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Obama's Auto Standards Marks a Turning Point for the Industry

2009-05-22T06:17:54Z

I've just returned from Washington after attending President Obama's announcement of new greenhouse gas and fuel economy standards for passenger vehicles. After battling the industry for seven long years since the passage of the groundbreaking California Clean Cars Law (AB1493, Pavley 2002), it's a moment that I never seriously thought I'd ever witness: regulators, automakers and environmentalist all coming together in agreement that emission and fuel economy standards should be made more stringent. (To see photos, visit David Doniger's blog.) To me, the White House event crystallized the new realities for the auto industry: they are living in a volatile world where they cannot control politics, the courts, or oil prices, and the best way they can seize control of their own fate is to build fuel efficient cars and trucks.

There are a handful of key factors that emerged that led to this group of strange bedfellows to converge at the White House Rose Garden last Tuesday. My top three reasons for why the automakers agreed to a standard that they just a two years ago, swore to Congress would cost them tens of thousands of jobs, are listed below.

Perhaps the most important factor was after decades of denial, the Detroit automakers finally came to their own startling conclusion: analysts (including myself) were right who claimed higher fuel economy was critical to their survival. Moreover, their own engineers, once they were asked what could be done, came to another startling conclusion: that the emission levels of the California greenhouse gas standards were achievable. The automakers eventually quietly unveiled this remarkable turnaround in perspective in December of 2008, when Ford and GM submitted their business plans to Congress which my analysis showed put them into compliance with a national version of California's program.

Second, the financial distress of Chrysler and GM, two of the most recalcitrant companies, played an important role in undercutting the negotiation leverage with an Administration that they simultaneously were asking for tens of billions of dollars in loans. Poor business decisions of their leadership and overreliance on gas guzzlers undermined their credibility with the public and Congress.

Finally, the legal and political handwriting was on the wall starting with the Supreme Court ruling in April of 2007 that the EPA has the authority to regulate carbon dioxide. The automakers grip on Congress, substantially loosened with Speaker Pelosi's successful passage of an energy bill in 2007 with 35 mpg CAFE standards by 2020, was further eroded when Mr. Waxman's wrestled control of the key Energy and Commerce Committee from Mr. Dingell. President Obama's signing of two key memorandums on fuel economy and the California waiver on January 26 made it clear the President was going to forge ahead with strengthened standards, despite the automaker's financial distress.

The one word that kept coming up when I talked with others on the White House lawn was "transformative". After fighting the auto industry for so long, I'm not ready to declare the battle over. But after hearing the President speak, there is no doubt in my mind this agreement marks a defining moment in the history of automotive vehicle regulation.

Getting Biofuels Right Requires California’s Low Carbon Fuel Standard to Have Honest GHG Accounting

2009-04-22T07:29:56Z

This Thursday (April 23), the California Air Resources Board has a dramatic opportunity to help solve global warming and get biofuels right by adopting the nation's first Low Carbon Fuel Standard. To do so, California must stand up against two of the biggest, most powerful industries: Big Oil and Big Ethanol. Just like it has catalyzed the development of a whole host of cleaner technologies, such as 3-way catalytic converters and low sulfur gasoline, California can jump start the development of "green" biofuels by adopting the proposed LCFS which includes the impacts of direct and indirect land use conversion in its lifecycle accounting.

As with other groundbreaking California global warming pollution laws and regulations, California is once again poised to lead the nation and have its action serve as a model for similar national and state programs in the future. The Low-Carbon Fuel Standard undoubtedly represents the future of fuels policy: roughly a dozen states are poised to adopt similar programs; a version of the LCFS is included in the new Waxman-Markey climate bill being debated in Washington now; and President Obama's Energy and Environmental Agenda includes the establishment of a National Low Carbon Fuel Standard.

