Discussion: Investing in Efficiency - Car or House?

Sorin is quite right. The wastefulness of cars goes far beyond gas mileage. An old guy I knew - a car fanatic himself - told me, "Cars are the worst investment you could ever make. They cost too much, depreciate the day you buy one, and they're nearly worn out by the time you pay it off."
Many people in America try to defeat this reality by trading in their cars within 3 years, trying to reclaim some of their investment before the car is too old. But that becomes a costly lifestyle.

But you'll notice that even on this site, articles about cars seem to generate the most comments (i.e. interest). It's ingrained in our culture.

It's a good point, but it also assumes you weren't going to spend around $25k on a car anyway. If you need a car (and most people in this country do), then your extra investment for a hybrid or diesel or whatever is only a couple thousand dollars. Sticking solar panels on your roof is a full $25k new investment.

This whole argument really revolves around people who have a spare £25000 to spend rather than (I assume) the majority who don't have or don't want to spend £25000.

Any sensible treehugger sould say that first and foremost, if you are not looking to buy a new car don't by a new car even if a hybrid might be seen to save you money in the long term. The same really goes for PVs. As much as the price has come down in recent years, they are still a costly investment with a long payback so, if you are trying to reduce bills this could be done in a number if cheap and simple ways including:

Energy efficient light bulbs,
turning off your TV/video/stereo/computer rather than leaving it in standby,
shower don't bath,
clothes washing at 40 deg,
not using your car as much! (car pool),
use public transport (or even better cycle),
Better insulation in your house,
turning central heating down a couple of degrees,

Many of these things cost nothing and could ofset the cost of your existing car which you are using far less. These things do save money and also reduce CO2 emmissions. So, keep your car, use it less, make your daily used items more energy efficient and hey, see your bank balance rise. Of course, if you do need to buy a new car then take heed of the e-mail and think hard if you actually NEED a new car.

Sounds like a good arguement, except for one point. While trading in a perfectly good car for a more eco-friendly version is probably bad just on the environmental cost of producing a new car, if you old car needed replacing anyway, then it'd be worthwhile to replace it with a more eco-friendly version even if it costs a bit more. My guess is, don't replace unless you need to, but when you do replace, do so with an eco-friendly model.

The gas you burn driving it just a a fraction of the energy and environmental costs associated with your vehicle.

The majority of the steel that composes your car was probably mined in Australia or Africa. Meaning land was stripped, steel was extracted with large construction vehicles and trucks (usually not the cleanest burning vehicles), sent for refining (a likely toxic process) and then sent by freight to an auto plant or steel manufacturer to be turned into something more useful. That steel then gets processed again, along with all the other plastics and textiles (there are MANY, about 3500 lbs worth for a small car) and shaped into a shiney new car.

I've heard what seems like a conservative estimate that the energy it takes to produce a new car is about equivalent to the gasoline-energy burned in one year of its use. I would guess that this is a little on the light side. This certainly doesn't take into account the effect on the environment and how much space this 2-Ton beast will take up after it's replaced with something 'more efficient'.

Buying smaller cars is even better than we thought. Buying less often and used-cars is also less harmful to the environment, as it doesn't promote the manufacturing of new cars quite as much.

I liked Sorin's comments. Perhaps that $25k should be spent in finding a house that is that much closer to work, and maybe have a little left over to keep that old jalopy going a couple more years.

I think we all can see that more permanent efficiency improvements around the home make more sense than they would on a car, if for no other reason than the fact that we spend way more time in the house than we do in the car. However, I think people choose to improve efficiency where they can, not where they ought. Sure, a hybrid car and a solar panel array might cost roughly the same, but I don't know anyone who *actually* has $25k in hand to plunk down when they go pick up their new Prius. Try getting low-interest financing and a $5000 trade-in credit for your old Camaro at your local solar-panel contractor.

Saving $100/month on gas for life of car has net future value in range of 12 to 18 thousand dollars if you put the cash saved in interest bearing instrument all along. However, the capital needed to install a solar system on a home has to be paid back with interest. I'd suggest making a few scenario comparisons along these lines before deciding which camp to be in.

I certainly agree that Sorin has a point.

However, I am also concerned with two other issues related to buying energy saving/electric/biodeisel/hybrid cars:

1. Reducing emissions from cars.
2. Encouraging others to buy conservation-model appliances/transport machines, by putting more of them on the road for all to see.

