.

All in all, we have a winner!

Via CT, this NY Times piece, which sadly points out that the apparent tax credit for hybrid vehicles actually caps out at 60,000 vehicles per manufacturer.

The energy bill sets up a complex formula that begins restricting eligibility for the tax credit once an automaker sells 60,000 gas-electric hybrids or cleaner burning diesels, known as advanced lean-burn vehicles.

Once an auto company hits the 60,000 mark, it has the remainder of that fiscal quarter plus one additional quarter in which buyers of its vehicles can receive the full credit. The credit ranges from $250 to $3,400 depending on the fuel efficiency of the vehicle.

During the two quarters immediately after the cars and trucks of the automakers become ineligible for the full credit, buyers would receive 50 percent of the credit. The next two quarters after that, the credit is 25 percent. The credit is phased out entirely at the end of the fifth full quarter after the automaker sells 60,000 hybrids or advanced diesels.

Note that Toyota plans to sell 140,000 hybrids this year, meaning it will probably hit the cap in the second quarter. Implication?

By capping the credit, Congress has limited the incentives available to companies that have been at the forefront of hybrid technology.

“Ironic isn’t it?” said Ed Cohen, Honda’s vice president for government and industry relations. “It really does create market mismatch.”

Meaning, when DaimlerChrysler and GM finally get in the game in a few years, they’re going to have an advantage.

Might be time to start reading the bill text to see what other goodies are buried in there.