While everyone was busy focusing on the recently consummated mid-term elections, the administrative state was humming right along, busily devising new and creative ways to micro-manage civilization.
Few noticed it, but hovering just below a surface cluttered with insufferable ads, candidates, and ballot measures, was the issue of Colorado’s adoption of California’s Low Emission Vehicle standards.
You may recall that last June Gov. Hickenlooper, perhaps practicing for a future endeavor, exercised his executive pen, Obama-style, and issued an executive order fettering Colorado to California’s vehicle emission standards. Essentially, the regulations impose a mandate requiring 22 percent of auto sales by 2025 be generated from low-emission vehicles – hybrids and electric cars. Sales of those vehicles currently make up a shade over one percent.
Since federal law requires any state joining California’s waiver to maintain regulations identical to theirs, this means that any future changes California regulators make to the standards will automatically apply to Colorado, whether Colorado cares for it or not.
Setting aside for the moment the obvious offense to the principle of federalism and state sovereignty, there is the equally obvious offense to the science of economics. The imposed mandates are necessarily unattainable – were it otherwise, no mandate would be needed. So how does a dealership go about complying with the new diktat? Well for starters they will need to apply heavy discounts to the cars that the law – but nobody else – wants. That cost, of course, will need to be shifted onto the vehicles that the dealerships can actually sell, and which are useful in Colorado’s snow and mountains – namely pickups and SUV’s. It is estimated that the regulations will add at least $6,000 to the cost of a new vehicle in the state.
One result is as ironic as foreseeable; if new SUV’s are more expensive fewer people will buy new SUV’s, opting to hang on to their old clunker for as long as possible. That old clunker invariably spews far more emissions into the atmosphere than the new ones which California, with the help of John Hickenlooper and the Colorado Air Quality Control Commission, seek to price out of reach.
So the California regulations are unlikely to generate a positive impact on air quality, but they will generate a pretty positive impact on Tesla’s bottom line. The mandate on the car dealers is accomplished through a system of assigning LEV credits to each dealership, credits which can be bought by dealerships which are unable to meet the quota (most of them), or sold by those which exceed it (exclusively Tesla).
This, in fact, is Tesla’s business model. Mr. Elon Musk’s venture consistently loses money, insomuch as his product consistently fails the impartial judgment of the marketplace. The California low- and -zero emission mandates have therefore been a gift for him – he can’t sell his zero emission cars, but lo, he can sell low- and zero emission credits, for which he alone has a surfeit. The expansion of coastal liberal states opting to fall in line with the California regulations is the cornerstone of Tesla’s corporate survival strategy.
So the LEV mandates will drive up inflation in Colorado, set back the state’s success in improving air quality, and do nothing except financially support Tesla. It seems reasonable to wonder just why Mr. Hickenlooper saw fit to hang this albatross around the state’s neck – and to do so by executive order, no less, rather than legislatively. And why now, halfway through his eighth and final year in office?
The most obvious answer is the political one. Hickenlooper sees a president in the mirror as he shaves every morning. But first he must win a primary. Whatever his faults, Hickenlooper has been reasonably moderate and prudent on economic and energy issues, traits which have infuriated the environmental far left, a sect which has metastasized throughout his party, encompassing most of its base. Few things get liberal activists salivating quicker than the prospect of instituting a radical program in middle-of-the-road, heartland Colorado, just to show it can be done in places other than San Francisco and Portland. He knows he needs to win those people back, and this was the perfect bone to throw them.
That probably also explains why he elected in September to replace an energy expert on the AQCC with a professional environmental activist who has been described as a “goofy climate-change guy.”
There could be a further explanation; it is no secret that Hickenlooper is close with one Kimbal Musk, brother of Elon and board member of Tesla Inc., even officiating his wedding. I’m unsure what range of services a sitting governor typically provides a friend in the course of overseeing his nuptials, but might it include a little executive wheel-greasing?