Right now I am debating buying a hybrid versus buying a bicycle and using my car (pretty darned green, manual Toyota Corolla) less. So far, the bike seems to be winning the debate.

Also, I am a rental-apartment dweller - not to mention a wage-slave who has little extra income to waste on making energy-saving improvements to my apartment. I have no incentive for many of the usual green home improvements, which in the long run have no benefit to me since I will move out within 3-5 years.

Just another perspective.

Is it possible to get the same kind of financing for eco-friendly housing projects as you can get with for a new car?

I got 1.9% financing on the Honda Civic Hybrid I'm paying off, so I didn't need to pay the $25,000 (actually it was more like $18,000) all at once.

In the future I'd like to do some improvements to my house, but I don't have $25,000 to lay out all at once.

Another reason I invested in the car: I was renting at the time. Renting doesn't leave many options for home improvement.

Another reason to invest in the car: at the time there were 3 hybrids on the market (the Insight, the 2002 Prius and the Civic). It was pretty easy to evaluate all of them and determine which best fit my needs. When it comes to home improvements, there are a lot more options and avenues to investigate. Which improvement should I do? Which materials should I use? What contractor should I use? Should I do it myself? With the cars, the choices were A, B, or C?

Don't get me wrong. Now that I own a house I plan to make improvements. These are just the reasons I chose to invest in car first.

As an apartment dweller, improving my car is the only option for me. I ride my bike as often as possible and dream of someday owning a sustainable house, but that's a long way off.

I do agree with Sorin, however, that if you're a homeowner, much greater environmental impacts (and financial) can be realized by improving your home than a new car. Unless you're buying a new car to drive for 10 years, buying a new car will always cost you money. Much better to invest that in yourself.

I think that most people need to realize that being a treehugger does not always mean that you are saving money. In the case of being energy efficient, it does, because of energy costs. I think people need to decide whether they are doing things because it will save them money or if it will be better for the environment.

That being said, my point is that, Sorin's comments are mostly about money. And certainly, buying a new car and disposing of an old car has its environmental costs as well. We need to know where we are in terms of money-environmental cost tradeoffs. Spending more money to incur less environmental costs should be one of the things we are willing to do.

The only problem I see with this argument is that usually if you're buying a new car, it's because you need to replace one. So in reality you may only be spending $2000-5000 more on the vehicle then if you had decided to buy a less fuel efficient vehicle.

It's not often you have $25,000 sitting around and start asking yourself if you should buy a car with it, or improve your house.

Also, most people do not have $25,000 cash, so they need to get financing. Often, if you are careful you can get lower interest for your car payments then maybe a line of credit.

So in reality, you aren't actually spending $25,000 all at once. Most often you maybe spending (to pull a number out of my ass) $35,000 on that fuel efficient car, whereas the approximate non-efficient one may only be $25,000. Whereas for those same home improvements the $10,000 after interest may be closer to $18,000.

Just some things to consider. But all in all, I think looking to improve your house is definitely worthwhile.

I agree, the emphasis on efficient cars can distract people from what needs to be questioned most: the assumption that auto-mobility will always be a given. Ultimately, the question about cars is "why do this?" rather than "how do we do this better?" I know from experience that choosing a home carefully in order to make driving unnecessary, or even rarely necessary, brings unexpected benefits in both quality of life and environmental terms. If everyone drives efficient cars we still have roads, parking lots, overpasses, car-ghetto suburbs, and all the waste that goes with them.
(I'm off for my nice calm riverside commute on a bike path now . . . highly recommended!)

This is a great point. However, most people finance their car purchase and can usually get a better interest rate from a car dealer than a bank would be willing to offer on a home improvement loan.

I am a renter in an apartment building in NYC - does anyone have any suggestions about making my apartment more efficient? I already use efficient light bulbs, avoid unnecessary appliances, turn things off when they're not in use, etc.

I don't see the relevance of "Cars are the worst investment you could ever make. They cost too much, depreciate the day you buy one, and they're nearly worn out by the time you pay it off." I buy cars because I need to use them - not as financial instruments for money burning a hole in my pocket. (Would you take someone seriously who makes similar comments about other consumables? "Granola bars are the worst investment you could ever make...")

