Climate Bills and a Green Economy

New Mileage Rules: Pay More for Cars, Less at Pump

April 1, 2010

AP - Drivers will have to pay more for cars and trucks, but they'll save at the pump under tough new federal rules aimed at boosting mileage, cutting emissions and hastening the next generation of fuel-stingy hybrids and electric cars.

The new standards, announced Thursday, call for a 35.5 miles-per-gallon average within six years, up nearly 10 mpg from now.

By setting national standards for fuel efficiency and greenhouse gas emissions from tailpipes, the government hopes to squeeze out more miles per gallon whether you buy a tiny Smart fortwo micro car, a rugged Dodge Ram pickup truck or something in between.

The rules will cost consumers an estimated $434 extra per vehicle in the 2012 model year and $926 per vehicle by 2016, the government said. But the heads of the Transportation Department and Environmental Protection Agency said car owners would save more than $3,000 over the lives of their vehicles through better gas mileage.

Touting the plan, Transportation Secretary Ray LaHood said:

"Putting more fuel-efficient cars on the road isn't just the right thing to do for our environment, it's also a great way for Americans to save a lot of money at the pump."

The requirements for the 2012-2016 model years pleased environmentalists who have criticized sluggish efforts by previous administrations to boost fuel efficiency. They also were welcomed by automakers who have been seeking a single standard after California and a dozen states tried to create their own rules.

Dave McCurdy, a former Oklahoma congressman who leads the Alliance of Automobile Manufacturers, a trade group representing 11 automakers, said the industry supported the single national standard for future vehicles. He said the program made "sense for consumers, for government policymakers and for automakers."

Not all dealers were pleased. Ed Tonkin, a Portland, Ore., car dealer who chairs the National Automobile Dealers Association, said the rules were the "most expensive fuel economy mandates in history" and would turn many new cars and trucks into luxury items for consumers.

"Under these new mandates, the price of new cars and light trucks will rise significantly, meaning fewer Americans will be able to buy the new vehicles of their choice," Tonkin said.

Environmental groups said the changes would actually give consumers more choices because they would ensure that every new car would get slightly more fuel-efficient each year.

"Because of these standards, Americans will drive vehicles that save them money at the pump, cut the country's oil dependence and produce a lot less global warming pollution," said Jim Kliesch, a senior engineer in the Union of Concerned Scientists' Clean Vehicles Program.

The regulations set a goal of achieving by 2016 the equivalent of 35.5 miles per gallon combined for cars and trucks, an increase of nearly 10 mpg over current standards set by the National Highway Traffic Safety Administration. The figure could actually be as low as 34.1 mpg because automakers can receive credits for reducing greenhouse gas emissions in other ways, including preventing the leaking of coolant from air conditioners.

The changes will cost the auto industry about $52 billion, but the government says the program will provide $240 billion in savings to consumers, mostly through lower fuel consumption. The changes also could help U.S. manufacturers who produce advanced vehicles, batteries and engines, the government said.

The EPA is setting a tailpipe emissions standard of 250 grams (8.75 ounces) of carbon dioxide per mile for vehicles sold in 2016, equal to what would be emitted by vehicles meeting the mileage standard. This represents the EPA's first rules ever on vehicle greenhouse gas emissions, following a 2007 Supreme Court decision.

Each auto company will have a different fuel-efficiency target, based on its mix of vehicles. Automakers that build more small cars will have a higher target than car companies that manufacture a broad range of cars and trucks. For example, passenger cars built by General Motors Co. will need to hit a target of 32.7 mpg in 2012 and increase to 36.9 mpg by 2016. Honda Motor Co., meanwhile, will need to reach passenger car targets of 33.8 mpg in 2012 and ramp up to 38.3 mpg in 2016.

Some small-volume auto companies such as Porsche, Aston Martin and Lamborghini will not have to meet the standards initially, but all automakers will need to comply by 2017.

