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Federal Actions Accelerate Transition to Plug-In Cars
May 26, 2009 (From the CalCars-News archive)
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Momentum for PHEVs has been growing steadily - but May looks like "The month that changed the world." We're seeing Obama-style transformation all over. In this chock-full posting we look at many of the new developments on the federal level -- not chronologically, but in order of importance -- plus a few links and our comments. At the end you can read the President's rousing remarks on fuel efficiency and the auto industry.

Here's what we cover below:


OBAMA ADMINISTRATION'S NEW FUEL STANDARDS: 30% cut by 2016. The national fleet mileage (unchanged since 1985) will increase 5% annually, for cars reaching 39 MPG and light trucks (including SUVs) 30 MPG. This is the resolution of the long struggle since the passage of California's AB1493 (the Pavley Bill) that precipitated automakers' lawsuits to block higher standards in California (followed by more than a dozen states), and the Bush Administration's refusal to grant California a routine waiver to set its own standards (as it has done for decades because it had emissions regulations before the U.S. had national rules). See a good summary at http://www.greencarcongress.com/­2009/­05/­obama-announces-new-national-fuel-policy-two-harmonized-standards-with-fleet-average-of-355-mpg-250-.html#more and a discussion of unresolved issues at http://earth2tech.com/­2009/­05/­21/­what-you-need-to-know-about-the-new-car-emissions-standards/­ .

The new plan brokered by the Obama Administration has won the approval of automakers (10 were at the announcement), the autoworkers, the state and federal government agencies and elected officials, and many environmental groups. It represents the breakup of a decades-long impasse, with a single uniform national standard, so the automakers can no longer resist based on their opposition to a "patchwork of standards." It's not quite as strong as California's bill; it still leaves the U.S. way behind the rest of the world, and California is still free to enact stronger requirements after 2016. For a news context-setter and photo of the assembled group at the announcement see http://www.nytimes.com/­2009/­05/­20/­business/­energy-environment/­20emit.html

Long-time CalCars supporters will recall that in Sept 2004, we testified at the ARB hearing on the implementation of the Pavley Bill, pointing out http://www.calcars.org/­CalCarsARBTestimonySept04.pdf that "the elephant in the room" is PHEVs, which could start saving CO2 emissions faster than any other vehicle type and double the goal of 30% reduction in a decade. Several commissioners looked at each other and agreed it was necessary to rethink their dismissal of PHEVs. And now it's widely acknowledged that plug-in cars have to be a big part of automakers' future vehicle mix for them to meet the goals in a shorter time. That's where we see automakers' race on electric vehicles taking shape.

As attention shifts to how the carmakers will meet the regulations, journalists and analysts have a new favorite question: With low gas prices, will smaller, lighter and more-efficient cars attract buyers? And what if lower fuel demand leads to even lower gas prices? Virtually every article on that subject concludes "this wouldn't be a problem if we had a gas tax that set a floor on the price of gasoline -- but as we all know, no politician can survive voting for that, so it's of course unachievable." A refreshing new take is a Reuters story on the "Green Gold Rush" -- the economic opportunities the new standards open up: http://www.reuters.com/­article/­GCA-GreenBusiness/­idUSTRE54I71D20090519. At Edmunds, Michelle Krebs reminds us of options like "feebates" -- taxing higher gas-guzzlers more than fuel-sippers: http://www.autoobserver.com/­2009/­05/­new-fuel-rules-automakers-may-build-them-but-will-customers-buy-them.html and John O'Dell looks at a range of ways to incentivize sales of efficient vehicles: http://blogs.edmunds.com/­greencaradvisor/­2009/­05/­is-cafe-needed-consider-prodding-the-public-rather-than-pushing-automakers.html


WAXMAN-MARKEY CAP AND TRADE LEGISLATION OK'D BY HOUSE ENERGY/COMMERCE COMMITTEE. "H.R. 2454, The American Clean Energy and Security Act," was significantly modified to gain the support of coal-state Democrats and others. While some environmental groups criticize its lower targets and providing emissions credit allocations to industry rather than auctioning them, advocates point out that most of the allocations to regulated industries will end up in with consumers. Their fundamental point is that this bill is the best we can do and still get 60 Senate votes -- and that we must get started. For four perspectives, see:

WAXMAN-MARKEY & PLUG-INS: The measure contains an additional $25 billion in loans to companies retooling to produce plug-in vehicles and buy batteries, doubling the amount committed in the TARP legislation last fall. It also includes funds funds for EV infrastructure, including charging stations and integration with smart grid systems. And to fund their reduction of CO2 emissions in the vehicles they produce, they would get three percent of the federal government's revenue from carbon emissions permits from 2012 to 2017, then one percent to 2025. See Subtitle C Sections 121-124 in the 22-page bill summary and other documents at http://energycommerce.house.gov/­ .


