(Wall Street Journal, Europe Edition)

Green But Unsafe

by John D. Graham

April 18, 2007

The European Union is busy preparing new rules to encourage greener vehicles following its February decision to force the auto industry to produce cars that emit less carbon dioxide. Whatever the plan's effectiveness in slowing the pace of global warming, the regulatory impact assessment now being drawn up will need to consider a factor that is often overlooked: the safety of motorists.

Nowhere in Brussels' 13-page plan is the word "safety" even mentioned. Unless carefully designed, the new rules may inadvertently stimulate the auto industry to produce smaller cars that provide inferior crash protection.

There are lessons to be learned from U.S. regulatory mistakes. In 1974, Congress mandated a doubling in car fuel efficiency to 28 miles per gallon from 14. The rules duly led to a cut of fuel consumption. However, the U.S. National Academy of Sciences estimated that they also resulted each year in 2,000 additional traffic deaths and 30,000 nonfatal injuries.

As a consequence, the U.S. suspended these fuel-economy rules in the 1990s for more than a decade. Brussels can avoid a similar debacle by trying to anticipate the auto industry's response to regulation. When a car maker is subjected to carbon-emission or fuel-economy constraints, it has three options: Produce smaller vehicles (since lighter cars consume less fuel); make engines less powerful; or implement fuel-saving innovations, such as advanced diesel or hybrid-electric systems.

But such innovative technologies are much more expensive. Without a sharp reduction in the costs of batteries, a hybrid engine will add thousands of euros to the cost of a car. At the same time, competitive pressures in the industry — in response to consumer demand — are causing car makers to offer progressively more powerful engines. Unless those are heavily taxed, neither consumers nor manufacturers will opt for less horsepower.

Offering smaller vehicles is therefore often the most attractive way for car makers to comply with environmental rules. That is especially true if deadlines are tight and the company is strapped for cash. Smaller cars save production costs. Given that Europe's car fleet is already much smaller than the U.S. fleet, downsizing could have even more severe consequences in Europe than it had across the Atlantic.

More motorists die when two small cars collide than when two large cars collide. If both small and large cars are reduced in size, the decline in crush space adds risk for occupants in both vehicles. Downsizing only the large cars is safer for the small cars, but it puts the occupants of large cars at greater risk in single-vehicle impacts (for example, when crashing into guardrails and trees) and in collisions with heavy trucks.

There are creative ways to mandate green cars without reducing the size and safety of vehicles. First, rules and taxes aimed at reducing carbon emissions should be adjusted for vehicle size, as has been recently done in the U.S. The fuel-economy standards there are now based on the "footprint" of the vehicle — roughly the area between the four wheels. Of the various measures of vehicle size, footprint is considered the best surrogate for safety. In order to discourage downsizing, vehicles with smaller footprints should face stricter fuel-economy targets. The U.S. did not choose weight as the safety indicator because using lighter but possibly stronger materials is not necessarily bad for overall safety.

Second, consumer labels on vehicles should include an overall safety rating as well as a rating for fuel efficiency or carbon emissions. Car makers should be encouraged to add side-impact airbags, electronic stability systems and interior padding to cars, even though these safety innovations add weight, consume more fuel, and lead to more carbon emissions.

Brussels needs to be creative to make sure environmental regulations designed to secure the planet's future do not result in more deaths on the roads now.

Mr. Graham is dean of the Frederick S. Pardee RAND Graduate School and holds a chair in policy analysis at the RAND Corporation. He previously served as administrator of the Office of Information and Regulatory Affairs in the White House Office of Management and Budget.

This commentary originally appeared in Wall Street Journal, Europe Edition on April 18, 2007. Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.