06/05/2010 05:12 am ET | Updated May 25, 2011

Strategies for Plug-In Hybrid Vehicles Leading to Less Pollution

Many of us are excited by the new plug-in hybrid vehicles (PHEVs) coming into the market later this year. They're cool, high-tech and use less gasoline from countries that don't like us very much and threaten America's national security. They're a big winner for reducing pollution in the targeted markets. What's not to like about cars with environmentally-friendly names like the Nissan Leaf, or charged-up names like the Chevy Volt?

The devil is in the details, however, when it comes to whether driving and charging the PHEVs will lead to less, instead of more, pollution compared with "conventional" hybrid gas-electric vehicles (HEVs) that are available to consumers today. As my real estate friends say, it's about "location, location, location." It's also about what time you're charging the PHEV. Whether the mix of electricity generating sources used for charging are high-CO2 or low-CO2 depends a lot on the location and the time of day. In short, if the charging source is electricity generated by old highly-polluting coal plants, on balance, that may hurt the environment more than it helps in some cases.

That's the conclusion of a 2009 study by the National Research Council of the National Academies and a 2007 study issued by the Minnesota Pollution Control Agency. When coal plants supply more than 50% of the power mix, the equation is not favorable for PHEVs compared to HEVs when it comes to the CO2 pollution (global warming) and SO2 (acid rain-causing) pollution; for other pollutants the data varies. HEVs work better for the environment in these places.

The new federal clean car standards issued on April 1, 2010 recognize this challenge when it comes to accounting for greenhouse gas pollution. That's why the U.S. EPA and NHTSA standards provide that the first 200,000 PHEVs and other electric vehicles sold are treated as "zero emissions" for CO2, but additional electric vehicles would assume some responsibility for the CO2 created while producing the electricity to charge them.

PHEVs are an important emerging technology -- where the cleaner energy power sources are used to charge their batteries. Let's compare and contrast among markets. In Indiana, about 95% of the electricity is supplied by coal plants. It's not a good place to look for PHEVs as a pollution solution. However, in Northern Illinois, most of the power supplied at the margin at night is from low/no-CO2 wind power and nuclear power plants. Much better.

Peak power prices are very high on hot summer afternoons when the most highly polluting plants tend to be running on the margin to meet soaring electricity demand from cranked-up air conditioners and fans. However, at night, the Northern Illinois power market has so much surplus nuclear and wind power available that prices are very low. Indeed, during some night-time hours, as supply exceeds demand, the prices are so low that the can't-easily-be-shut-down (so-called "must run") nuclear plants and wind turbines are "running negative" They make money selling power during the day, but are essentially giving it away at night.

Here are three policies and actions that help make the PHEV pollution equation work favorably:

1. Location Matters - Let's Pick Our Places for PHEVs vs. Conventional HEVs: Let's push for PHEV-favorable policies in those parts of the Midwest and the country where wind power, solar power, hydro power and nuclear power supply more than half of the power mix. Northern Illinois (nuclear and wind power) is a good market. South Dakota, too (hydro and wind power). Coal-heavy Indiana and Southern Illinois are not. Sorry. In many places, HEVs work better for the environment.

2. Time Matters - Discount Off-Peak Electric Rates for PHEV Charging: In most Midwestern states, electricity rates are flat, while power market prices are not. On a hot summer day, consumers may be paying less then the market price per kw of electricity, but on that same summer night, the utility may be charging much more than the power, transmission and delivery actually cost. Therefore, utilities have an incentive to encourage PHEV owners to charge their cars during off-peak night times, rather than during high-price peak power day times. Time of use rates are economically justified, but complicated for many social, practical and equity reasons to implement on an across the board basis. However, there are steps that we can take in a sensible direction.