If a car costs "too much" don't buy it. If you don't like that it depreciates the day you buy it, buy used. If you don't like that it's "nearly worn out by the time you pay it off" get a shorter-term loan. These are all completely under your control.

Best of all, if you can't justify getting a car at all, *don't*! I lived for short time without one and I really enjoyed it. (I more than made up for the gas savings by the extra time I put on my plane so don't get any ideas that I was being a conservationist.)

Incidentally, I want to build my next car - mostly because I'm so disappointed by the current crop of vehicles.

Back to the original article...I see the "investment in cars" as being in terms of spending *more* money on a car than you would otherwise in order to save energy (and perhaps lower total spending). You'll still need to justify buying a car. (If you drive a car 0 miles per year no increase in mileage is going to be worth a new purchase.) It's not going to suddenly be a good financial investment but the extra money you spend to get one that saves energy might/might not pay off more than investing the same money in reducing energy usage elsewhere.

'course if you *really* just want to save energy (but not personally) I'm prepared to believe that you're better off to send the $25K to a good political action or education campaign.

MGR - go all the way. go vegan.

I think Sorin is spot on.

You could take it even further and suggest all you suburbanites take what you would have spent on getting that car (or worse second car) and move in to town.

I wholehartedly agree with the observations made.

In our case, we needed a car (we've opted for just one to reduce our impact) and could get a loan easily enough for a new Hybrid. This gave us a 4x improvement in MPG over our old truck.

We would have prefered electric, but can't bear to be the cause of that much more emission from our local coal-fire plant.

We would have preferred to improve out home, but the lenders I have spoken with don't see the conversion to solar heat/electricity as a sufficient improvement to allow us the loan.

The next big step to take will be in convincing the housing market that solar power is worth paying extra for -- thereby pushing solar home prices up, making the lenders willing to fund the process.

--Matthew

Most people finance their car purchase and can usually get a better interest rate from a car dealer than a bank would be willing to offer on a home improvement loan.

You can write off the interest of a home improvement loan. Thereby lowering your overall cost of the loan and closing the gap between a car loan and a home loan. And when you are done with an improvement project you can attribute that improvement to the overall value of the home (raising your available equity). I am sure that a home loan is a better investment strategy then any auto loan (even a 0% interest car loan since auto value reduces the moment you drive it off the lot).

Another cost issue to consider: If you increase the value of your home, you increase your property taxes.

missc, I'm in the same boat as you - renter in NYC, keen on making my apartment and energy use more efficient. I have a black thumb, not much space or sunlight, and little time for maintenance, so the usual urban/apartment-living ideas of starting an herb garden on my windowsill or growing veggies on my fire escape fall on deaf ears with me. It ain't gonna happen. Apartments are hard because you can't just go install solar panels on the roof or put in a composting toilet (what would be the point of one of those in a gardenless life anyway?), and in NYC the buildings are usually pretty old things.

I'm interested in treehugger tech (for lack of a better description) but so much of it usually seems to apply to people with nice big houses in the suburbs. Maybe us city dwellers are already pretty efficient by virtue of living in the city?

I've looked around for green clubs or solar power clubs or something like that but haven't found anything. I'm surprised there isn't some NYC organization for individuals to work on and learn about green power projects and things like that.

Well, guess I'll just have to wait until I have my own home someday, or until I'm rich enough to be a landlord myself. Not that I'd want to be...

Abolutely correct, on many levels. If you own your own home, invest your money there. Homes are an appreciating asset. Cars are a depreciating asset. And you can probably achieve fuel savings similar to what a new, efficient car would create, by changing your driving habits.

If you own your home, try to find a "home performance contractor". This person will run a variety of tests on your house (such as the blower door, the duct blaster, and possibly a scan with a thermal camera) that will identify where your home is leaking energy, and thus what measures are best to take to improve the situation.

There aren't many of these folks out there, so you may have to do some looking. If you're in the San Francisco Bay Area, I can recommend a company called Sustainable Spaces. They're in the book. Otherwise, you might give Home Energy Magazine a call and see if they can recommend someone in your area.

Hmm, Adam, that idea of local "green clubs" for apartment dwellers (or ANYBODY, really) to learn more about how to green their personal spaces is a great idea.

I'm in Los Angeles, you're in NYC - maybe we urban TreeHuggers ought to get these clubs going...would be fun!

