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Policy stories from HybridCars + related NYTimes story
Dec 6, 2005 (From the CalCars-News archive)
CalCars-News
This posting originally appeared at CalCars-News, our newsletter of breaking CalCars and plug-in hybrid news. View the original posting here.
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These are excerpts from the HybridCars.com newsletter followed by the important NYTimes piece cited in the last section of the newsletter.

~~~ Hybrid Cars Newsletter: Issue No. 0021 ~~~ Moderator: Bradley Berman [brad@...]

Vehicle and Fuel Choices for American Security Act of 2005 On Nov. 16, a bipartisan group of 10 senators and 26 representatives introduced the Vehicle and Fuel Choices for American Security Act. Based on the Blueprint for Energy Security of the Set America Free Coalition, the sweeping bill provides an array of fuel-conscious policy initiatives, from offering financial incentives to enable Detroit to ramp up production to seeking ways to reduce diesel consumption by heavy-duty trucks. In a write-up for HybridCars.com, Anne Korin, co-chair of the Set America Free Coalition, explained who is behind the bill:

"These are not the usual suspects you'd normally hear preaching for alternative fuels and better mileage but--reflecting the sea change in Washington about an issue most Americans regardless of political affiliation care deeply about--a group of primarily Southern conservatives who are fed up by the unprecedented transfer of wealth to OPEC and the vulnerability of our transportation sector, which accounts for two-thirds of U.S. oil consumption."

The act doesn't stipulate specific regulatory programs, but directs the White House's Office of Management and Budget to publish and carry out an action plan to save 2.5 million barrels per day by 2016, 7 million barrels per day by 2026, and 10 million barrels per day by 2031. Deron Lovaas, vehicles campaign director for the Natural Resources Defense Council, called the act "a very ambitious mandate, somewhat like the Clean Air Act in its breadth and the flexibility of its interpretation."

Other items in the act include closing the SUV loophole, lifting the per manufacturer cap on consumer tax credits for hybrids, providing retooling tax credits for manufacturers and suppliers of advanced diesels and hybrids, and establishing targets for production of flex-fuel, alt-fuel, gas-electric hybrids, plug-in hybrids, and fuel cell vehicles starting at 10 percent in 2012 and rising to 50 percent by 2016. To qualify, vehicles must meet a performance standard of 175 percent of average fleet fuel economy.

Korin's article with links and details: http://www.hybridcars.com/­vehicle-fuel-choices-act.html

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The Healthcare for Hybrids Act Barack Obama (D-Ill.) was among 10 U.S. senators sponsoring the Vehicle and Fuel Choices for American Security Act. Two days later, on Nov. 18, he introduced a separate bill, co-sponsored with Congressman Jay Inslee (D-Wa.) called "The Healthcare for Hybrids Act." The act connects the dots between the financial hardships faced by Detroit automakers--in part due to the health care burden faced by the Big 3--and the need for American automakers to develop more fuel-efficient vehicles.

The bill's "findings" section has one of the best plain-English summaries of our collective predicament. In seven easy steps, here we go: 1. The United States imports more than half the oil it consumes. 2. According to present trends, the United States' reliance on foreign oil will increase to 68 percent of its total consumption by 2025. 3. With only 3 percent of the world's known oil reserves, the health of the United States' economy is dependent on world oil prices. 4. World oil prices are overwhelmingly dictated by countries other than the United States, thus endangering our economic and national security. 5. Legacy health care costs associated with retiree workers are an increasing burden on the global competitiveness of American industries. 6. American automakers have lagged behind their foreign competitors in producing hybrid and other energy-efficient automobiles. 7. Innovative uses of new technology in automobiles in the United States will help retain American jobs, support health care obligations for retiring workers in the automotive sector, decrease America's dependence on foreign oil, and address pressing environmental concerns.

What do Obama and Inslee want to do about it? The bill proposes that up to 10 percent of the retiree health care costs for a qualifying manufacturer be paid by federal financial assistance--that is, if the carmaker invests at least 50 percent of the those savings into alt-fuel, flex-fuel and hybrid vehicles, including the retooling of assembly lines, the retraining of workers, and other costs associated with "the diversifying of domestic production of automobiles through the offering of high-performance fuel efficient vehicles." (In other words, if they break from gasoline fundamentalism.)

