I'm glad you wrote abut this since it's a subject lots of people talk about. At CalCars.org, we're focused on plug-in hybrids, where the carbon benefits are far better, but the case can be made well for hybrids. I've asked Joe Romm, former official in the US Dept of Energy, author of The Hype About Hydrogen to respond, and he's done so at length. [I've added a few comments of my own in brackets.]

Every aspect of this analysis is flawed or misleading. I hardly know where to start, so I apologize if the narrative is not polished. Hopefully these mistakes won't get repeated around the Internet for years to come by those who oppose hybrids.

First we have the classic apples vs. oranges analytical mistake. He seems to be comparing the Prius ACTUAL mpg with Corolla/Camry EPA mpg. Whoa! Stop right there. Neither the Corolla nor Camry get the EPA rating. No car does. Yes, it is true that the Prius has a larger absolute mpg drop from EPA to reality, but that is because it starts from a larger baseline. MPG is not linear with gasoline consumption of CO2 emissions, which is what we care about (i.e. a 10% mpg drop for a 20 mpg costs the planet over twice the gasoline per 1000 miles driven than a 10% mpg drop for a 50 mpg car. (You or he can do the math if you want to convince yourself of that statement.)

Second, let's actually do the numbers. Dave Hermannce [top engineer at Toyota's hybrid program] has done the specific case. Let me run through them. For the actual mpg, Dave uses Consumer Union's real-world testing (which I actually think overly penalizes the hybrid). The Prius saves 196 gallons per year over the Corolla if we go by EPA and 176 if we go by CU. The Prius saves 283 gallons per year over the Camry if we go by EPA and 284 (!) if we go by CU.

(As an aside, if you do the math at $2.50 a gallon, the Prius pays for itself over the lifetime of the vehicle, assuming people even buy technologies like hybrids on the basis of their payback, which, as you know, is an absurd argument. Do leather seats pay for themselves? Does XM satellite radio? And so far the Prius does NOT depreciate! Plus there is the time I save not going to the gasoline station--probably worth $500+/year to me. The Prius is midway between a Corolla and a Camry in terms of roominess and trunk space, although owning one, I view it as a vastly superior to either technologically. You couldn't pay me to buy either one.) [I addressed some of the issues about straight payback at my blog, Power, Plugs and People. Since then, I've realized that NONE of the discussions on this subject include the point Joe raised: depreciation. The trade-in value of even the earlier generation Prius is astounding. And these #s get even better if you factor in what now is up to a $3,400 tax credit, not a deduction, for buying a hybrid. The number eligible for the deduction has been capped, but hopefully will increase.]

Third, the direct CO2 emissions of burning a gallon of gasoline is 20 pounds, but that also releases about 5 pounds of C02 upstream (refining, etc), so 25 pounds is a good number to use. Over a 10 year period, the Prius saves 20 metric tones of CO2 compared to the Corolla and 30 metric tons of CO2 compared to the Camry.

(As an aside, CU gave the Prius 44 mpg actual overall. Brad says 42. I have owned the 2004 Prius for 2 years in Washington, DC, which is an intermediate climate. I don't see how you can get only 42, unless you have a real lead foot or live in the coldest 25% of the U.S. Plus, as you know, if you live in California and/or you drive the car to optimize mileage, you can easily get 48 or more, so the numbers here are quite conservative.) [After 30,000 miles, I'm around 50MPG in the SF Bay Area, and many people I know are in the mid-50s.]

Fourth, what is the right value to use for carbon dioxide? Clearly we want to use a realistic value that in some sense reflects its true cost, not what its cost might be in a very immature, non-liquid market. After all, many people are buying the Prius precisely because they care about the environment more than the U.S. government. The U.S. does not have a serious carbon market, which is one reason why prices are so low here. Until you have a cap, reductions in one place do not necessarily mean reductions nationwide. Why should I pay to plant trees in New York if someone else is cutting down trees in Oregon? Europe has a serious market, will have a genuine cap in 2008, and the price is about $90 a ton of carbon ($25/ton of CO2). Anyone doing carbon costing analysis should probably use this figure. As an aside, when people realize just how serious things really are on climate, (when the reality finally trumps the brilliant disinformation campaign), which I figure will happen around 2020, the price will probably go much higher.

