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Published on August 10th, 2009 | by Joanna Schroeder

Hybrid Vehicles Failing to Produce Environmental Benefits

August 10th, 2009 by  
 

Despite government rebates for hybrids offered to consumers in U.S. and Canada, the programs are failing to produce environmental benefits, yet the programs continue to cost consumers. This according to a new study, “Green Drivers or Free Riders? An Analysis of Tax Rebates for Hybrid Vehicles,” from the University of British Columbia (UBC).

[social_buttons]The study finds that hybrid sales have not replaced gas guzzling SUVS, but rather have replaced small, relatively fuel-efficient, conventional cars. Too bad considering SUVS, trucks and vans produce substantially greater carbon emissions.

Amarish Chandra, a professor at UBC’s Sauder School of Business and co-author of the study said, “If the intention of rebate programs is to replace gas guzzlers with hybrids, they are failing.”

He goes on to say that large vehicle sales have risen steadily since the introduction of hybrid rebates. The study also finds that the majority of consumers who purchase hybrids were not motivated to do so by government rebates.

“People are choosing hybrids over similarly priced small- and medium-sized conventional cars, which are not far behind hybrids for fuel efficiency and emissions,” says Chandra. “The reductions in carbon emissions are therefore not great.”

Hybrid rebate programs are currently offered by the governments of the U.S. and 13 states, including Washington, Oregon, Illinois and Colorado, and five Canadian provinces, including B.C., Ontario, Quebec, PEI and Manitoba. The Canadian government offered hybrid rebates during 2007-2008.

“Our estimates indicate that two-thirds of people who buy hybrids were going to buy them anyway,” said Chandra. “So for the majority, rebates are not changing behavior – they are subsidizing planned purchases.”

“When B.C.’s rebate jumped from $1,000 to $2,000 in 2005, the actual cost of reducing carbon emissions more than doubled,” he says, noting that Ontario recently increased its rebate to a maximum of $10,000 per hybrid vehicle. In the U.S. hybrid rebates can range from $900 up to $3,400 but some models no longer qualify, such as the Toyota and Honda hybrids. Apparently, the inefficiency of rebate programs rises disproportionately when governments increase rebate levels.

The study finds that Canadian provinces that offer rebates have spent an average of $195 per tonne of carbon saved or, equivalently, $0.43 for every litre of gasoline that a vehicle consumes over its 15 year average life expectancy.

But this isn’t enough. Chandra claims that governments could garner greater environmental benefits by purchasing carbon offsets (currently priced between $3 and $40 per tonne on carbon markets) or investing in green jobs and technologies. However, carbon offsets are a murky area, and the U.S. government has currently passed a cap and trade policy which I fondly call “crap and raid”.

While hybrid rebates help governments to appear environmentally progressive, Chandra suggests that some programs may serve as de facto “bailouts” for the North American auto industry.

“The criteria for Ontario’s recent rebate increase seem designed to benefit domestic manufacturers, especially General Motors,” Chandra says. “The biggest rebates will be given to purchasers of the Chevy Volt, rather than other hybrids like the Toyota Prius.”

In addition to Chandra, the other authors include Sumeet Gulati, assistant professor in UBC’s Dept. of Food and Resource Economics and Milind Kandlikar of UBC’s Liu Institute for Global Issues and Institute of Asian Research. Researchers used Canadian vehicle sales data over a 17-year period from 1989 to 2006. Results are believed to extend to the U.S. market, given the similarities between auto industries, in terms of vehicle buying patterns, pricing structures and car models.





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About the Author

Joanna is a writer and consultant specializing in renewable energy and sustainable agriculture issues.



  • Sales will eventually pick up. This is just part of the teething process. We need to start somewhere.

  • Sales will eventually pick up. This is just part of the teething process. We need to start somewhere.

  • Sales will eventually pick up. This is just part of the teething process. We need to start somewhere.

  • Seems to me like most folks who are buying gas-guzzlers today are buying them not as status symbols, but because they need the extra capacity on an at least semi-regular basis and they’re willing to pay the pain at the pump in order to have it when it’s needed.

    Ain’t no way you’re going to be able to use an Insight to haul 4-6 kids and camping gear, or metric craploads of stuff for home improvemnt projects, or a trailer with a couple of dirt bikes, or a travel trailer out to your favorite campground – there’s just not the capacity.

  • Seems to me like most folks who are buying gas-guzzlers today are buying them not as status symbols, but because they need the extra capacity on an at least semi-regular basis and they’re willing to pay the pain at the pump in order to have it when it’s needed.

    Ain’t no way you’re going to be able to use an Insight to haul 4-6 kids and camping gear, or metric craploads of stuff for home improvemnt projects, or a trailer with a couple of dirt bikes, or a travel trailer out to your favorite campground – there’s just not the capacity.

  • Seems to me like most folks who are buying gas-guzzlers today are buying them not as status symbols, but because they need the extra capacity on an at least semi-regular basis and they’re willing to pay the pain at the pump in order to have it when it’s needed.