There are three important reasons why it is necessary for CARB to adopt the LCFS regulation without delay:

First, the Low Carbon Fuel Standard is absolutely necessary to meet global warming pollution emission reduction targets by ensuring that the oil industry makes its fair share contribution to the overall reductions. The 15 million metric tons of C02 reduction expected from the LCFS in 2020 is 9 percent of the total reductions required required by California's AB32 Global Warming Solutions Act. The LCFS's 10 percent C02 reduction goal for 2020 is the bare minimum needed to ensure that we are on the trajectory to decarbonize our fuel supply by 60 to 80 percent by 2050, which is our estimate of what is needed to meet long term targets, even with strong measures to address vehicles tailpipe emissions and reduce the demand for travel. Failure to require the oil industry to invest in and bring to market low carbon fuels means that other pollution sources --such as powerplants, natural gas providers, etc - will be forced to make up the difference in order to meet the requirements of AB32.

Second, the Low Carbon Fuel Standard is necessary to discourage investments in high carbon fuels, or what we at NRDC call "dirty fuels". These fuels include tar sands from Canada, oil shale in the interior West, and liquid coal in various parts of the country. Reserves of these fuels are enormous and the global warming pollution and other environmental impacts are devastating. On a full fuel cycle basis, we estimate tar sands are about 20% more polluting and that oil shale and liquid coal can emit as much as twice the pollution as conventional gasoline. Hence, the use of dirty fuels can literally turn a hybrid into Hummer. Large scale investments in these dirty fuels, some of which are already happening, will prevent California and this nation from being able to solve global warming. The LCFS is needed now to discourage investments in dirty fuels by ensuring that refiners that choose to use this fuel are responsible for offsetting the increased carbon emissions.

My third and final point is that the LCFS with a lifecycle accounting that includes emissions from indirect land use change and strong lands safeguards is needed to "get biofuels right". California is in a position to take bold, critical leadership to help put this country's biofuel policy on the right path. Unfortunately up to this point, our national biofuel policies have emphasized far too much the narrow interests of the corn ethanol industry over the public interest and are badly out of step with where we need to head to solve global warming.

Unfortunately for Big Ethanol, when it comes to global warming pollution, not all biofuels are created equal, some are clearly superior then others. Under the LCFS, producers of these superior, advanced biofuels will thrive and grow. That is why sixteen advanced biofuel companies and investors have voiced their support for the proposed LCFS. Despite the claim of the corn ethanol industry, the California LCFS will not damage their business because national law mandates a market for corn ethanol that will grow 2.5 times over next six years to 15 billion gallons. Furthermore, the LCFS is a benefit to efficient producers of corn ethanol, including those in this state, because efficiently produced corn ethanol will provide significant GHG credits, unlike the average corn ethanol from the Midwest.

Big Ethanol's aggressive attacks on the CARB LCFS proposal to include indirect land use change is already backfiring on their industry and is further tarnishing their already poor image outside of the Midwest. While indirect land use change is an "inconvenient truth" for Big Ethanol, that's no reason for the industry to deny that it exists. Big Ethanol claims the indirect land use change emissions are too high; in reality, if anything, the estimate is too low. CARB's proposal is just one-third of what Tim Searchinger estimated in his seminal peer-reviewed paper published in Science magazine.

The time for debate is over. When I and a handful of his key advisors met with Governor Schwarzenegger over two years ago and convinced him to support the LCFS, his mantra was (and still is) "action, action, action". I couldn't agree more. California must move forward to with the Low Carbon Fuel Standard and get on with the business of reducing global warming pollution.

Stringency for a National Standard Equal to California Applied Nationally

2009-03-24T18:14:31Z

As reported in today's New York Times, responding to the Supreme Court's decision in Massachusetts v. EPA, the Environmental Protection Agency (EPA) plans to declare CO2 and other greenhouse gases as an air pollutant under the Clean Air Act which would likely lead to the establishment federal GHG emission standards for motor vehicles. At the same time, EPA is widely expected to grant California's waiver request for its CO2 vehicle pollution program sometime in the next few months. Thirteen other states and the District of Columbia have adopted those standards and more states are considering doing the same.