ENERGY SECRETARY STEVEN CHU PROPOSES $0 FOR FUEL CELL CARS IN NEXT BUDGET: Chu proposed for the year beginning Oct 1, a $100M reduction in the hydrogen program, while maintaining $68 million research funds for stationery applications. He said, "We asked ourselves, is it likely in the next 10 or 15, or even 20 years that we will convert to a hydrogen-car economy? The answer, we felt, was no." Other than those directly involved in the industry, and some automakers continuing on momentum, most analysts see other technologies advancing far more rapidly and facing fewer barriers in technology, infrastructure and conversion losses. For insight into the reasons the Energy Department is favoring plug-in vehicles over fuel cells, see the links to the US DOE's Principal Deputy Assistant Secretary of Energy Steven Chalk's congressional testimony and Detroit News interview at http://blogs.edmunds.com/­greencaradvisor/­2009/­03/­federal-funding-shifting-away-from-fuel-cells-back-to-plug-in-hybrids.html


CASH FOR CLUNKERS BILL ADVANCES: Waxman-Markey also includes $3.5-$4.5 billion incentivize vehicle swaps for a million vehicles. It has also been introduced as a stand-alone bill in the House and Senate. The bill has been slightly improved, giving higher amounts for swaps with a 10MPG increase. Senators Dianne Feinstein and Susan Collins, recognizing the measure's limitations, have introduced a bi-partisan stronger version, requiring much higher efficiency vehicles in the swap: http://blogs.edmunds.com/­greencaradvisor/­2009/­05/­senate-members-offer-clunkers-measure-they-say-is-greener-than-house-version.html . But none of them have begun to think about the points CalCars has been making involving the "embedded energy" involved in building a car. That means, in simplified terms, unless you replace a car with one getting twice the MPG, you're a net loser in terms of energy and CO2 savings. Weighing in on this issue are Bill Chameides, dean of Duke University's Nicholas School of the Environment, and Richard Larrick, an associate professor at Duke's Fuqua School of Business, saying, "Just because you go out and buy a new car and it has a higher fuel economy, it doesn't mean you're actually saving C02." They also support switching how we view fuel efficiency, to talk about "gallons per hundred miles" to enable us to appreciate the impact of energy savings from the least efficiency vehicles. http://www.nytimes.com/­gwire/­2009/­05/­08/­08greenwire-clunkers-deal-for-autos-stirs-questions-about-12208.html


PLUG-IN COMMUNITY REACHES FINISH LINE AFTER INTENSE ROUNDS OF APPLICATIONS: Remember those stimulus grant programs we alerted you to? Organizations ranging from large automakers and component makers to regional consortia, universities, small startups and many nonprofits have been buried in paperwork, spreadsheets and PDFs for months. Deadlines to apply for over $2 billion in grants from the Department of Energy (DOE) under the American Recovery and Reinvestment Act for batteries and components and for a range of products and services under the category of "transportation electrification" have passed; the US Clean Cities program applications close May 29. Still to come is "ARPA-E" for transformational technology. (See links to all at http://www.energy.gov/­recovery/­funding.htm .) (CalCars advised many, wrote endorsement letters, and partnered as education/outreach subawardees in three applications.) Results will be announced this summer, with funds available this fall.

