ICE Roadkill

Several countries have now announced eventual bans of internal combustion engines. It’s nice that such a thing can now be contemplated, but this strikes me as a fundamentally flawed approach.

Banning a whole technology class outright is inefficient. When push comes to shove, that inefficiency is likely to lead to an implementation that’s complex and laden with exceptions. Bans and standards are better than nothing, but that regulatory complexity gives opponents something real to whine about. Then the loonies come out. At any plausible corporate cost of capital, a ban in 2040 has near-zero economic weight today.

Rather than banning gas and diesel vehicles at some abstract date in the far future, we should be pricing their externalities now. Air and water pollution, noise, resource extraction, the opportunity cost of space for roads and parking, and a dozen other free rides are good candidates. And, electric vehicles should not be immune to the same charges where applicable.

Once the basic price signal points the transportation market in the right direction, we can see what happens, and tinker around the edges with standards that address particular misperceptions and market failures.

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