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Cars Prius_Exhibit_3

Published on March 28th, 2012 | by Zachary Shahan

7

Prius Rebound Effect Wrong

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March 28th, 2012 by Zachary Shahan 

 
This is a special guest post by Shakeb Afsah and Kendyl Salcito, via CO2 Scorecard (h/t Climate Progress). I remember several years ago hearing this claim that Prius drivers drove more and ended up having a net negative effect on the environment as a result. I assumed that was true, despite being surprising. Oh, the days before I was a blogger and saw more clearly all the misinformation spread around the internet and through the mass media! This is a big one, and big thanks to the folks at the CO2 Scorecard for covering it. Here’s the full post:

There is a new term circulating to suggest that by choosing fuel-efficient and low-energy consumption technologies we actually end up increasing our energy use and CO2 emissions. The “Prius Fallacy” is now the catchphrase for the uselessness of energy efficiency that David Owen of The New Yorker has pitched in the pages of the Wall Street Journal and amplified as the central theme in his recent book Conundrum. Owen has disseminated his claims on the opinion pages of theNew York Times, and the catchphrase has over 4,000 hits on Google within two months after its invention.

We have detailed the empirical flaws in Rebound repeatedly (see the links above) but have not directly tackled the metaphor itself.

The Prius Fallacy rests on two key assumptions: (1) that Prius drivers drive more because they are paying less in gas, and/or (2) that Prius drivers use money saved on fuel to purchase or participate in energy- & carbon-intensive goods and activities.

To address the first assumption we turned to the work of Professor Ken Gillingham of Yale University. Prof. Gillingham meticulously compiled a micro-dataset on personal automobiles for his doctoral research at Stanford. This dataset contains information on personal vehicle registration from automotive data supplier R.L. Polk and actual odometer readings reported by the California Bureau of Automotive Repair, who conduct emissions tests. At our request he matched Vehicle Identification Numbers (VINs) to compare the distribution of vehicle miles traveled (VMT) for a sample of 4,208 Prius owners and around 4.6 million other automobile drivers in California.

The result obliterates the Prius Fallacy’s first assumption. As shown in the comparative histogram in Exhibit-2, there is no difference in VMT by Prius owners and the rest of  California’s drivers. On average Prius owners drove 13,130 VMT/year compared to 13,064 VMT/year for non-Prius owners—a difference of a mere 0.5%. The similarity of the VMT profiles of Prius and non-Prius is confirmed statistically and visually in the overlapping kernel density plot shown in Exhibit-3 (see endnote on data and diagnostic regression). This finding is in line with the simple economic logic produced by Prof. Matthew Kahn of UCLA at the Christian Science Monitor.

When consumers switch from conventional cars to a fuel-efficient hybrid like a Prius which gives 45 miles to a gallon, there is a genuine reduction in the consumption of gasoline – up to 430 gallons per year for an owner who switches from an SUV—an 18-mile-a-gallon vehicle (based on average 13,000 VMT/year).

To understand the significance of 430 gallons (~10 barrels) consider that the US imported roughly 600,000 barrels of gasoline every day in March 2012 (EIA). If around 60,000 people replaced their cars with hybrids, we would eliminate a full day of gasoline import in the course of a single year. If 25 million people replaced their SUVs/trucks and other low mileage passenger cars with hybrids (from America’s ~200 million registered vehicles), we could eliminate gasoline imports entirely (given the import average for 2012 so far). As long as Prius drivers don’t become the world’s largest coal-consumers, it’s hard to see any catastrophic rebound here.

But what if Prius drivers do guzzle coal? This leads us to Owen’s second assumption: that money saved on fuel is spent on carbon-intensive purchases. The fact is, we don’t know how Prius drivers spend the $1500 they save on fuel each year (assuming $3.50/gallon gas prices). Some may hide it in mattresses (zero rebound), some may install solar panels (a case of negative rebound), some may use it for the down payment on a Land Rover (positive rebound). In the worst possible scenario, you can imagine a Prius owner spending all her $1500 to buy anthracite coal to grill burgers in her backyard. We haven’t found a study contrasting the purchasing habits of hybrid drivers and conventional car drivers; as such, we can only rely on the aggregate macroeconomic figures.