So the CO2 savings add another $500 to $800 to the "value" of the Prius. I would also add that many people, including me, believe that the pump price of gasoline does not reflect its true cost to our society even not counting global warming (the military cost, the trade deficit, other environmental costs, depleting a non-renewable resource, etc). The fact that the most other rich countries in the world have considerably higher prices for gasoline supports this view. A responsible consumer is entirely justified in taking this perspective and thus finding the Prius to be vastly more cost-effective than my analysis shows. (One way of monetizing this is to consider the Prius as a hedge against gasoline prices rising substantially.) BTW, my Prius replaced a Saturn, so I achieved considerably higher GHG savings.

(As an aside, the transportation sector has for two decades now been the sector that has seen the fastest growth in greenhouse gas emissions in the US economy. From a policy perspective, it has proven that the most intractable in terms of reducing greenhouse gas reductions. So buying a "cheaper" car than the Prius and using that money to purchase emissions reductions in other sectors does not offer a long-term solution to our problems. We MUST reduce greenhouse gas emissions in the transportation sector by 50% compared to 2000 levels if we hurt to have even the slightest prayer of avoiding catastrophic greenhouse gas emissions. The two phase transition to hybrids and then plug-in hybrids is far and away the best strategy to achieve this, as you know. Yet another reason to buy a good hybrid.)

The bottom line as far as the Prius goes is that if somebody really cares about global warming or about funding both sides of the war on terror (!) through wasteful use of gasoline, but they need to buy a car, then you just can't beat the Prius. No ifs, and, or buts about it. I'd be happy to debate that with anybody.

Fifth, I don't agree with most of Brad's perspective in the second half of his post. I own a photovoltaic system. It won't pay for itself because I live in DC where there is no subsidy for purchase, although we wrapped it in to the mortgages so it comes pretty close (in CA, with the subsidy, the high peak price, and put in the mortgage, it definitly pays for itself from the start). But I care about the environment. It would be more cost-effective to purchase green tags or something like them. I might do so. But I would never in a million years buy US CO2 credits. They are mostly real cheap stuff that would probably happen anyway, particularly once we get serious about global warming. There has been a huge discussion in the environmental community about this subject. I have spent many years on this matter, and advise lots of companies on this, as I'm sure you know. $2.20 a tonne of CO2 gets you nothing of value. We usually recommend that companies seeking to improve their environmental performance start with what is cost effective in their company, then buy green tags or RECs, and don't speen too much time or money in the US CO2 market. Once the company has substantially improved its environmental performance, buying very high-quality credits (which typically cost more than $2.20) is certainly something they can consider. But again, the price in Europe tells you what the real cost of CO2 is.

If Brad were serious about cost-effective strategies to reduce greenhouse gas emissions, then he would urge people to focus first NOT on subsidizing industry to make cost-effective investments, but to focus on their own inefficient use of energy (they should wrap their water heaters, buy Energy Star Equipments, etc.) [And of course, Joe and I hope Brad will agree we should all get involved in one or more of the many organizations locally, nationallly or worldwide that are working on global warming. For my own perspective and links to what I've found are the most persuasive sources, see CalCars and Global Warming: A Personal Evolution]

I do agree that the single most important thing the US government should do is establish a carbon dioxide cap and trade system. Then the marketplace will determine what the most cost-effective greenhouse gas reduction strategies are. BUT most likely it will be a wimpy cap to start with, based on the legislation that is currently being tossed around Congress, so individuals may still want to take stronger action (note that Governor Schwarzenegger has called for an 80% reduction by 2050, which implies a very high price for carbon dioxide). Certainly, until that happens, anybody who cares about the environment or oil imports is more than justified in purchasing a Prius.