Consumers can expect improvements to engines, transmissions and tires, and the use of start-stop technology that halts the engine at stop lights to save fuel. Automakers are expanding their portfolio of gas-electric hybrid vehicles and beginning to introduce electric cars and plug-in hybrids.

Nissan recently announced pricing for its electric car, the Leaf, which will be available in limited numbers later this year. Toyota is launching plug-in hybrids along with battery-powered cars running solely on electricity starting in model-year 2012.

In Michigan, the first version of the Chevrolet Volt, which can go 40 miles on battery power before an engine kicks in to generate power, rolled off the assembly line this week and is scheduled to be sold in limited numbers later this year.

Beyond electric cars, Ford is aggressively promoting its "EcoBoost" line of direct-injection turbocharged engines, which provide a 20 percent increase in fuel efficiency. General Motors will begin assembling the Chevrolet Cruze, a replacement for the Cobalt, in Ohio later this summer. The compact Cruze is expected to achieve about 40 mpg on the highway thanks to a 1.4-liter turbocharged engine.

"All the automakers are doing what we're calling 'downsize and boost.' You take the engine, you make it smaller, you boost it, you put a turbocharger, a supercharger on it, and you get the same kind of results with better fuel economy," said Aaron Bragman, an auto industry analyst with IHS Global Insight in Troy, Mich.

LaHood and EPA Administrator Lisa P. Jackson said the new requirements will save 1.8 billion barrels of oil over the life of the program. The new standards move up goals set in a 2007 energy law, which required the auto industry to meet a 35 mpg average by 2020.

EPA and the Transportation Department said the requirements would reduce carbon dioxide emissions by about 960 million metric tons over the lifetime of the vehicles regulated, or the equivalent of taking 50 million cars and light trucks off the road in 2030.

Environmental groups have sought curbs on greenhouse gas emissions, blamed for global warming, and they challenged the Bush administration for blocking a waiver request from California to pursue more stringent air pollution rules than required by the federal government. The request was granted by the Obama administration last year.

U.S. Bid to Combat Climate Change Starts with Cars and Trucks
U.S., Canada crack down on vehicle emissions
U.S., Canada hike car fuel efficiency, set CO2 standard

EPA Limits On Greenhouse Gases Will Shift U.S. Production Overseas

March 30, 2010

Investors.com - Climate change represents a tough and complex policy issue. That's the reason U.S. lawmakers — more than 30 years since scientists first introduced the concept of global warming into the American political dialogue — continue to debate the best way to structure legislation aimed at reducing greenhouse gas (GHG) emissions without damaging the economy.

As Congress debates domestic legislation, the administration participates in an international process with similar objectives.

As this takes place, the Environmental Protection Agency is engaging in a form of political blackmail, threatening to push ahead on its own if elected officials don't move as quickly as the agency wants. It has already taken the first step toward leveraging the Clean Air Act to mandate GHG reductions.

Headed toward regulatory seppuku, the agency recently finalized a climate change determination that current concentrations of GHGs — about 435 parts per million (ppm) in CO2 equivalents — in the atmosphere endanger public health and welfare.

EPA makes this claim not because these emissions are toxic like pollutants covered by the Clean Air Act, but because of their heat-trapping capacity. EPA has accepted the theory that increasing emissions of these gases will lead to unprecedented increases in the earth's temperature and that a much warmer earth will mean health- and even life-threatening problems.

Although it has been as warm or warmer in the past, EPA wants to act assuming a worst-case scenario — even if the probability of occurrence is incredibly small.

There is support for the theory (a theory, not a fact) that the projected path of human emissions will lead to global concentrations that pose a risk. The U.N.'s Intergovernmental Panel on Climate Change has set an ambitious goal of cutting GHG emissions so concentrations do not exceed 450 ppm and keeping the global average temperature increase below 2 degrees Celsius.

Leaving aside whether achieving such a goal is even technologically or economically feasible, let's focus on the fact that the international goal — which the Obama administration has acknowledged in the Copenhagen Accord — represents a higher concentration than what EPA claims is already endangering all of us.

