The irony: Green policies hurt Chevy Volt

Trying to reinvent our energy landscape is a task fraught with troublesome and unintended consequences. Just look at all the flak that’s been heaped on the corn ethanol industry for its reported impact on world food prices and carbon emissions (growing corn requires some heavy carbon inputs).

Now we hear that oh-so-green California, with its tiered electricity price system aimed at reducing energy consumption, could unwittingly be hurting its prospects for an electric car revolution.

That’s because electricity users in California pay more for power the more they use, with three tiers of increasing prices.

“Almost everyone in California reaches the third pricing tier each month,” says Wally Tyner, an agricultural economist at Purdue University. “If they add a plug-in hybrid, they are charged the highest rate.”

In a study published in the journal Energy Policy, Tyner compares the economics of the Chevy Volt with the hybrid, but not plug-in, Toyota Prius and the internal combustion engine-driven Chevy Cobalt. The findings aren’t encouraging for electric-car-minded Californians: when considering both purchase and operating costs, the Cobalt makes the most economic sense when oil prices are relatively low. As oil prices rise, the Prius becomes the better choice for California motorists. (On the other hand, plug-ins can be more economical in other states with flat rates and low off-peak prices.)

Tyner calculates that oil prices would have to fly up to between $171 and $254 a barrel (West Texas Intermediate crude currently stands at around $91 a barrel) before the Chevy Volt  became the most economical option for Californians. At those prices, of course, it’s unlikely anyone will be rushing out to buy a new car — plug-in or not — as the last oil price peak of $145 in 2008 is widely believed to have helped crash the economy.

Tyner offers two suggestions for California if it wants to see more residents opt for plug-in cars: change its current electricity pricing system or install special electricity meters just for charging electric cars at flat rates.

And the lesson learned? The path toward a smart grid can be blocked by some unexpectedly dumb side-effects of well-intended policies.