The Heat Is Online

Detroit Balks At Higher Auto Efficiency Standards

Auto chiefs make case to Congress

Sides square off on fuel rules

 

The Detroit News, March 15, 2007

 

WASHINGTON -- One of the loudest critics of the auto industry didn't hesitate to draw the battle lines when it was his turn to grill the CEOs of the largest U.S. automakers.

 

"You couldn't be more wrong, Mr. Mulally," said U.S. Rep. Ed Markey, D-Mass., blasting Ford Motor Co. CEO Alan Mulally for labeling the Corporate Average Fuel Economy (CAFE) program a failure.

 

The exchange was the most heated and possibly the most telling moment Wednesday as the leaders of Detroit's automakers, Toyota Motor Corp. and the United Auto Workers made a rare joint appearance before a House subcommittee.

 

The auto leaders came to Washington, amid growing concerns about climate changes, looking to beat back proposals gaining momentum that would increase gas mileage standards each year for new vehicles.

 

The CEOs and UAW President Ron Gettelfinger argued that increases in mileage standards for new vehicles would be extremely expensive and potentially disastrous. But they pledged during the nearly three-hour hearing to work with the committee to produce regulations to address climate change.

 

"We need our government to be partners, not adversaries," Mulally said.

The executives touted alternative fuels as a better way to reduce the nation's dependence on foreign oil and said the auto industry alone can't solve the issue.

 

And for the first time, the CEOs agreed to support the idea of mandatory regulations on tailpipe emissions, which they believe if done correctly would shift some of the burden to oil companies.

 

Europe and California have embraced the idea of regulating greenhouse gas emissions, rather than new miles-per-gallon mandates. California also wants to reduce the greenhouse gas content of fuels by 10 percent by 2020.

 

The best news of the day for the automakers was word that Congress could not realistically approve an increase of fuel economy rules until at least 2008.

 

U.S. Rep. Rick Boucher, R-Va., the chairman of the subcommittee on energy and air quality, disclosed that a climate change bill would not be ready by July 4 as House Speaker Nancy Pelosi had hoped. A final bill wouldn't be able to pass both houses before 2008, he said.

 

The new timetable raises serious doubts about the viability of the Bush administration's proposal to cut gasoline use 5 percent -- or 8.5 billion gallons annually -- by 2017 through raising fuel economy an average of 4 percent a year.

 

In order to meet its timetable, the administration must complete work by April on a final fuel economy regulation. An analysis said it would cost automakers $114 billion between 2010 and 2017, including $85 billion for Detroit's automakers.

 

U.S. Transportation Secretary Mary Peters backed away from that estimate Wednesday, noting it is based on 2002 model year data. But GM chief Rick Wagoner said the estimated $40 billion price tag just for GM is "probably low."

 

Wagoner and Mulally said they flatly opposed the Bush administration's 4 percent figure.

 

U.S. Rep. John Dingell, D-Dearborn, for the first time said that number is "not currently feasible."

 

But the longtime friend to the auto industry offered some tough love, saying he hoped the hearing "serves as a wake-up call" for the companies."Inaction and telling us what doesn't work is also no longer sufficient," he said.

 

Automakers are most worried about representatives like U.S. Rep. Mike Doyle, D-Pa., who said he has always driven American cars and opposed setting mandatory fuel economy rules. He expressed frustration with the slow pace of progress by automakers to increase efficiency and he praised Toyota's embrace of hybrids.

 

"It's time for the excuses to come to an end," he told the CEOs. "No longer is it ifbut whatare we going to do."

 

Rep. Jane Harman, D-Calif., whose district includes Toyota's North American headquarters, also warned of raised standards, saying the auto industry could "either take the opportunity to shape change or they can resist ... because change surely will come."

 

She urged automakers to do more to make a "safer and healthier planet" for her new granddaughter Lucy.

 

Congress hasn't raised the mandates for passenger cars since it created the program in 1975, which ordered automakers to double the efficiency of their fleet from 13 mpg to 27.5 mpg by 1985.

 

Automakers have been successful in beating back attempts to raise standards for years, saying the system perverts the market by forcing them to heavily discount smaller cars to meet mandates.

 

"New vehicle efficiency improvements alone will never result in the overall decline in petroleum consumption and the greenhouse gas emissions we need," said Chrysler Group President Tom LaSorda.

 

Gettelfinger said a high mandatory fuel economy increase "could result in the loss of tens of thousands of automotive jobs, and the loss of health coverage for retirees and their families."

 

Last year, NHTSA hiked light-truck fuel economy rules -- currently at 22.2 mpg -- about 2 percent a year through 2012. That smaller increase will cost automakers $6.2 billion.

 

While vehicles are getting much more efficient, they are getting bigger and more powerful and the result is fleetwide fuel economy has remained virtually unchanged for 20 years.

 

Half of all vehicles sold in the United States are SUVs, while 60 percent of vehicles sold in Europe are compact or smaller, in part because heavy fuel taxes prod Europeans to buy smaller vehicles.