ProgGrrl, Adam & co, if you get really serious about these clubs and start a website, mailing list, whatever to get people on board, drop me a note at mike {@} treehugger {dot} com and I'll do a post about it. It could help you connect with other interested people.

An alternative, for those who are able, is to recycle an old polluting vehicle (bad engine, etc..) into an electric car for local commuting. Keep your current vehicle for the longer range/trip travel.

Add the alt power to the house to augment/help charge the car.

-Jerry

www.evconvert.com

Kyler:

I believe my friend was comparing cars to houses, which usually appreciate and last several generations.

At what point did the second most expensive thing people buy in their lives become a 'consumable'? Not long ago, if a person were spending most of a year's income on a single item, it would become a family heirloom. Before 'car lifestyle' became dominant, people spent far less of their income on transportation.

People should question their 'need' for a car.
I chose to move to a city with more transit options, so I rarely use our car. Before the advent of dependable cars, people found work much closer to home, and shopped at local stores, which is better for the local economy, anyway.

One of the simplest and most effective ways one can save energy in their house is to convert their appliances to the latest energy efficient version. Producing 20% of your home's electricity by solar panels is great, but do you know what's involved in creating those Galium Arsenide solar cells is? It's nasty (I work in the aerospace industry... at least for now).
Check out this website - it shows the contributers of energy consumption in a house. Biggest is heating and cooling, so insulation (windows, doors, stuff inside the walls) is estremely important.
http://www.energystar.gov/index.cfm?c=products.pr_pie

That's not to say its a horrible idea, but just think about how much more effective it would be to buy the latest windows and improve the door seams.
In Europe, on average, the homes are about 2x as efficient as the ones in the US... For less money replacing your windows and improving insulation, you could have a better energy impact, and all that glass is probably recycleable.

the fatal flaw of your arguement is to spend 25k on upgrading your house or on a car. well if you are in the market for a car, its because you need a new car, its not really an option. You could argue that the additional 5k cost of say a hybrid car over a regular car could instead be spent on your house. Theres plenty of efficient upgrades you could do to your house for 5k [lightbulbs, replace a few old windows, extra insulation] and still save more than you would on the car.

A big note I have on the email is that it only really considers financial impact.

I did NOT buy my Prius to save loads of money. I did not buy my wife a Prius to save her money. I purchased both cars because I felt that it was a good way to a)help reduce harmful emissions in my locality, b)do my part to reduce dependency on oil (domestic and foreign) in this country, and c)help spread the word that Hybrid cars aren't bleeding edge technology anymore.

Sure, I could've saved more money by putting a PV system in my house, maybe, but that's not the point. It is a demonstrable fact that, to produce the same amount of energy from gasoline and coal, the gasoline takes a much higher toll on the world environment.

Yes, I want a PV system on my home. Maybe not my present home, as I may be moving out in as little as 5 years, but on a home I have. The acceptable short term alternative is to make sure I drive efficient, low-emissions vehicles.

My $0.02

"well if you are in the market for a car, its because you need a new car, its not really an option."

If only it was so!

I know that for you and most people here it must be that way, but in the US in particular, but in the western world in general, people buy a new car much sooner than they "need" to.

It has a lot to do with status and image, and with how people are constantly seeing ads for the new models and hearing about how much better they are than the old ones, etc. There's an incredible amount of pressure to make people change car as soon as possible.

I think that the average ownership of a car in the US is around 5 years, and 6 years in Canada.

I have an SUV that gets relatively poor gas mileage. My friend has a new Prius. My neighbor has a Suburban. I drive 5 miles to work and back, and ride my bike every other day or so (depends on if I have appointments out of the office). My Friend commutes 60 miles a day. My neighbor car pools the 20 mile commute with 3 other workers on his crew? Who has the larger environmental impact? (Not including the production cost the cars).

Another thing to consider when upgrading is that manufacturing a new automobile accounts for approximately one-eighth of the lifetime resource usage of an average car. That's a lot of deficit to make up before you even drive it off the lot.

With respect to the apartment-dwelling experience, there is a class being offered at the grad center (this for those living in NYC)by GreenHomesNYC entitled, "Designing and Building Your Own Green/ Environmentally Healthy Home or Apartment".

The link for the entire series is: http://web.gc.cuny.edu/cepp/courses/architecture.html#1.

