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State-by-State Regulation, the Costs and Consequences

By | Economy, Energy, Global Warming | No Comments

The NAM issued a statement upon President Obama’s announcement that the EPA would review California’s request for waiver so it can establish its own regulations to control vehicle emissions. Keith McCoy, vice president for energy and resources policy, said:

Auto makers acted in good faith working with Congress and the previous administration to develop the tough new national fuel economy law for the next 12 years and beyond. As directed by the 2007 Energy Independence and Security Act (EISA), the National Highway Transportation Safety Administration is currently in the process of setting fuel economy standards that will result in a minimum of a 40 percent increase in fuel economy and a minimum 30 percent reduction in carbon dioxide emissions by 2020.

A separate waiver for California would lead to a patchwork of greenhouse gas reduction laws when climate change is a global issue and should be addressed on a national level.

Dave McCurdy, president and CEO of the Auto Alliance, representing domestic and foreign automakers with major U.S. presences, also issued a statement supporting federal standards.

“The Alliance supports a nationwide program that bridges state and federal concerns and moves all stakeholders forward, and we are ready to work with the Administration on developing a national approach.”

Since CA sought federal permission to set its own fuel economy/CO2 standards, there have been many developments. The U.S. Supreme Court directed EPA to reconsider greenhouse gas regulations for autos, the Congress passed stringent new fuel economy standards requiring CO2 reductions of at least 30%, automakers are offering more than 25 models of hybrids for sale in 2009, President Obama and a Democratic Senate and House are considering a comprehensive, economy-wide approach to CO2 reductions, and the credit crunch is producing the toughest marketplace since World War II.

Today in the U.S. there are three voices on fuel economy/CO2 — NHTSA, EPA and CA — and each has different standards, different structures and different timelines. Automakers seek a federal-state solution that provides us with compliance clarity and one national standard.

The Alliance also urges the Obama Administration to issue fuel economy standards for MY2011, because automakers are working on their product plans now and need the certainty of final standards.

For a Healthy Auto Industry

By | Energy, Labor Unions | No Comments
  • Dow-Jones, “Manufacturers Call On Congress To Approve Loans To Auto Cos“: “WASHINGTON -(Dow Jones)- The National Association of Manufacturers Wednesday urged the U.S. Congress to approve a federal loan program that would provide up to $50 billion to the bruised automotive industry…’Now is the time for Congress to keep their promise to provide these loans,’ NAM President John Engler said in a prepared statement.”
  • The Detroit News, “Groups back auto industry loans“: “WASHINGTON — Direct loans to the auto industry drew additional support Wednesday from two influential groups, the United Auto Workers and the National Association of Manufacturers. “
  • Detroit Free Press, “Federal cash to aid electric R&D“: “A top Chrysler executive Wednesday said multibillion-dollar loans to the U.S. auto industry would help automakers, such as Chrysler, come to the market quicker with electric cars…’I think it will allow everybody to bring electric cars, plug-in hybrids, hybrid cars, even range-extended hybrids. All of those vehicles will be accelerated,’ Jim Press, a Chrysler president and vice chairman, said after a speech to the Automotive Press Association in Detroit.”

NAM President and John Engler’s statement follows:

Manufacturing is the mainstay of the U.S. economy, providing a primary impetus for economic growth, and accounting for 75 percent of export growth this year. The automobile industry is a key to U.S. manufacturing; it is imperative to our nation’s economic future that this vital sector be strong and competitive.
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On the Antidisenergized Campaigns in Michigan

By | Energy, Global Warming | No Comments

Henry Payne, a keen observer of the auto industry, takes a tough look at the energy policies — and voting history — of both presidential candidates on their recent visits to Michigan.

Unmentioned in the media coverage of sparring energy plans is that both candidates are ardent supporters of federal cap-and-trade laws. Writing for the Mackinac Center, a Michigan think tank, author Deneen Borelli reports that “the economic cost of a cap-and-trade bill would hit Michigan especially hard. The increase in energy costs would compound the loss of manufacturing jobs in the state and reduce the disposable income of Michigan residents.”

Yesterday we noted Sen. Obama’s floor statement in June 2005 on H.R. 6, the Energy Policy Act, which included much criticism of the legislation that he did vote for.

Today, a bit more from Sen. McCain’s statement. Sen. McCain voted no, and one reason was the bill’s failure to include provisions he and Sen. Joe Lieberman (D-CT) proposed to control global warming through cap-and-trade.

