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Electric Cars: Be Careful What You Wish For


Without clean-energy alternatives, they may create more problems than they solve.

The rhetoric is eerily familiar: A green, viable alternative to gasoline. What's not to love?

Any purported "cure" for America's gasoline addiction should, however, be regarded with the utmost skepticism - just think of the ethanol debacle. Ethanol helped spur rampant food-price inflation -- resulting in riots throughout the developing world -- while doing little to curb oil imports from unfriendly nations.

The promise of electric cars could similarly be remembered as a massive swindle - one that cost taxpayers billions and still failed to find a green solution to our dependence on foreign oil.

Nevertheless, California -- ever at the heart of the green revolution -- is getting an early Christmas present this year: A planned $1 billion charging network for electric cars. The Wall Street Journal reports that Better Place, a startup founded by former SAP AG executive Shai Agassi, will begin construction on a series of charging stations throughout the San Francisco Bay Area in 2010.

Most electric cars, including General Motors' (GM) Chevy Volt, go a mere 40 miles on a single charge. Agassi hopes this new fad will take hold; to that end, his company is offering charging services and an exchange service by which fresh batteries can be swapped for drained ones.

Following the cultish success of the Toyota (TM) Prius hybrid, Chevy's Volt and Ford's (F) Hybrid Escape aim to capitalize on environmentally friendly commuters.

But widespread acceptance of electric cars could create more problems than it solves: Without adequate sources of green electricity, fossil fuel emissions could actually increase if plug-in Hummers catch on.

Critics argue that, as long as American power companies continue burning coal to produce the vast majority of our power, any benefit to "clean" electric cars would be wiped out by busier furnaces and dirtier smokestacks.

According to the Energy Information Association, utility companies still produce more than half their total power from coal. And although clean alternatives like wind, solar and hydroelectric are seeing sizable gains in market share, they still represent a tiny fraction of our total energy output.

Meanwhile, natural gas and nuclear power, which collectively come close to totaling coal production, are controversial clean-power alternatives.

Natural gas is notoriously tricky to store and transport, although methods for getting this clean-burning alternative to market are improving. Nuclear energy, despite its capacity for creating massive amounts of power with few environmental side effects, suffers from public-health concerns. The stuff is certainly toxic and tricky to handle, but there hasn't been a serious nuclear accident in the US since Three Mile Island in 1979.

To be sure, breaking our addiction to foreign oil won't happen on its own. We do not, however, have a great track record at finding permanent solutions that meet both economic and social requirements.

Gas prices are tumbling back to earth, and driving is once again becoming affordable. Americans would do well to remember the scary summer of 2008, when we were finally forced to be green - whether we liked it or not.
No positions in stocks mentioned.

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