A Sound Business Decision… or More Virtue Signaling?

Recharging an electric school bus. Photo credit: Dominion Energy

Governor Ralph Northam has pledged to put $20 million from the Volkswagen diesel-emissions settlement toward the purchase of zero-emission school buses, the governor’s office has announced. The program, to be administered by the Department of Environmental Quality (DEQ), will help local school systems to replace about 75 diesel-fueled buses and reduce CO2 emissions by 36 million pounds per year, the administration says.

It’s a nice little feel-good story. But, as I attempted to conduct some elementary cost-benefit analysis, I found that the numbers don’t make sense. And even if they did, there are probably more cost-effective ways to save the planet from the climate apocalypse.

Here’s how it works. DEQ will reimburse local school systems up to $265,000 per electric bus, which is approximately the difference in cost between purchasing a diesel-powered bus and an electric bus. While the electric buses can save $2,000 a year in fuel costs and $4,400 and maintenance, the extra up-front investment is a big hurdle. The new program eliminates that barrier, creating financial savings for the locality and a reduction in CO2 emissions as well.

So far, so good. How much in CO2 reductions will Virginia get from that extra $20 million? States the governor’s press release: “Replacing 75 buses with all-electric school buses results in a lifetime savings of 670,000 pounds nitrogen oxide, approximately 41,000 pounds of particulate matter population [sic], and 36 million pounds of greenhouse gas tailpipe emissions.”

Thirty-six million pounds translates into 18,000 tons.

Now, let’s assume that, instead of putting our money into electric buses, purchased carbon offsets by other means available online, such as reforesting Mexican rain forest or building solar facilities in India. According to What It Costs, a ballpark estimate of carbon offsets runs about $5.50 to $29 per ton of CO2. According to Energy Sage, the cost can vary between $.10 and $44.80 per ton, with an average cost of about $3.30 per ton. How many tons of CO2 could Virginia buy with its $20 million Volkswagen settlement by purchase offsets in the open market? If we assumed a cost in the middle/high end of the range, say, $25 per ton, the answer would be 800,000 tons! (If we assumed $3.30 per ton, the figure would be more than 6 million tons.)

To be fair, electric vehicles also would reduce emissions from other pollutants such as nitrogen oxides and particulates. Those reductions would have some monetary value. Furthermore, if integrated into the electric grid, the bus batteries would have yet another value as a source of battery storage.

A Dominion Energy plan to put 50 electric school buses on the road (and 1,000 buses by 2025) by 2020 makes an instructive comparison.  Reports the Washington Post:

The bus batteries will serve as a resource for the power grid; 1,000 buses will produce enough energy to power about 10,000 homes for five hours, according to Dominion.

“Most school buses are kept in a centralized location, so from a grid support standpoint we can have a concentrated amount of battery storage in a specific location,” [said Chief Innovation Officer Mark Webb]. “You know it will be there when you need it — for planning, that’s super useful.

Like the Northam administration, Dominion is paying school districts the difference in cost between the cost of a diesel bus and electric bus. But in theory  Dominion can gain an economic value not available to the Commonwealth by being able to draw upon the electricity stored in school bus batteries during periods of peak electricity demand, thus saving the expenses of more expensive electricity sources. It’s not clear from the Washington Post article, however, how such draw-downs would work or how much money they would save.

Virginia school systems operate about 17,000 buses in all, and replace about 1,000 yearly.

Update: I made some basic, unforgivable arithmetical errors in the calculations in the original post. I have corrected them. My basic point remains the same, although I must retract my snarkiness.