Auto economist Walter McManus, who lives a stone's throw from one of the plants threatened by General Motors' recent closures, called Obama's bill "a stroke of genius." McManus has recently documented in detail the crisis faced by Detroit for failing to invest in hybrids and other fuel-saving technologies. In his HybridCars.com blog, McManus wrote, "It gives no joy or satisfaction to say, 'I told you so.' And unlike all measures that have gone before, the Obama-Inslee legislation takes no such satisfaction. Instead, they have risen above petty partisan argument and entrenched positions with bold, out-of-the-box thinking."

What's so innovative about the bill? According to McManus:

"Typically, the Federal government influences investment decisions through tax credits. But, in order for tax credits to work you have to have something to tax. Companies posting losses--and the Big 3 are billions in the red--pay no taxes and therefore receive no benefit from a tax credit.

"Senator Obama and Congressman Inslee have recognized these companies are circling the drain, and with them our national economy and energy security. Their stroke of genius is in connecting the dots: Decreasing oil consumption is clearly a top national priority but it will not happen without a national investment...At this moment in history Detroit simply does not have the financial strength needed to transform its fleet quickly enough to survive."

See McManus's blog, which includes a link to a pdf version of the Health Care for Hybrids Act: http://www.hybridcars.com/­blogs/­brain/­health-care-for-hybrids

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Hybrid Legislation: Pitfalls and Potholes Michael Millikin, of Green Car Congress, is the newest addition to our roster of bloggers. In a recent blog, Millikin took note of the recent flurry of pro-hybrid, pro-efficiency legislation and reminded us about past government efforts that fell short. He wrote, "It sounds like the government is going to make us be more fuel-efficient and less petroleum-dependent. Unfortunately, we've already been in federally funded 'fuel efficiency' development mode for more than 12 years."

Millikin then recounts the Clinton Administration's 1993 project entitled "Partnership for a New Generation of Vehicles (PNGV)." The goal was to develop a vehicle that delivered fuel economy of 80 mpg-three times that of the then-current 1994 family sedans--without increasing car prices or compromising performance and comfort.

The three automakers did indeed produce their super-efficient mid-sized concepts--all diesel-electric hybrids-in 2000. Five years later, none of the vehicles have made it to market. Millikin advised, "Buyers are the best and ultimate market-makers. If we want a market of fuel-efficient vehicles that lasts, if we want to be free of the petroleum monkey on our backs, we'd better start electing to act that way and stop waiting for solutions from Washington."

Millikin spoke up again in response to a U.S. Chamber of Commerce proposal to levy a surcharge on hybrids and other alt-fuel vehicles, as a way to make up the $42 billion shortfall in our national highway maintenance budget:

"A universal surcharge on fuel efficiency--which, by the way, would need to be extended to diesel vehicles as well to be equitable in terms of comparative vehicle fuel efficiency--would be a stunningly myopic policy blunder at a time when we need to be encouraging the wide-spread purchase of more fuel-efficient vehicles, not discouraging it...We need to figure out a way to adequately fund our highways and byways. But we should not risk tomorrow's environmental, economic and political well being to fill today's pothole."

See Michael Millikin's blog "HyView": http://www.hybridcars.com/­blogs/­hyview

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Battle over Greenhouse Gases Heading to New York While all eyes turn toward the latest legislative proposals, California's powerful pending regulation to curb global warming pollution may get overlooked. Just over a year ago, California regulators approved a plan to drastically reduce vehicle emissions related to global warming over the next 11 years. "It's the most challenging regulation that's ever been proposed by the California Air Resources Board, or even the EPA" said Thomas C. Austin, a top research consultant on the regulation. The new regulation would require the auto industry to cut the car emissions from its new fleets by approximately 30 percent. The only way to cut emissions to these levels is to dramatically increase efficiency.

On Nov. 24, the New York Times reported that New York's State Environmental Board unanimously approved adopting California's tighter restrictions for greenhouse gas emissions. New York joins nine other states--Maine, New Jersey, Vermont, Massachusetts, Oregon, Washington, Rhode Island, Connecticut and Pennsylvania--that have either already signed up or are in the process of adopting the California standards.

