Wednesday, May 09, 2007

Unsafe Green?

The small cars needed to get high mileage may be too small to be safe in crashes.

Green But Unsafe
By John D. Graham
This commentary appeared in Wall Street Journal, Europe Edition on April 18, 2007.

The European Union is busy preparing new rules to encourage greener vehicles following its February decision to force the auto industry to produce cars that emit less carbon dioxide. Whatever the plan's effectiveness in slowing the pace of global warming, the regulatory impact assessment now being drawn up will need to consider a factor that is often overlooked: the safety of motorists.

Nowhere in Brussels' 13-page plan is the word "safety" even mentioned. Unless carefully designed, the new rules may inadvertently stimulate the auto industry to produce smaller cars that provide inferior crash protection.

There are lessons to be learned from U.S. regulatory mistakes. In 1974, Congress mandated a doubling in car fuel efficiency to 28 miles per gallon from 14. The rules duly led to a cut of fuel consumption. However, the U.S. National Academy of Sciences estimated that they also resulted each year in 2,000 additional traffic deaths and 30,000 nonfatal injuries.

As a consequence, the U.S. suspended these fuel-economy rules in the 1990s for more than a decade. Brussels can avoid a similar debacle by trying to anticipate the auto industry's response to regulation. When a car maker is subjected to carbon-emission or fuel-economy constraints, it has three options: Produce smaller vehicles (since lighter cars consume less fuel); make engines less powerful; or implement fuel-saving innovations, such as advanced diesel or hybrid-electric systems.

But such innovative technologies are much more expensive. Without a sharp reduction in the costs of batteries, a hybrid engine will add thousands of euros to the cost of a car. At the same time, competitive pressures in the industry — in response to consumer demand — are causing car makers to offer progressively more powerful engines. Unless those are heavily taxed, neither consumers nor manufacturers will opt for less horsepower.

Offering smaller vehicles is therefore often the most attractive way for car makers to comply with environmental rules. That is especially true if deadlines are tight and the company is strapped for cash. Smaller cars save production costs. Given that Europe's car fleet is already much smaller than the U.S. fleet, downsizing could have even more severe consequences in Europe than it had across the Atlantic.