If EPA Administrator Lisa Jackson really believes this, she must be setting the stage for a massive regulatory assault by declaring that any increase in GHG concentrations will further harm human health and welfare. Once the agency determines that current concentrations of greenhouse gases are unhealthy, how can U.S. negotiators agree to a U.N. limit that is higher?

By crafting the endangerment finding as she did, Jackson ensured future EPA administrators will be compelled to mandate further reductions in emissions — clamping down on economic development and growth in the U.S. for the foreseeable future. Nonetheless, some environmental groups are pushing EPA to establish air quality standards for CO2 and other GHG emissions.

This means that under the Clean Air Act, EPA must set those standards at a level that protects human health and the environment with an adequate margin of safety (i.e., some concentration level lower than current concentrations the agency claims are now endangering us). How this could be done would be a mystical process at best.

While it might appear that Administrator Jackson and her army of regulators are out of step with the rest of the administration, the White House has done nothing to discourage EPA from pressuring Congress. In spite of the Supreme Court ruling that GHG emissions could qualify as pollutants under the Clean Air Act, nothing in its history supports that interpretation.

Moreover, reducing U.S. emissions while developing countries are increasing theirs would have no meaningful impact on global concentration levels. America alone cannot control emissions worldwide. Our states and businesses will be held accountable for the impossible while other nations prosper at our expense.

Consider the lesson from our experience with price controls in the '70s. To counteract the inflationary effects of an expansive monetary policy put in place in the 1960s, the Nixon administration slapped a 90-day freeze on wages and prices in late 1971. The fix was only temporary, though, and when inflation took off again in 1973, the administration put in place more price controls.

When farmers began killing chickens and ranchers stopped raising cattle because the cost of doing so exceeded the prices they could fetch, consumers stripped store shelves of their wares.

The resulting shortages forced the administration to relent and lift all but one segment of the price controls, the ones imposed on oil and natural gas.

In his book "The Commanding Heights: The Battle for the World Economy," economist Daniel Yergin notes:

"Washington's effort to run the energy market was a lasting lesson in the perversities that can ensue when government takes over the marketplace. ... The prices for domestic production were also held down, in effect forcing domestic producers to subsidize imported oil and providing additional incentives to import oil into the U.S.

"The whole enterprise was an elaborate and confusing system of price controls, entitlements and allocations. It was estimated that just the standard reporting requirements for what became the Federal Energy Administration involved some 200,000 respondents from industry, committing an estimated five million man-hours annually."

Not until federal controls were lifted did real oil and gasoline prices decline by providing incentives for new oil development.

Much like domestic oil price control shifts increased America's reliance on energy imports, the EPA's plan for a 350 ppm limit on greenhouse gas emissions is a control that will just shift emissions production overseas — the production of goods and services that consumers value.

Ends and means cannot be separated. And unintended consequences are usually severe, as the Nixon and Carter administrations discovered in the 1970s and the Obama administration will discover today if the EPA doesn't change course.

Senators Work on Bipartisan Climate Bill

March 30, 2010

Financial Times - Three senior US lawmakers are piecing together a sweeping bipartisan energy and climate bill, which looks set to include sweeteners to galvanise support among Republicans and industry groups.

The proposed legislation, encouraged by President Barack Obama, dilutes a climate bill that stalled last year in the Senate. The senators have hosted meetings with industry groups over the past two weeks, revealing details about their plan that would cap carbon emissions while expanding offshore oil drilling and nuclear power generation.

Nearly six months have passed since the Senate’s most recent climate bill failed to win over conservatives and moderates, a political stalemate that cast a shadow on America’s presence at the Copenhagen climate summit. But some Democrats say the passage of healthcare reform has opened the door for climate change legislation, while acknowledging trade-offs will be needed to secure 60 Senate votes.

“They know that to pass a comprehensive bill they will have to ease concerns of some special interests and mid-western senators whose states have manufacturing-oriented economies,” said Daniel J. Weiss, senior fellow at the Center for American Progress Action Fund, a liberal think-tank ...