WONDER WHO APPLIED FOR WHAT? We won't be surprised if the number of applicants exceeds 500. We've heard of many imaginative and inspiring ideas. We think telling the world about these proposals will spur further innovation and partnerships that will speed the arrival of the green jobs, new company formation, community revitalization, and fossil fuel and greenhouse gas reduction goals of the program. Given the new administration's pledges of "transparency and accountability," we have urged the Department of Energy to approach the entire process in the spirit of "coopetition." We have proposed that for the first time, DOE release the non-confidential summaries that were requested from all applicants. A perfect home has been created for such information: the DOE Recovery Act Clearinghouse https://recoveryclearinghouse.energy.gov/index.htm . We're taking our request through channels and hope for a positive response, but we may seek allies and endorsements if we don't make rapid progress.


MILITARY THINKTANK URGES HYBRIDIZATION/ELECTRIFICATION: 12 retired generals and admirals from four branches of the US military on the Center for Naval Analysis Military Advisory Board have issued a report, "Powering America's Defense: Energy and the Risks to National Security" http://www.cna.org/­nationalsecurity/­energy/­ citing "the electrification of combat" and urging "energy efficiency, smart grid technologies, and electrification of its vehicle fleet." Topics include The National Security Risks of Business as Usual and "Achieving Energy Security in a Carbon-Constrained World" (including migration that could result from rising ocean levels and other disruptions). The report confirms analyses that the cost of delivering fuel to the battlefield can reach hundreds of dollars per gallon, and suggests analyzing the "fully burdened price of fuel" to include military expenditures to operate some military bases, defend sea lanes and maintain forward presence. In a confirmation of the impact of PHEV experts and advocates, the acknowledgments and citations include ClimateProgress. Google.org and its 2030 plan, the California Energy Commission and many National Laboratories.


CLEAN ECONOMY NETWORK LAUNCHES: A new organization http://www.cleaneconomy.net announces itself: "Welcome. We are business voices -- investors, professionals, workers and entrepreneurs engaged in catalyzing clean development and creating green jobs. This is our best hope for economic growth, climate stability, energy security, and competitiveness." Formed by people from across the political spectrum (though many first came together in CT4O (Clean Tech for Obama), the group says "the rules of the clean economy are being written now," and aims to engage in that process, focusing especially on supporting an effective carbon price, working at the state level to leverage public dollars, pass a comprehensive federal clean energy package, and finance clean investments. You can join as a free General Member and participate in advocacy activities, provide input, and attend events, or become an Executive Member at $1,500 and gain access to insider events and briefings. The group is somewhat complementary to Environmental Entrepreneurs http://www.e2.org , which is affiliated with the Natural Resources Defense Council.


INDISPENSABLE NEW BOOK ON PLUG-INS: "Plug-in Electric Vehicles: What Role for Washington?" arrives just in time. Here's THE BOOK TO READ to get the current thinking about the benefits and opportunities for plug-ins -- and the policies to get there. Its editor is David Sandalow, who was based at Brookings Institution until he was confirmed as the Energy Department's new Assistant Secretary for International Affairs and Domestic Policy.) Here's our annotated Table of Contents -- get information and order for $30 or less at http://www.calcars.org/­books.html:

  • Foreword -- Strobe Talbott -- eminent foreign policy analyst and president of the Brookings Institution: concise and compelling four pages worth the price of the book!
  • Commentary-- Dan Reicher -- explains Google.org's interest and recaps the Google/Brookings Institution Plug-In Conference in June 2008.
  • Introduction -- David Sandalow -- topics reviewed and updated since the author's 2007 "Freedom From Oil: How the Next President Can End the United States' Oil Addiction," which helped provide roadmaps for several Presidential candidates.
  • PART 1 BENEFITS
    • Geopolitical Implications of Plug-in Vehicles -- R. James Woolsey, Chelsea Sexton -- overview of benefits.
    • Electrification of Transport and Oil Displacement: How Plug-Ins Could Lead to a 50 Percent Reduction in U.S. Demand for Oil -- Saurin D. Shah -- co-author of the influential 2006 Alliance Bernstein report, "The Emergence of Hybrid Vehicles" (still available at http://www.calcars.org/­downloads ) explores market penetration issues and sees a 2-6 year societal payback for a rapid transition.
    • Pluggable Cars: A Key Component of a Low-Carbon Transportation Future -- Deron Lovaas, Luke Tonachel -- summarizes the environmental issues and the EPRI-NRDC study.
    • The Cash Back Car -- Jon Wellinghoff -- broad and very accessible summary of opportunities from vehicle-to-grid integration.
  • PART 2 BARRIERS
    • The Impact of Plug-In Hybrids on U.S. Oil Use and Greenhouse Gas Emissions -- Alan L. Madian, Lisa A. Walsh, Kim D. Simpkins -- focuses on market penetration issues. (This chapter and Shah's confirm how difficult it is too get plug-ins fast enough; we hope the next generation of discussions will factor in the opportunities to convert millions of internal combustion engine vehicles on the road.)
    • Look Before You Leap: Exploring the Implications of Advanced Vehicles for Import Dependence and Passenger Safety -- Irving Mintzer -- raises issues of materials required for rapid scale-up.
  • PART 3 POLICIES
    • Current Federal Authorized Programs on Plug-In Hybrids, Battery Electric Vehicles, and Related Efforts -- Dean Taylor -- captures the legislative and administrative history of government programs.
    • Tax Credits for Electric Cars: Stimulating Demand through the Tax Code -- Benjamin H. Harris -- explores and explains those subtle distinctions between deductions, credits, refundable credits, and the impact of the Alternative Minimum Tax.
    • Cost-Effectiveness of Greenhouse Gas Emission Reductions from Plug-in Hybrid Electric Vehicles -- Daniel M. Kammen, Samuel M. Arons, Derek M. Lemoine, Holmes Hummel -- costs and benefits of PHEVs in context of trends in battery prices and federal incentives.
    • Federal Policy Options to Support Early Electric Vehicle Deployment by Reducing Financial and Technological Risks -- Bracken Hendricks, Benjamin Goldstein -- proposes fleet purchases, Federal Battery Guarantee Program to reduce risks to consumers and a secondary market for used batery packs; tells the story of World War II indusstrial retooling
    • Electric Vehicles: How Do We Get Millions on the Road? -- Tom Z. Collina, Ron Zucker -- explores the Better Place and similara business models and the evolution of the national power grid.
    • Electric Utility Issues in Replacing Oil with Electricity in Transportation -- Steve Marshall -- explains regulatory policies and electric utilities; explains why they haven't been behind plug-ins in ways comparble to oil companies and internal combustion engine vehicles.
    • Promoting Use of Plug-In Electric Vehicles through Utility Industry Acquisition and Leasing of Batteries -- Peter Fox-Penner, Peter Dean Murphy, Mariko Geronimo, Matthew McCaffree -- presents benefits of a new business opportunity.


May 19, 2009 1:05 p.m.
CQ Transcript: President Obama Announces New Auto Mileage and Emissions Standards
http://www.cqpolitics.com/­wmspage.cfm?parm1=1&docID=news-000003120709


SPEAKER: PRESIDENT BARACK OBAMA

Thank you. Thank you. Thank you, everybody. Thank you. Thank you very much. Thank you.

Please, everybody have a seat. Have a seat. What an extraordinary day. The sun is out because good things are happening.

Before I get started, just some preliminary introductions. I'll probably repeat them in my formal remarks, but I want to make sure that I acknowledge some people who've been critical to this effort and critical to so many efforts at the state and federal levels.

First of all, Speaker Nancy Pelosi , who has just been cracking the whip and, you know, making Congress so productive over these last several days. We are grateful for her.

My wonderful secretary of transportation, Ray LaHood, is in the house.

Lisa Jackson, the outstanding administrator of the EPA.

Some of the finest governors in the country are here. Let me take them in order of good looks.

Sorry, Arnold.

(LAUGHTER)

Jennifer Granholm of Michigan, Governor Deval Patrick of Massachusetts, and Governor Arnold Schwarzenegger of California.

(APPLAUSE)

Barbara Boxer just had to leave, but the -- the head of the Environment Committee in the Senate who's done just outstanding work. And Senators Feinstein, Levin, and Stabenow couldn't be here, because they are busy voting on credit card legislation that we're going to get done before Memorial Day.

And we've got two outstanding members of the House of Representatives, John Dingell -- where's John? Right here. The dean of the House, who's done so much extraordinary work around these issues, and Sandy Levin. Please give them a round of applause.

(APPLAUSE)

I also want to mention Ron Gettelfinger of the UAW, our president who's just been a great leader during some very trying times in the auto industry.