Instead of our approach, the American public is going to be saddled entirely with the expense of this bill, which is running on empty– empty of new ideas–and further running up our deficit. The fuel we should be relying on to drive our national energy policy is American consumer demand. If we allowed consumer demand to drive our legislative actions, this bill would emphasize energy efficiency across all sectors of the economy and include a reasonable and progressive CAFE standard for SUVs and all other passenger vehicles. If it were up to American consumers, we wouldn’t be imposing a meaningless 8 billion gallon ethanol mandate, but instead would be making it possible for people to obtain and operate their automobiles using clean and abundant biofuels that actually reduce our dependence on foreign oil and not just provide subsidies to the ethanol producers. If it were to the American public, we would not be repealing the Public Utility Holding Company Act, PUHCA, without replacing it with alternative protections for utility ratepayers, investors, and pension plans. Finally, if it were up to the American public, we would pass a bill that addresses global climate change: more than 75 percent of Americans believe that we need to reduce our greenhouse gas emissions and participate with our allies and other countries in a united effort. And in the process of reducing emissions, we would also improve the health of millions of Americans who suffer from asthma and other air quality related conditions.

It’s almost as if he’s arguing for a complete transformation of the American economy.

But wait, that’s Senator Obama, as Daniel Henninger quotes the Illinois Democrat in today’s Journal, a piece called “Enviromania“: “Breaking our oil addiction . . . will take nothing less than a complete transformation of our economy.”

A top-down, government imposed complete transformation of our economy. History suggests a bad end to that sort of thing.

EPA Greenhouse Gas Proposal Due; Will the Public Have a Say?

By | Global Warming | One Comment

This afternoon the Environmental Protection Agency will release the Advance Notice of Proposed Rulemaking seeking information with which to develop (or not) regulations to control greenhouse gas emissions. The EPA media advisory is here. The EPA’s action comes in response to the U.S. Supreme Court decision in Massachusetts v. EPA (opinion here), which held that the federal government had the authority to regulate carbon dioxide and other greenhouse gases under the Clean Air Act, or at least had to explain why it chose not to.

Here’s a good reason not to: Regulation of carbon dioxide will radically expand the power of the federal government over the economy and, in fact, over all human activity that involves the atmosphere. (It’s a lot.) That kind of fundamental decision about the nature of the American economy and polity is a political one that demands a balancing of interests and the approval of the public as expressed in elections.

But, as we’ve seen from the spectacular failure of Lieberman-Warner climate change legislation, there is no political will or public agreement about what to do about global warming (which appears to be taking a vacation this decade).

You can see what the elite opinionmakers want by reading today’s front page story in the Washington Post, “EPA Won’t Act on Emissions This Year.” The implicit thesis is that the Bush Administration is on the wrong side by disagreeing with the enlightened views of mid-level, non-elected civil servants in the EPA (some of them are scientists!), or at least the ones who are talking to Post reporters off the record. Regulatory activity is by definition good; political oversight is by definition bad.

Marlo Lewis of the Competitive Enterprise Institute provided a good analysis of what happens when you put that world view into effect. In “EPA Must Be Licking Its Chops,” Lewis looks at the consequences of the Energy Independence and Security Act (EISA), the 2007 legislation that included fuel-efficiency requirements for vehicles; the draft Advance Notice cites the law for the purposes of discussing the possible federal regulation of tailpipe emissions.

If EISA is just a baby step towards the auto emission reductions EPA will require, then Detroit is in for a rough ride. Even the fuel-economy zealots at the National Highway Traffic Safety Administration caution [see p. III-3 of this report] that, as fuel economy standards increase, “the incremental benefits [in fuel savings at the pump] are approximately constant while the incremental costs [to the manufacturer] increase rapidly.” Consequently, “as stringency is increased, costs rise out of proportion to the benefits or the fuel savings. Increasingly higher costs have a negative impact on sales and employment.”

But be not afraid, because EPA’s regs will increase the number of “green jobs” — at EPA. Even if the eventual rule is limited just to the transport sector (very unlikely, given the Clean Air Act’s multiple interconnections), EPA will be Technology-Forcing Central for decades to come. College grads looking for job security should send their resumes to Environmental Protection Agency, Office of Air & Radiation, Climate and Transportation Division. Unfortunately, there won’t be enough jobs to go around for all the autoworkers displaced by far more stringent standards on a less profitable class of automobiles.

Advocates who demand federal regulation of carbon dioxide are proposing just this kind of new society, one where the EPA runs much of our economy. But that’s not a decision that should be made by career civil servants, no matter how well-meaning or enlightened or useful as sources to Washington Post reporters. That’s a decision the people must make through their representative democracy.