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US Auto Industry Supports National Global Warming Legislation

by Celine Ruben-Salama, New York, NY on 03.15.07
Business & Politics

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The US has the lowest fuel-economy standards for vehicles in the developed world. While the Japanese, the Europeans and even the Chinese have been working hard to improve fuel-economy standards, the US auto industry went down a different road - a strategy that has so far proved quite unsuccessful. In 2006 Ford Motor reported its biggest annual loss ever, $12.7 billion. General Motors’ (GM) year was not quite as bad, total losses only reached $8.6 billion.

Earlier this week, chief executives of America’s four largest car companies Ford, DaimlerChrysler, Toyota North America and General Motors (GM) acknowledged they intend to change their ways. Collectively the group told lawmakers that they would accept a US economy-wide strategy to reduce carbon emissions as long as it did not disproportionately target car producers. In addition they agreed on the merits of devising a US-wide carbon emission “cap and trade” regime. Their pledge, which took place in a rare joint appearance before Congress, marked a significant step forward for the new Democratic majority on Capitol Hill, which aims to draft America’s first national global warming legislation in the next few months.

Although the auto executives differed on the degree to which they would accept tougher fuel economy standards for vehicles the consensus was that the Corporate Average Fuel Economy (CAFE) regime, enacted in 1975, had failed to achieve its purpose of reducing US dependence on foreign oil and reducing domestic petrol consumption. Rick Wagoner, chief executive of GM, said, “it is time to move away from approaches that divert resources to solutions that actually work.” We agree. :: Financial Times

Comments (9)

Isn't it time to just tax gasoline more? Better than CAFE for a lot of reasons including that you can't game the system as easily.

jump to top akatsuki says:

Average US gasoline prices are already nearly 40% higher than they were just two years ago. The financial insentive for fuel efficiency is already in place -- we don't need to accelerate the inflationary side effects with additional taxes on gasoline.

Beefing up CAFE isn't enough on it's own, but it's absolutely a step in the right direction.

jump to top Anonymous says:

"Average US gasoline prices are already nearly 40% higher than they were just two years ago. The financial insentive for fuel efficiency is already in place -- we don't need to accelerate the inflationary side effects with additional taxes on gasoline. "

But they are still very low compared to the rest of the world. Canada has almost $4/gallon, and Europe is even higher.

the difference between the current high prices and a tax is that you can use the tax for something (credit to the poor, rebate on fuel efficient vehicles, investment in EVs, clean tech, whatever) while a hike in prices that is not a carbon tax just goes in the pockets of the oil industry, part of it goes back to lobbyists, etc.

jump to top Anonymous says:

The automakers are correct in pointing out that there are many other greenhouse gas sources than them. Anyone know the % CO2 that cars give off?

CAFE failed due to many loop holes etc. and beefing it up won't fix the problem. Phasing in much higher gas taxes over a 10-20 year period or so would be a much better solution. At first people may drive less as they think more about the cost and knowing the cost ramps up every year they will take steps to reduce driving even more and/or buy more fuel efficent cars. You could use some of the dollars for the above mentioned rebate on fuel efficient vehicles and to help put in place more public transit.

The reason for a long ramp up period is this will cause profound social changes. People will relocate closer to their jobs, some will get hurt as their exurb houses drop in value (shouldn't have bought 40 miles from your job to begin with). The electric "interurban" railway may rise again.

jump to top Tim Russell says:

Tim, the burning of fossil fuels by cars is not the largest human contribution to environmental CO2. Cars are about 40% of the carbon emmissions from fossil fuel burning, which as a group is about 4% of the CO2 in the atmosphere as a gas.

The vast majority of all CO2 released into the atmosphere is from the environment itself, most notably out-gasing from the oceans (about 57%) and the decomposition of organic material and animal respiration (about 38%).

Another fun statistic is the amount of CO2 in the evironment overall. It's just under .06% (not 6% as I often see it misquoted). So, quick math shows that CO2 emitted by cars is about .001% of the atmosphere.