And Carol Browner, who helped to make this all happen today, please give Carol Browner a big round of applause.

(APPLAUSE)

Since -- since I'm acknowledging everybody -- I'm in a voluble mood today -- let me go ahead and acknowledge my other members of the cabinet who are here who are part of our energy green team and do just outstanding work on an ongoing basis.

First of all, my secretary of labor, Hilda Solis.

(APPLAUSE)

OBAMA: The guy who's just cleaning up the Department of Interior and doing an extraordinary job, Ken Salazar .

(APPLAUSE)

Our head of HUD, Shaun Donovan .

(APPLAUSE)

And our commerce secretary, Gary Locke .

(APPLAUSE)

Now, thank you all for coming to the White House today and for coming together around what I consider to be an historic agreement to help America break its dependence on oil, reduce harmful pollution, and begin the transition to a clean-energy economy.

This is an extraordinary gathering. Here we have today standing behind me, along with Ron Gettelfinger and leadership of the UAW, we have 10 of the world's largest auto manufacturers, we have environmental advocates, as well as elected officials from all across the country.

And this gathering is all the more extraordinary for what these diverse groups, despite disparate interests and previous disagreements, have worked together to achieve.

For the first time in history, we have set in motion a national policy aimed at both increasing gas mileage and decreasing greenhouse gas pollution for all new trucks and cars sold in the United States of America. And I want to...

(APPLAUSE)

I want to applaud the leadership of the folks at the Environmental Protection Agency, the Department of Transportation, and the White House Office of Energy and Climate Change who've worked around the clock on this proposal, which has now been embraced by so many.

You know, in the past, an agreement such of this -- such as this would have been considered impossible. It's no secret that these are folks who've occasionally been at odds for years, even decades. In fact, some of the groups here have been embroiled in lawsuits against one another, so that gives you a sense of how impressive and significant it is that these leaders from across the country are willing to set aside the past for the sake of the future.

For what everyone here believes, even as views differ on many important issues, is that the status quo is no longer acceptable.

While the United States makes up less than 5 percent of the world's population, we create roughly a quarter of the world's demand for oil. And this appetite comes at a tremendous price, a price measured by our vulnerability to volatile oil markets, which send gas prices soaring and families scrambling.

It's measured by a trade deficit where as much as 20 percent of what we spend on imports is spent on oil. It's measured in billions of dollars sent to oil-exporting nations, many that we do not choose to support if we had a choice. It's measured in a changing climate, as sea levels rise and droughts spread, forests burn and storms rage.

And what is all the more tragic is that we've known about these costs in one way or another since the gas shortages of the 1970s, and yet all too little has been done. Calls for action rise and fall with the price of a barrel of oil. Worn arguments are traded across entrenched divides. Urgency fades. Complacency grows. And time passes.

As a result, we have done little to increase the fuel efficiency of America's cars and trucks for decades. Think about this. Consider how much has changed all around us. Think of how much faster our computers have become. Think about how much more productive our workers are. Think about how everything has been transformed by our capacity to see the world as it is, but also to imagine a world as it could be.

That's what's been missing in this debate for too long. And that's why this announcement is so important, for it represents not only a change in policy in Washington, but the harbinger of a change in the ways business is done in Washington.

No longer will we accept the notion that our politics are too small, our nation too divided, our people too weary of broken promises and lost opportunities to take up an historic calling. No longer will we accept anything less than a common effort made in good faith to solve our toughest problems. And that is what this agreement seeks to achieve.

Right now, the rules governing fuel economy in this country are inadequate, uncertain, and in flux. First, there is the standard for fuel economy administered by the Department of Transportation.

On top of that, the Environmental Protection Agency, in response to a decision by the Supreme Court, may have to set limits on greenhouse gas emissions from vehicles, establishing another standard.

California has sought permission under the Clean Air Act to require that vehicles sold in California meet yet another even stricter emission rule. And 13 states and the District of Columbia have agreed to adopt California greenhouse gas reductions if the permission, called a waiver, is granted.

Now, car companies might then face three different sets of overlapping requirements, one administered by the Department of Transportation, one administered by the EPA, and still a third administered by California and 13 other states.

This proposed national policy, under the leadership of two agencies and bringing together 14 states, 10 companies, as well as autoworkers and environmental groups, changes all that.