    Ain’t no way you’re going to be able to use an Insight to haul 4-6 kids and camping gear, or metric craploads of stuff for home improvemnt projects, or a trailer with a couple of dirt bikes, or a travel trailer out to your favorite campground – there’s just not the capacity.

  • Brett

    Anyone look at all the SUV hybrids coming out?

    This article is misleading and misguided in my opinion as while the facts may be true the first hybrids could never have worked in large SUVs. This technology is still developing, and as we see already is just now spreading to larger, less efficient vehicles. It is in this market, the SUV market, where we will see the best, marginal improvement in mpg.

  • Brett

    Anyone look at all the SUV hybrids coming out?

    This article is misleading and misguided in my opinion as while the facts may be true the first hybrids could never have worked in large SUVs. This technology is still developing, and as we see already is just now spreading to larger, less efficient vehicles. It is in this market, the SUV market, where we will see the best, marginal improvement in mpg.

  • Brett

    Anyone look at all the SUV hybrids coming out?

    This article is misleading and misguided in my opinion as while the facts may be true the first hybrids could never have worked in large SUVs. This technology is still developing, and as we see already is just now spreading to larger, less efficient vehicles. It is in this market, the SUV market, where we will see the best, marginal improvement in mpg.

  • Tim Cleland

    “However, carbon offsets are a murky area, and the U.S. government has currently passed a cap and trade policy which I fondly call “crap and raid”.”

    Joanna is my favorite Gas 2.0 writer! 🙂

    Regarding the hybrids, I always thought the Ford Escape Hybrid was the most important hybrid on the road. I could see that actually replacing a larger SUV for some people (resulting in a net mpg gain of 50-100%), but a Toyota Prius just doesn’t have the cargo capacity that a family needs. People who drive them are probably people who would drive a Corolla/Civic if hybrids didn’t exist.

  • Tim Cleland

    “However, carbon offsets are a murky area, and the U.S. government has currently passed a cap and trade policy which I fondly call “crap and raid”.”

    Joanna is my favorite Gas 2.0 writer! 🙂

    Regarding the hybrids, I always thought the Ford Escape Hybrid was the most important hybrid on the road. I could see that actually replacing a larger SUV for some people (resulting in a net mpg gain of 50-100%), but a Toyota Prius just doesn’t have the cargo capacity that a family needs. People who drive them are probably people who would drive a Corolla/Civic if hybrids didn’t exist.

  • Mark Thomason

    Good article, but misleading headline. I think it should have been something like “Government incentives fail to persuade bug vehicle owners to buy hybrids”.

    This conversion (large vehicles to hybrids) is dependent on a lot more things than money. People buying these things often point out safety, roominess, high driving position, hauling capacity and “manly looks” as being factors in their decision to own these behemoths…even when many of these factors are mostly perceptions (safety) or things they never use (hauling capacity). That said, it will take a while to change their minds….and $5/gallon gas will help…it’s just a matter of time.

  • Mark Thomason

    Good article, but misleading headline. I think it should have been something like “Government incentives fail to persuade bug vehicle owners to buy hybrids”.

    This conversion (large vehicles to hybrids) is dependent on a lot more things than money. People buying these things often point out safety, roominess, high driving position, hauling capacity and “manly looks” as being factors in their decision to own these behemoths…even when many of these factors are mostly perceptions (safety) or things they never use (hauling capacity). That said, it will take a while to change their minds….and $5/gallon gas will help…it’s just a matter of time.

  • Mark Thomason

    Good article, but misleading headline. I think it should have been something like “Government incentives fail to persuade bug vehicle owners to buy hybrids”.

    This conversion (large vehicles to hybrids) is dependent on a lot more things than money. People buying these things often point out safety, roominess, high driving position, hauling capacity and “manly looks” as being factors in their decision to own these behemoths…even when many of these factors are mostly perceptions (safety) or things they never use (hauling capacity). That said, it will take a while to change their minds….and $5/gallon gas will help…it’s just a matter of time.

  • ChuckL

    When hybrids are without the capacity needed by a family or a single person, they make no sense. I should really like the efficiency, but I can not afford two vehicles and no hybrid yet, with the possible exception of the GM hybrid pickup truck that is an excellent reason to dislike hybrids could tow my “Ultra-Lite” travel trailer safely.

    Now, if you can get me a hybrid pickup that has the towing capability of a Ford F-250 diesel and the mileage of a Ford Fusion, I’m definitely interested, but I suspect that it would be priced out of my price range.

  • ChuckL

    When hybrids are without the capacity needed by a family or a single person, they make no sense. I should really like the efficiency, but I can not afford two vehicles and no hybrid yet, with the possible exception of the GM hybrid pickup truck that is an excellent reason to dislike hybrids could tow my “Ultra-Lite” travel trailer safely.