The response from automakers, Honda included, is that they don't have the technology to improve efficiency by 30 percent. (Huh?) Lobbyists say there would be no health benefits to the plan; there's a great debate about what it would cost; and the resolution probably requires presidential approval. Soon after the regulations were first approved in California, a lawsuit was filed in U.S. District Court in Fresno by 13 California car dealerships and the Alliance of Automobile Manufacturers, seeking an injunction to halt California from enacting the plan. The alliance includes GM, DaimlerChrysler, BMW, Volkswagen, and even hybrid makers Ford and Toyota.

With New York joining the fray, people who like to breathe fresh air and who don't want to see the world flooded by melting polar icecaps got a strong new ally: New York State Attorney General Eliot Spitzer. Judith Enck, a policy adviser to Spitzer, said she expected more challenges on many fronts, with automakers battling New York every step of the way. "We're ready for them to file a lawsuit if the state sneezes," she said.

If California and the other states are able to form a powerful alternative regulatory bloc, then the car companies will have to raise the fuel-efficiency standards of their products, or face being blocked from approximately one-third of the nation's auto market.

Full article: http://www.hybridcars.com/­carb-global-warming-regulations.html [SEE BELOW FOR FULL NYTIMES ARTICLE]

The Hybrid Cars Newsletter is a free email-based newsletter discussing the latest news and information in the world of hybrid gas-electric vehicles. Subscribe and unsubscribe at http://www.hybridcars.com/­newsletter.html

http://www.nytimes.com/­2005/­11/­26/­nyregion/­26emissions.htm The New York Times November 26, 2005 Saturday, p.1. Lead story Battle Lines Set as New York Acts to Cut Emissions By DANNY HAKIM

ALBANY, Nov. 23 - New York is adopting California's ambitious new regulations aimed at cutting automotive emissions of global warming gases, touching off a battle over rules that would sharply reduce carbon dioxide emissions while forcing the auto industry to make vehicles more energy efficient over the next decade.

The rules, passed this month by a unanimous vote of the State Environmental Board, are expected to be adopted across the Northeast and the West Coast. But the auto industry has already moved to block the rules in New York State, and plans to battle them in every other state that follows suit.

Environmentalists say the regulations will not lead to the extinction of any class of vehicle, but simply pressure the industry to sell more of the fuel-saving technologies they have already developed, including hybrid systems that use a combination of electricity and gasoline. And that, they say, will curtail one of the main contributors to global warming.

"The two biggest contributors to global warming are power plants and motor vehicles," said David Doniger, a senior lawyer for the Natural Resources Defense Council. "If you deal with them, you deal with more than two-thirds of the problem."

But automakers contend that the regulations will limit the availability of many sport utility vehicles, pickup trucks, vans and larger sedans, since they will effectively require huge leaps in gas mileage to rein in emissions. The industry also says the rules will force them to curb sales of more-powerful engines in the state, and ultimately harm consumers by increasing the cost of vehicles.

The standards are the most ambitious environmental regulations for automobiles since federal fuel economy regulations were enacted in the 1970's. They will be phased in starting with 2009 models and require a roughly 30 percent reduction in automotive emissions of carbon dioxide and other greenhouse gases by the 2016 models.

The new rules will also effectively require an improvement in fuel economy on the order of 40 percent for vehicles sold in the state.

Ten states follow or plan to follow California's air quality rules, which have previously focused on auto emissions that cause smog, and the latest set of rules would for the first time limit carbon dioxide emissions. And as the largest of the 10 states, New York is being closely watched as it institutes the new rules.

If all 10 states and California succeed in enacting the rules, they will form a powerful alternative regulatory bloc accounting for about a third of the nation's auto sales.

"That is so much of the market it should reach a tipping point," Mr. Doniger said. "It won't make sense for the automakers to build two fleets, one clean and one dirty."

New Yorkers will certainly notice the regulations should they survive the court challenges. The state estimates that the rules will increase the cost of a new car or truck by more than $1,000 when fully phased in, an amount it expects car owners to recoup over time through savings at the pump. Vehicles will need to comply with the new standards to be registered in the state.

In early August, more than three months before the regulations were even adopted, automakers from Detroit to Tokyo joined in a suit to block them, making New York the latest legal front in the industry's fight against the measures. After California adopted the regulations in their final form in September 2004, automakers sued in state and federal courts, where the battle is still playing out.