The goal is to set one national standard that will rapidly increase fuel efficiency without compromising safety by an average of 5 percent each year between 2012 and 2016, building on the 2011 standard my administration set shortly after taking office.

A series of major lawsuits will be dropped in support of this new national standard. The state of California has also agreed to support this standard.

And I want to applaud California and Governor Schwarzenegger and the entire California delegation for their extraordinary leadership. They have led the way on this, as they have in so many other efforts to protect the environment.

In addition, because the Department of Transportation and EPA will adopt the same rule, we will avoid an inefficient and ineffective system of regulations that separately govern the fuel economy of autos and the carbon emissions they produce.

And in a time of historic crisis in our auto industry, when domestic auto manufacturers are making painful choices and restructuring their businesses to be viable in the future, this rule provides the clear certainty that will allow these companies to plan for a future in which they are building the cars of the 21st century.

Yes, it costs money to develop these vehicles. But even as the price to build these cars and trucks goes up, the cost of driving these vehicles will go down as drivers save money at the pump.

And this is a point I want to emphasize. If you buy a car, your investment in a more fuel-efficient vehicle, as a result of this standard, will pay off in just three years. In three years' time, you will have paid off the additional investment required.

So this is a winning proposition for folks looking to buy a car. In fact, over the life of a vehicle, the typical driver would save about $2,800 by getting better gas mileage.

And the fact is, everyone wins. Consumers pay less for fuel, which means less money going overseas and more money to save or spend here at home. The economy as a whole runs more efficiently by using less oil and producing less pollution. And companies like those here today have new incentives to create the technologies and the jobs that will provide smarter ways to power our vehicles.

And that's why, in the next five years, we're seeking to raise fuel economy standards to an industry average of 35.5 miles per gallon in 2016, an increase of more than 8 miles per gallon per vehicle. That's an unprecedented change, exceeding the demands of Congress and meeting the most stringent requirements sought by many of the environmental advocates represented here today.

As a result, we will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years. Just to give you a sense of magnitude, that's more oil than we imported last year from Saudi Arabia, Venezuela, Libya, and Nigeria combined.

(APPLAUSE)

Here's another way of looking at it: This is the projected equivalent of taking 58 million cars off the road for an entire year.

I also want to note that the agreement we have announced today is part of a far larger effort. In fact, on the other end of Pennsylvania Avenue, Henry Waxman is chairing a meeting of the Energy and Commerce Committee, which is working on an equally historic energy bill that will not only help our dependence on foreign oil, prevent the worst consequences of climate change, and build a clean-energy economy, but will provide more than $15 billion to help build the cars and trucks of the future right here in America.

(APPLAUSE)

And the recovery plan we put in place, as well as the budget that builds on it, makes historic investments in a clean-energy economy, doubling our capacity to generate renewable energy like wind and solar, investing in new battery technologies for plug-in hybrids, and building a smarter, stronger grid on which the homes, businesses and vehicles of the future will run.

(APPLAUSE)

Now, too often lost in the back-and-forth of Washington politics, absent in arguments where the facts opponents use depend on the conclusions they've already reached, absent all that is this: Ending our dependence on oil, indeed, ending our dependence on fossil fuels, represents perhaps the most difficult challenge that we have ever faced, not as a party, not as a set of separate interests, but as a people.

We have, over the course of decades, slowly built an economy that runs on oil. It has given us much of what we have, for good, but also for ill. It has transformed the way we live and work, but it's also wreaked havoc on our climate. It has helped create gains in prosperity unprecedented in history, but it also places our future in jeopardy.

Ending this dependence will take time. It will take an incredible effort; it will take an historic investment in innovation. But more than anything, it will take a willingness to look past our differences, to act in good faith, to refuse to continue the failures of the past, and to take on this challenge together, for the benefit not just of this generation, but generations to come.

All the people who've gathered here today, all the auto executives, all our outstanding elected officials and appointees, Ron Gettelfinger, members of Congress, governors, all these folks here today have demonstrated that this kind of common effort is possible. They've created the template for more progress in the months and years to come. Everything's possible when we're working together, and we're off to a great start.

So thank you, everybody. Appreciate it.

(APPLAUSE)


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