Jay S: you are right -- pollution is entirely linear with gasoline consumption (depending on your carpool car, he is probably the lowest impact!).

You can do you calcs here: TerraPass Carbon Calculator

I bike commute to appointments in SF all the time. Nobody minds (just go slowly up the hills ;-)

-Tom

"Jay S: you are right -- pollution is entirely linear with gasoline consumption"

That's not quite right. CO2 emissions are directly related to gasoline consumption, but pollution includes more than CO2 (NOx and particulate matter, for example). Some engines burn cleaner than others.

As for Jay S, yes, he probably burns less gasoline than the person with a Prius but with a 6 times longer commute. But comparing ourselves to other people is not very productive since it's always possible to find someone worse to justify what we're doing.

The true test should be: "Am I doing as well as I can (within reasonable limits)?"

I don't know if Jay S needs the SUV or not (very few people do), but I hope that he will consider a more fuel efficient vehicle next time he's on the market (or even using a bike, or carpooling, etc). Not because he's doing anything wrong right now, but because we should all aim at a steady improvement in our lifestyles.

There is a balance to be struck. I believe in both environmental and social sustainability. I do use my SUV to go camping and haul things, but I could get a sedan and rent an suv when I needed to. The problem is my SUV is now 18 years old. It runs perfectly, but has little value. Because of the externalities problem it is worth a lot more to me (I know it is in good shape, and will run well, but another person isn't as certain, which drives the cost down). Thus I can take an extra 10 grand and purchase a used sedan (i hate to buy new). But that is resources I don't need to use. I think our society would be better if we focused attention on reducing our material needs rather than buying recycled goods. Recycling is great, but better if we can get by without them. Sure I can buy the organic clothing, but my environmental impact is a lot less if I stay with what I allready have.

Getting back to the point. I have 10 grand. I can replace my old 12 mpg pathfinder, install new windows in my home, or donate to a job training program and microcredit institutions in Africa. Which is the best use? Its a balance, and in economics we know of the law of diminishing returns. we all need to do better, but who is to say what that is for everyone? If I were commuting 100 miles to work (as I did a few years ago) selling my SUV would be a good step. Now not so much.

I think the better question for people to ask is not Prius or Solar, but Walk or Live Closer and to set the AC at 80 Degrees or Buy less imported stuff

Everyone seems to assume that "most people" need to buy new cars. When I bought my car a few months back, I had the choice of forking out $500+/month for a Prius, $350-500 for a non-hybrid (like a Matrix), or what I decided on, $500 (period) for a used Camry. Only environmental damage on my conscience is the gas I burn (and it's not bad, around 30mpg), since the car was made years ago. And having driven my dad's prius for a couple of weeks while I didn't have a car, I can say for sure that the prius wouldn't get any better mileage (I have a 4-mile commute, neither car heats up enough to get more than 20mpg or so).

And my bank account thanks me. I'm not spending $500/month on a car but instead have that money to invest in my house, remove any concern about paying extra for organic food, etc.

*If* you were going to buy a new car, anyway, and didn't want to go with a used car (personally, I don't care how old my car is as long as it works well enough to get me to/from work), sure, get a good hybrid. But don't go trading in your good-enough car to get that shiny new hybrid when your money is better spent (or saved) elsewhere.

Jay S,

You've got it. Your last post is a nice illustration that there are different ways to achieve a certain result, and the best way to go about doing something depends on your particular context, which is why the post says: "think about it and see if it applies to your life".

MGR

I totally agree. The problem I see is that much of the focus on Environmental blogs is on shiny new products, instead of balancing with how to reduce personally. Just my 2 cents.

Agree with Jay S & MGR comments above - we can't consume our way into sustainability, hence fashionable goods from recycled materials still aren't sustainable (v's classic well-crafted goods). A lot of sustainability is good old-fashioned ethic - ask yr parents & grannies for advice!!

I wonder aobut the oft-repeated eco advice to replace yr old fridge & washer with new energy efficient models.... then give the old one to someone who needs it!! If the old appliance is still being used it doens't decrease the total energy consumed, and at what point does the saving in energy from yr new appliance exceed the total energy used in its production & shipping? Perhaps it's more energy (not to mention cost) efficient to get a service visit eg replace the seals in yr fridge doors, lubricate yr washing machine motor.