California, unlike other states, has special authority to set its own air quality rules because it did so before passage of the federal Clean Air Act. Other states can pick California's tougher regulations over Washington's.

"If the California regulation actually were in effect today, only a handful of models would meet it," said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, which includes Toyota, General Motors and several other major automakers.

Judith Enck, a policy adviser to Attorney General Eliot Spitzer, said she expected more challenges on many fronts, with automakers battling New York every step of the way. "We're ready for them to file a lawsuit if the state sneezes," she said.

An analysis by the State Department of Environmental Conservation said it would take one to five years for drivers of cars, smaller sport utility vehicles and pickup trucks to make up for the higher initial cost of their more fuel-efficient vehicles, assuming a gas price of $2 a gallon. For drivers of heavier S.U.V.'s and pickups, it would take one to three years.

But automakers estimate that the regulation will add about $3,000 to the cost of new cars and trucks and be hard to make up over time. To comply, they say, they will have to restrict sales of their vehicles with the poorest mileage, or redesign them to add new technologies, or to be more aerodynamic and lighter in weight.

"The California legislation would hurt the most the people that rely on large cars, pickups, S.U.V.'s and minivans," Ms. Bergquist said.

Environmental groups say the rules can be met with technology already on the shelf.

"They said that seat belts would put them out of business; they said that air bags would put them out of business; they said fuel economy and emissions regulations would all put them out of business," said David Friedman, a senior analyst at the Union of Concerned Scientists.

"It turns out it's their unwillingness to innovate that's putting them out of business right now," he added, referring to the current struggles of General Motors and Ford Motor Company.

The legal battles do come at an awkward time. After years of saying that customers cared little about gas mileage, automakers are rushing to assert their green credentials as oil prices have risen. G.M. and Ford have been particularly scarred by the sales slump of their large sport utility vehicles and pickup trucks.

In a recent advertisement that has appeared in The New York Times and in many other publications, Ford's chairman and chief executive, William Clay Ford Jr., promoted his company's plan to sell 250,000 vehicles next year that can run on a corn-based ethanol blend instead of on gasoline, and 250,000 hybrid vehicles annually by 2010.

"Innovation is our mission," the advertisement said, adding that the company was building "smarter, safer, more fuel-efficient vehicles."

Industrywide, however, the gas mileage of the average new vehicle sold in the United States is below what it was two decades ago, because leaps in efficiency have been overtaken by increases in the weight of vehicles and in the power of their engines.

The 10 states that either follow California's car rules or are in the process of adopting them are New York, Maine, New Jersey, Vermont, Massachusetts, Oregon, Washington, Rhode Island, Connecticut and Pennsylvania.

While states are supposed to follow all of California's car rules or stick with Washington's, in practice that has not always been the case. The administration of Gov. George E. Pataki, however, has been an early supporter of the global warming regulations, getting approval from the State Environmental Board on Nov. 9. (The rules do not need to be approved by the State Legislature.)

Many of the industry's legal arguments against the rules are likely to be drawn from a playbook automakers have used in California. One contention is that the regulation of tailpipe emissions is superseded by Washington's authority to regulate fuel economy. Regulators in California have countered that they have authority to take action on any emissions threatening public health.

While global warming and what contributes to it have been controversial issues in the United States, a wide body of international science has linked it to health and environmental dangers, including increases in rates of asthma and infectious disease and threats to coastlines from rising sea levels.

The auto industry does not dispute the issue of global warming, but says policies should be set nationwide, rather than at the state level. President Bush has shown little inclination to do that, having rejected the Kyoto global climate accord early in his first term, but his administration has modestly increased federal fuel economy standards.

In New York, automakers also plan to argue that the regulations were not vetted as thoroughly as the state's laws require. And they will contend that the standards will actually harm the environment by leading to what Ms. Bergquist called "the jalopy effect" because higher initial car prices will discourage people from trading in older models that pollute more than newer ones.

"Less efficient autos will stay on the road longer, and that will increase smog-forming pollutants," she said.

Daniel F. Becker, a top global warming strategist at the Sierra Club, said, "If there were an Olympics of chutzpah, the auto industry would win a gold medal for suing New York claming that their clean car law is bad for the environment."


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