    Now, if you can get me a hybrid pickup that has the towing capability of a Ford F-250 diesel and the mileage of a Ford Fusion, I’m definitely interested, but I suspect that it would be priced out of my price range.

  • ChuckL

    Tim’s comment above is definitely relevant. My daughter has a Prius and it is too small to hold her, her husband and their three children, all of whom are required by California law to be in car seats.

    On the other hand, my Quad-Cab Dakota pickup can hold all of them and me in reasonable comfort. Much better than the Prius, and it can carry a large, but light load in the covered bed at the same time. The short story is that for day trips to a family gathering, my pickup is a more efficient way to travel than the TWO Priuses that would be needed.

  • ChuckL

    Tim’s comment above is definitely relevant. My daughter has a Prius and it is too small to hold her, her husband and their three children, all of whom are required by California law to be in car seats.

    On the other hand, my Quad-Cab Dakota pickup can hold all of them and me in reasonable comfort. Much better than the Prius, and it can carry a large, but light load in the covered bed at the same time. The short story is that for day trips to a family gathering, my pickup is a more efficient way to travel than the TWO Priuses that would be needed.

  • ChuckL

    The carbon offsets in the “Cap and Trade” legislation whatever its real mane, are nothing more than a way to continue releasing carbon into the environment while feeling good and increasing costs to the consumer to pay for the credits. Are you able to say, “GOVERNMENTAL SCAM”.

    The only benefit from “Cap and Trade” is higher prices that allow the government fo collect higher taxes, and of course huge incomes for those who sell the credits. Can you say “WINDFALL PROFITS”?

  • ChuckL

    The carbon offsets in the “Cap and Trade” legislation whatever its real mane, are nothing more than a way to continue releasing carbon into the environment while feeling good and increasing costs to the consumer to pay for the credits. Are you able to say, “GOVERNMENTAL SCAM”.

    The only benefit from “Cap and Trade” is higher prices that allow the government fo collect higher taxes, and of course huge incomes for those who sell the credits. Can you say “WINDFALL PROFITS”?

  • ChuckL

    The carbon offsets in the “Cap and Trade” legislation whatever its real mane, are nothing more than a way to continue releasing carbon into the environment while feeling good and increasing costs to the consumer to pay for the credits. Are you able to say, “GOVERNMENTAL SCAM”.

    The only benefit from “Cap and Trade” is higher prices that allow the government fo collect higher taxes, and of course huge incomes for those who sell the credits. Can you say “WINDFALL PROFITS”?

  • Richard

    People that buy SUV, buy them for a reason. They need the space or need the ground clearance or need the towing ability and or the safety that a larger vehicle provides. Once the tree hugger and the car companies figure that out and make an affordable Low Carbon SUV. People will buy it. AFS Trinity has Proven that it can be done.

    Remember the CUSTOMER is ALWAY RIGHT. If your customer wants a large SUV make it as Green as possible. Don’t try to tell then or try shame them in to a car they don’t want. THEY WON’T BUY.

  • Richard

    People that buy SUV, buy them for a reason. They need the space or need the ground clearance or need the towing ability and or the safety that a larger vehicle provides. Once the tree hugger and the car companies figure that out and make an affordable Low Carbon SUV. People will buy it. AFS Trinity has Proven that it can be done.

    Remember the CUSTOMER is ALWAY RIGHT. If your customer wants a large SUV make it as Green as possible. Don’t try to tell then or try shame them in to a car they don’t want. THEY WON’T BUY.

  • Richard

    People that buy SUV, buy them for a reason. They need the space or need the ground clearance or need the towing ability and or the safety that a larger vehicle provides. Once the tree hugger and the car companies figure that out and make an affordable Low Carbon SUV. People will buy it. AFS Trinity has Proven that it can be done.

    Remember the CUSTOMER is ALWAY RIGHT. If your customer wants a large SUV make it as Green as possible. Don’t try to tell then or try shame them in to a car they don’t want. THEY WON’T BUY.

  • Aaron

    I think the first sentence says it all, “If the intention of rebate programs is to replace gas guzzlers with hybrids, they are failing.”

    The benefit of rebate programs is to help get more efficient vehicles over the hump, or increase volumes and learning to get the cost down so in the future vehicles gain wide market shares without rebates. That is where the real benefits are.

  • Aaron

    I think the first sentence says it all, “If the intention of rebate programs is to replace gas guzzlers with hybrids, they are failing.”

    The benefit of rebate programs is to help get more efficient vehicles over the hump, or increase volumes and learning to get the cost down so in the future vehicles gain wide market shares without rebates. That is where the real benefits are.

  • Aaron

    I think the first sentence says it all, “If the intention of rebate programs is to replace gas guzzlers with hybrids, they are failing.”

    The benefit of rebate programs is to help get more efficient vehicles over the hump, or increase volumes and learning to get the cost down so in the future vehicles gain wide market shares without rebates. That is where the real benefits are.

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