In last week’s article, I talked about how becoming ‘green’ was turning into this great big fad. Yet, popularity aside, the economics of becoming green don’t really make sense.

For example, a CNN.com study found that the price premium you pay for a hybrid over a gas guzzler wouldn’t be made up by cheaper gas prices for up to five years. And that’s after including government incentives.

Some of you wrote in and pointed out that economics weren’t everything. That becoming green is more of a social responsibility. It’s something you do to make sure your kids have a nice, clean Earth to live on when they grow older.

And I couldn’t agree more. But the responsibility side isn’t what I’m trying to show everyone. What I’m trying to point out is that the economics of becoming green, for the most part, don’t yet make sense.

Sure, companies can plant a lot of trees on land they’ve purchased. Sure, they can pay just a little bit more to switch to more renewable packaging materials, etc… But the things that would make the greatest impact – fuel saving technologies, advanced water conversion techniques, and more renewable solutions – come at a cost to the company.

Nine times out of ten, the company won’t want to kill their margins for the sake of going green, unless of course they are trying to improve their image (Google, here’s looking at you, kid). And there’s nothing wrong with having a good public image. But that doesn’t mean that the economics of the solution make any more sense.

With that said, I believe that over time this will change dramatically. And once that change happens, there will be a lot more money to be made. Let me explain…

The Three-Wheeled Car I Need Right Now

The other day I was going through one of my favorite websites, www.autobloggreen.com. While on the site, I ran across a very interesting ride.

It’s by a company you’ve probably never heard of, Venture Vehicles. It’s a three wheeled vehicle, which is basically a roll cage on wheels (meanings it’s pretty safe).

When you go to make a turn, the vehicle actually tilts 45 degrees in the direction you’re turning. You can see a video of the venture one in action here.

That’s not the best part, though. This three-wheeled, electric-only vehicle, goes 0-60 in seven seconds, can reach top speeds of over 75 MPH (making it highway capable), and can travel up to 120 miles, all on battery. When you get home, just plug it in and it’ll be fully charged in six hours (on a 120v plug, if you use a 240v, it’ll be much faster).

And if you want to go further, you can get their hybrid version which goes over 350 miles on about four gallons of gas (That’s a phenomenal 90MPG!) and can reach top speeds of over 100MPH. Now, this vehicle won’t be in production until next year. Which is sad because I want one today. Why?

The economics are starting to make sense.

You see the car I drive right now is a six cylinder. It gets great fuel economy on the highway. But in the city, where I do most of my driving, the fuel economy is horrendous. At current gas prices, I’ll spend about $280 this month filling up.

That Venture Vehicle I showed you earlier will cost between $20,000 to $25,000. If I put ten percent down and get a decent interest rate on a five year loan, I’ll pay something like $320 - $350 every month.

This is only a little more expensive than it costs to buy gas – today. But next year, gas might be $5 a gallon. At that point, it’ll cost me $340 to fill up my tank. Instead of filling up my tank and polluting the air, I could own one of these cars and pay a little more on electricity every month to recharge it. Sounds like a pretty good deal.

Now, here’s the thing – cars like these are set to flood the market in the next year or two. For example, Tesla Motors (a Silicon Valley startup) will release their $98,000+ all-electric roadster sometime this year. That doesn’t include a host of other manufacturers like Aptera Motors and Fisker Automotive. As gas prices keep rising, these electric vehicles will become more and more popular.

And the big tipping point is affordability. If consumers can obviously save money buying one of these, they’ll do it.

This goes for the entire industry. Solar panels won’t be accepted en masse unless the economics of it makes sense. Sure, adoption is growing. But it won’t be mainstream until everyone can afford it. The same goes for wind power.

This brings me to ethanol – another alternative that doesn’t make economic sense. In this case, ethanol makes no real sense at all. The argument is that its carbon neutral. But most people end up paying more to fill up with E85 (85% ethanol). And to make matters worse, they get worse gas mileage. So what sense does it make to fill up with ethanol? I wouldn’t do it. And many people don’t.

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