As Owen and others have pointed out, about 6-8 percent of the US GDP is spent on energy in a given year. This 6-8% share of the GDP accounts for the total energy we consume—including items like the direct gasoline we buy, the electricity we consume at home, and the indirect or embodied energy used in the production of our cars, dishwashers, etc. The 6-8% share accounts for our aggregate spending behavior—the dollars we directly and indirectly spend on energy consumption.

We expect that an average Prius owner will spend the extra money the same way they spend the rest of their money. In the worst case scenario, then, where 8 percent of a Prius driver’s $1500 fuel savings is spent on energy $120 ($1500*8%) is re-injected into the energy economy. But only 8.3% of the energy expenditure in the US economy is associated with coal—the fossil fuel of most concern (see data and statistical endnotes). Therefore $10 (8.3% of $120) or just 0.7% of the total fuel efficiency savings will rebound to generate CO2 emissions from coal.

Natural gas and petroleum account for 75.5% of energy expenditure in the US. This implies that around $91 ($120*75.5%) or 6% could rebound in the form of energy use from natural gas and petroleum. The total worst case scenario for indirect rebound associated with fossil fuel use adds up to 6.7% (0.7% + 6%).

Some rebound proponents have argued that dollar spent on energy has a two- or three-fold multiplier effect. It is hard to see how that is possible—if up to 8% of our GDP accounts for energy use, it already includes the energy component of the rest of the 92% of the GDP. Both direct and indirect energy use within the economy are included in the 8% share. Adding a two- or three-fold multiplier on top of that would lead to phantom accounting.

There is little in the way of a solid theory or verifiable empirical estimate that proves the existence of multiplier effect in this particular context. And even if we give the benefit of the doubt to the proponents of rebound and assume the existence of multiplier effect, the share of the $1500 savings will on average account for rebound worth $201 (13%) and $301 (20%) for two- and three-fold multipliers respectively.

So, at her worst, an average Prius driver is re-injecting $101-$301 of her $1500 savings into energy use from fossil fuel. And that’s near the worst-case scenario. If Prius drivers don’t drive more than conventional drivers, and if Prius drivers must (lacking evidence to the contrary) be considered among average American consumers, where’s the real fallacy?

Final Thoughts

We’ve written about other failed anecdotes in Owen’s Rebound reporting in the past, including the fallacy that efficient refrigerators have rebound effects – more people buy side-by-side fridges as cooling food gets cheaper. As shown in our earlier research note, rising sales of energy efficient refrigerators coincided with a 3.3% total energy consumption reduction between 2001 and 2005, even as 5.2% more households invested in more than two refrigerators.

Owen’s preference for narrative over fact is concerning, not just because he is informing Americans on key components of climate policy without researching the realities, but because as an established and respected staff writer at The New Yorker he is so well positioned to disseminate this simple and false storyline.

Data and Statistical Notes

A: Description of the vehicle-level dataset

  • Professor Ken Gillingham’s dataset on vehicle ownership and driving behavior is an example of micro-level datasets that are most appropriate for understanding the energy rebound effect at a high-resolution level. Prof. Gillingham compiled this composite vehicle-level dataset for his doctoral research that aimed to quantify the impact of the changes in gasoline prices on consumer behavior in terms of two key effects—how much consumers drive and what vehicles consumers choose to buy.
  • This dataset includes all new vehicle registrations in California from 2001-09 and all of the mandatory smog check program odometer readings for 2002-09. Including the information on demographics, prices, make, model and other variables, the full dataset has tens of millions of observations.
  • We focused on the subsample of Priuses for which there was a title change, and we observed the smog check odometer reading.  The analysis in this research brief compared the VMT of these Priuses first to all vehicles that had a title change and second to all vehicles. In both cases we found no evidence of the “Prius Fallacy”.
  • Additionally, a diagnostic simple regression check was conducted using a dummy for the Prius and controls for demographics, the gasoline price, and economic conditions. The calculation turned out a negative coefficient on the Prius—suggesting that Prius owners may actually drive less than others with similar wealth, location, etc.  This simple check was conducted only for assurance in the comparative histogram of VMTs shown in Exhibit-2.