The largest greenhouse gas by a wide margin is water vapor. Which may be why the car companies feel a bit over-targeted by those seeking solutions for global warming.)

jump to top Scottla [TypeKey Profile Page] says:

Marketplace (radio show about the economy aired on NPR stations) has a different take on the US Auto Industry's attitude toward global warming. See the article called "AutoMakers turn up heat on mileage proposals":
http://marketplace.publicradio.org/shows/2007/03/14/PM200703141.html

Here is the text from that program:

KAI RYSSDAL: It's either plain bad luck or terrible timing that Detroit seems to be turning around just as Congress is turning to global warming.

GM's restructuring to get in tune with America's shifting taste for more fuel efficient cars. But even today's profit isn't enough to get the world's largest automaker to support stricter fuel economy rules.

Executives from U.S. and foreign automakers were in Washington today — along with the United Auto Workers union — lobbying hard against proposals requiring higher mileage. It's a rare alliance. And it offers a glimpse into just how high the financial stakes are as Congress tries to craft climate change legislation. Sam Eaton reports from the Marketplace Sustainability Desk.

SAM EATON: For the past three decades the fuel economy standards for cars and trucks sold in the U.S. have remained unchanged — a fleetwide average of just under 25 miles per gallon. Pressure in Washington to address climate change is now driving a new round of proposals to boost mileage requirements, or CAFE standards, to about 35 miles per gallon over the next decade. But automakers are crying foul. Their argument? It would cost too much. Peter Brown with Automotive News says they may have a point.
PETER BROWN: They're struggling. So anything they have to spend on fuel economy that they think their customers don't want to pay for is a big problem for them. They don't have any extra money.
A White House estimate says boosting fuel economy standards could cost the industry about $114 billion. Automakers favor climate change legislation that wouldn't single out any one industry — something like an economy-wide cap on greenhouse gas emissions.

But David Friedman with the Union of Concerned Scientists says putting a price on CO2 would only raise the cost of gasoline by about 20 cents a gallon, leaving little incentive for U.S. consumers to abandon gas guzzling SUVs.
DAVID FRIEDMAN: We've seen gasoline prices more than double over the past five years with only a small impact on gasoline demand and greenhouse gas pollution. The automakers know very well that a 20-cent increase in gas prices is going to leave them off the hook.
Friedman says the irony is that if Congress had been raising fuel economy standards over the past three decades, U.S. automakers today wouldn't be losing so much ground to Toyota and its fleet of fuel-efficient cars.

In Los Angeles, I'm Sam Eaton for Marketplace.

jump to top Robin says:

A few years ago, I was in England in a rental car The pound was closer to the dollar than it is now. I remember thinking "Wow, gas prices are cheaper here". Then I realized that was per liter. So $1.50 a liter is about $6 a gallon. Its a bit of a shock when you work it out. Especially from NJ, where there is a minuscule gas tax.

jump to top James says:

Petrol prices in the UK have been constantly rising, and are now approx $7.50 a gallon.

Yet I have never seen so many 4x4s, Pick-ups and large cars on the road.

Don't rely on petrol prices to make any difference to people's driving habits.

You need this to be addressed by Engineering.

jump to top MY says:

Scottla thanks for that number, I had heard it once before but couldn't remember the source.

I agree the car companys are being kinda unfairly singled out there. The solution that I put out above was the "if you really want to stop the American people driving or get them to buy much more fuel efficent cars" method. Politically it's notgonnahappen.com.

I myself am in the middle of this subject, I love to drive, need to drive to get to work and as for my car keys "out of my cold, dead hand (or at least till I'm too old and decrepid to drive :-) )". At the same time I realize cars as a whole, use a lot of resouces and as far as carbon emmisions 40% of the fossil fuel CO thats released.

BTW Toyota who isn't in big trouble like the "big 3" was also at that meeting lobbying just as hard against higher CAFE. I guess after all the money they invested for their new pickup they don't want to have to figure out how to make it cleaner either.

jump to top Tim Russell says:

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