Offering discounted off-peak rates that incentivize PHEV owners to charge their cars in their garages at night, instead of during the day, is a win-win-win-win when the location is right as discussed above. The wind power, nuclear power and hydro power generating companies gain new, more profitable sales. The utilities gain profitable electricity sales, rather than losing money by selling peak-priced power at lower flat rates on hot summer days. Consumers who charge their PHEVs at night save money (about $150 - $175 per year in Northern Illinois) through the discounted off-peak rates. All of us gain environmental quality benefits from PHEV charging when the energy mix equation results in less pollution instead of more.

Let's bring environmental groups, consumer groups, auto companies, utilities, nuclear plant owners and wind power owners and developers together to petition the state public utility commissions to authorize pilot programs of discounted off-peak rates for PHEV charging. New meters will be required, but those costs can be amortized through the rate savings over time.

3. Time Matters - Solar Power Works Well for PHEV Charging: Solar energy is most available on hot, sunny afternoons when power market prices are highest and the power is needed most. So, if PHEV charging stations are powered by solar, the pollution equation works well. How can we encourage that to happen? First, by using planning, zoning and electric utility regulatory laws and policies to encourage location of charging stations in places where there is good solar access. Second, authorizing favorable net metering rates for charging stations to sell solar-generated power back into the grid when it is not fully used for charging cars. Third, possibly direct some of the current public incentives for solar PV installations to PHEV charging stations.

The Northern Illinois Plug-In Hybrid Opportunity: President Obama has stated his national goal of 1 million PHEVs on the road by 2015 (PDF). Let's look at the fundamentals of the opportunity in his home area, which is one of the best places in the country for PHEVs to accelerate:

  • Large market of car buyers and users in third largest metro area in the U.S.

  • Large amount of auto manufacturing and suppliers, including two existing plants that could potentially be retooled - the Ford plant on the southeast side of Chicago, and the Chrysler plant in Belvedere.

  • Surplus, zero marginal cost, no-greenhouse gas wind power on-line and under development, which should ramp up to 20% of ComEd's power mix within a decade under the Illinois Renewable Energy Standard law. Some of this excess supply is now being sold out-of-state.

  • Surplus, low marginal cost, no-direct greenhouse gas nuclear power generation. Exelon Generation has the largest concentration of nuclear plants in U.S. The price/cost of this power at night is cheap, and this is most of ComEd's delivered electricity supply.

  • Precedent for setting pilot program time-of-use rates, which would offer low off-peak electricity rates for PHEV battery-charging at night. This creates an economic incentive for PHEV ownership and use, while still being profitable for ComEd and Exelon Generation to sell surplus nuclear power at night at low rates that exceed the marginal cost of the generation and delivery. This would also be highly beneficial for wind power generators who need an expanded power market at night - more off-peak sales would be a major driver for this renewable energy development as wind power is relatively plentiful at night, but searching for a market.

In short, the markets, policies and players are aligned in Northern Illinois for this PHEV strategy to succeed. This is a win-win-win-win for more transportation efficiency and better national security, less global warming pollution, more utility and energy generation company revenues, and more job creation.

Getting more PHEVs on the road is a key step forward in terms of reducing our dependence on foreign oil and, in some parts of the country, they also can sharply reduce both CO2 pollution. However, in places whose electricity comes primarily from coal, we need to develop PHEVs simultaneously with legislation to clean up the electricity system. Then everyone can take full advantage of PHEVs' technological improvements.

The pollution equation shifts dramatically depending on the power mix in the charging location and the time of day. From an environmental standpoint, location and time matter, a lot. We don't want more electricity load and pollution from PHEVs charging in all places at all times. We should focus on supporting PHEV rollouts in those places and at those times where there is excess low/no-CO2 wind, hydro and nuclear power available at the margin. Let's drive the market to achieve common benefits for the car-buying public, clean energy generators and utilities, clean car manufacturers and auto workers, and national security.

Howard A. Learner is the executive director of the Environmental Law and Policy Center, the Midwest's leading environmental and economic development advocacy organization.