B: Calculation of the ballpark estimate of energy expenditure by fossil fuel source (2009)

prius rebound effect not true

 

**Source: Annual Energy Review (AER) 2010, US Energy Information Agency (EIA)

**We are thankful to Jon Koomey for helping us crunch the estimates on energy expenditure.

C: Estimate of gallons saved when SUV driver switches to a Prius.


Shakeb Afsah is the President and CEO of the CO2 Scorecard Group and is a leading environmental reporting and disclosure specialist. Kendyl Salcito serves as the Policy Communications Specialist for the CO2 Scorecard initiative. This piece was originally published at the CO2 Scorecard website.

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About the Author

spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media. You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.



  • Mark Brooks

    I love how self appointed doomsayers ignore key facts to sell newspapers.

    The key fact being ingnored in this case by the pundit, like many others critical of new tech green cars and EV’s, is the energy used to refine gasoline ( 7 to 12 kwh a Gallon, ) and the CO2 produced in the refining process.
    If you take this into account then there is no were possible way for this sort of agument to stand. And thier is also no possible way for a gas car, even a prius, to be cleaner than an EV running on the dirtiest coal, as that same energy is required in the refining process.

    Lets be clear, an EV like the GM Volt can go further on the electrical energy used to refine a gallon of gasoline than an average car can on the gas.

    Time for sane thinking people to stop listen to these false fact pundits and drive into a new clean tech future by buying a new EV or fuel efficent car.

  • Bob_Wallace

    “On average Prius owners drove 13,130 VMT/year compared to 13,064 VMT/year for non-Prius owners—a difference of a mere 0.5%.”
    Source: Clean Technica (http://s.tt/18mfw)

    Prior to seeing the data I would have guessed that Prius owners drove more miles. Both before and after they bought their Prii. That they purchased a very efficient car because they drove a lot and wanted to save money on fuel.

    • http://cleantechnica.com/ Zachary Shahan

      and there probably isn’t even any statistical significance in the difference there.

  • TedKidd

    “Owen’s preference for narrative over fact is concerning, not just because he is informing Americans on key components of climate policy without researching the realities, but because as an established and respected staff writer at The New Yorker he is so well positioned to disseminate this simple and false storyline.
    Source: Clean Technica (http://s.tt/18mfw)

    Nicely put. Seems NY Times may be losing its ability to deliver high quality journalism. Also like Simon Oliver’s point, reduced consumption reduces demand which reduces price. It would be nice if there was a way to avoid that price drop, seems a bit of a penalty for those who improve efficiency and free ride for those who don’t.

  • http://www.facebook.com/people/Shecky-Vegas/1380703171 Shecky Vegas

    This sort of mis-information is along the lines of that nonsense spouted years ago about the fat substitute Olestra. Because it was to cut the caloric content of fried foods in half, it was assumed the general tubbo population would now eat twice as much in fried foods.

    That didn’t happen, of course, and several studies by the FDA confirmed the general fatso eating habit wasn’t really affected by those items advertised as being made with Olestra.

    However, it WAS funny when everybody started crapping their pants…

    • http://cleantechnica.com/ Zachary Shahan

      Yep.

  • http://www.facebook.com/profile.php?id=732186947 Simon Oliver

    This is actually a mis-statement of Jevon’s paradox. It’s not the Prius driver that drives more, it’s everyone. Reducing demand for a product through making (some) vehicles more efficient means that the price does not go as high as it might if demand remained at the higher level. The difference in price affects millions of purchasing and usage decisions, the net effect of which is to increase overall usage relative to the level it would be if the efficiency had not been implemented.

    The only way to make the market work effectively is to eliminate the externalities that are not reflected in the price of the product, which means a carbon price on fossil fuels.

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