 

Automakers argue it's time to change the fuels, which have a quicker impact than fuel economy rules that will affect the 16 million or 17 million new vehicles built annually. The problem is availability of alternative fuels; just 1,100 gas station pumps out of 170,000 carry E85. U.S. Rep. John Sullivan, R-Okla., noted he bought a flex-fuel Chevy Suburban. The only problem is he can't get E85. "I'd have to go to Kansas to get it," he said.

 

Jim Press, Toyota's North American president, gave some ground on flexible fuel vehicles, which run on E85 ethanol. He noted the automaker will introduce its first flex-fuel vehicle in 2009, a full-size Tundra pickup. It is considering a flex-fueled hybrid as well, Press said.

 

Earlier in the Senate on Wednesday, Democrat Byron Dorgan, D-N.D., and Larry Craig, R-Idaho, introduced a bill to raise fuel economy mandates by 4 percent a year from 2012 until 2030.

 

Auto Execs, Lawmakers Focus on Climate

The Associated Press, March 14, 2007 

WASHINGTON -- U.S. automakers and a top union official pledged Wednesday to work with Congress to find new ways of dealing with global warming but declared their industry could not bear the burden alone. 

The leaders of General Motors, Ford, Toyota and Chrysler, along with the head of the United Auto Workers union, made a rare joint appearance before a House subcommittee. They stressed that proposed increases in gas mileage standards for new vehicles would be extremely expensive and could have calamitous results. 

"This could include the closing of additional facilities and the loss of tens of thousand of automotive jobs," UAW President Ron Gettelfinger said. 

But all of the industry leaders, under questioning from House Energy and Commerce Chairman John Dingell, D-Mich., vowed to work with the committee to produce regulations to address climate change and consider "new regulatory regimes" beyond the fuel economy program. 

"Inaction will not work, and telling us what doesn't work is useful but no longer sufficient," Dingell said. 

The committee was exploring alternatives to the fuel economy program, possibly through the regulation of a vehicle's carbon dioxide emissions. Gettelfinger, for example, said the UAW wanted Congress to look into the potential of a carbon control policy that would require reductions in carbon emissions of vehicles.

All of the auto leaders answered "yes" when asked by Dingell if they were willing to consider "a system which regulates the emissions of carbon dioxide from your vehicles." But they said it would need to be coupled with reduced emissions and carbon production from fuels. 

David Friedman, research director of the Union of Concerned Scientists, said the auto industry's support for other industries _ such as oil producers _ paying for a cap on emissions could lead to higher gasoline prices and let car makers "avoid the responsibility for the pollution their vehicles produce." 

Congress heard from the automakers at a time when many lawmakers are concerned about global warming and seeking ways to require more fuel efficiency in vehicles. The White House is aiming for a 4 percent increase in fuel economy requirements and wants to change how the rules are applied. 

Rick Wagoner, General Motors Corp.'s chairman and chief executive, said the Corporate Average Fuel Economy program, or CAFE, had "failed dramatically" based on its original intentions of reducing gasoline consumption and reliance upon imported oil. 

Wagoner said a 4 percent increase in gas mileage standards would be "extraordinarily expensive and technologically challenging to implement." 

"Even with this proposed CAFE increase ... America will still be using more _ and more likely importing more _ oil than ever as well as producing more (carbon dioxide) emissions," Wagoner said. 

Ford Motor Co. Chief Executive Alan Mulally told the panel of the House Energy and Commerce Committee that the industry needed "government to be our partners, not our adversaries." 

Toyota Motor Corp.'s North American President Jim Press, whose company has pushed fuel-efficient hybrid vehicles, noted that Toyota "has long been mindful of and accepts the broad scientific consensus that climate change is occurring and will continue unless there are significant and coordinated global efforts to slow the growth of man-made greenhouse gas emissions." 

The Toyota executive said the auto industry "has a responsibility to be part of the solution, but these issues cannot be addressed by the industry alone." 

Tom LaSorda, president and CEO of DaimlerChrysler AG's Chrysler Group, said climate change must be addressed through more efficient vehicles, the expanded use of alternative fuels such as ethanol and biodiesel and the "harnessing of market forces to help drive consumer demand." 

Rep. Edward Markey, D-Mass., sharply disagreed with the auto industry's assessment of the fuel economy program, contending it originally reduced the nation's dependence on foreign oil but stagnated in recent years because Congress hasn't pushed higher standards. 

"The testimony that you're giving is completely wrong," Markey told the auto executives. 

Rep. Jane Harman, D-Calif., whose district includes Toyota's North American headquarters, also warned of raised standards, saying the auto industry could "either take the opportunity to shape change or they can resist ... because change surely will come." 

In the Senate, meanwhile, Democrat Byron Dorgan of North Dakota and Republican Sen. Larry Craig of Idaho introduced legislation that would raise the fuel economy requirements by 4 percent a year for all new vehicles from 2012 to 2030. Their bill, designed to be part of a larger energy package, would offer also tax incentives to manufacturers. 

"We don't have a choice but to make the auto fleet more efficient," Dorgan said.

GM, Ford and Chrysler have all announced layoffs and plant closings, and the industry is nervously eyeing an early, $100 billion-plus projected cost for raising the fuel economy standards under President Bush's plan.