A number of key decision makers, including the Chair of the California Air Resources Board and representatives of the Obama Administration, have begun talking about a "single national standard" to help solve the so-called patchwork problem which is widely understood to be referring to an EPA GHG standard (not a fuel economy standard through a CAFE program) that would be equivalent to applying the California program nationwide. In addition, though GHG and CAFE standards are clearly distinguishable, it is useful for comparison purposes to understand what impact potential EPA GHG emission standard would have on combined fleet average fuel economy levels when measured under the current CAFE system.

In a paper I just published, I provide a simple methodology to determine whether potential EPA GHG standards would deliver emission reductions equal to or greater than the California standards if applied to the nationwide fleet.

A quick summary of my results are that the national standard would have to result in a combined fleet average of about 264.9 grams of CO2 equivalent per mile in model year 2015. For comparison purposes, this level would result in a CAFE standard level of about 33.7 mpg, if the EPA GHG standards exist to ensure that low cost, non-CO2 GHG reductions are achieved through air conditioning improvements. If the EPA standards did not exist, the CAFE level would have to be raised by about 1.1 mpg to make up for the fact that the CAFE program does not account for air conditioning operations.

My methodology is describe in more detail in the full paper but is summarized below:

The equivalent GHG emissions value for the combined national fleet can be derived by taking a simple arithmetic average of the California PC/T1 (cars and light trucks) and T2 (heavier light trucks) standards, each one weighted for the proportion of PC/T1 and T2 vehicles forecast to be sold nationwide. As an example, for model year 2015 (MY2015), the calculation is as follows:

((59.45%) x (213 g/mile)) + ((40.55 %) x (341 g/mile)) = 264.9 g/mile

The market shares are from the US DOE, Energy Information Administration's official forecast (Annual Energy Outlook 2009) which estimates 59.45 percent cars and 40.55 percent light trucks by calendar year 2016.

We present two illustrative calculations. The first assumes automakers do not make use of the air conditioning credits under the EPA GHG program or the flex fuel vehicle (FFV) credits under the CAFE program. For this calculation, the equivalent level in MPG terms is:

[(8,887 g/gallon) / ((264.9 g/mile) - (1.9 g/mile))] = 33.8 mpg

However, we believe this scenario is highly unlikely. Both air conditioning credits and FFV credits are very inexpensive compliance options. The calculation to convert the MY2015 national GHG equivalency level of 264.9 g/mile to a corresponding CAFE level would then be:

[(8,887 g/gal) / ((264.9 g/mile)-(1.9 g/mile)+(8.4 g/mile))] + (1.0 mpg) = 33.7 mpg

Yes They Can

2009-03-05T13:18:34Z

Today, I and my colleague will testify at the EPA Waiver hearing where the Obama Administration EPA is going to reconsider the previous Administration's denial. There is little doubt in most observers' minds that the Obama Administration's EPA will grant California the waiver. As described in my colleague David Doniger's blog, science, the law and the rising tide of global warming politics are all on our side.

Attention, then, has started to shift to the next phase of the battle for cleaner cars. Intense speculation has now begun over the potential for a national greenhouse gas standard that will be sufficiently strong to entice California and the 13 other states with California's program to accept it as an alternative means of compliance instead of enforcing their programs on a state-by-state basis. Mostly recently an unnamed Obama Administration official was reported by Reuters as saying "A national policy at this point is in the conceptual stage and we do not have specifics we can share given that the conversations are ongoing."

The concept of a single national emissions program sounds familiar to David Doniger and me since it's what we have also been saying not just in our blogs, but even to Rick Wagoner himself. But there are some very important details to understand about the single national standard as a path forward:

First, it does not eliminate the need for the California waiver. The California waiver final decision is within a matter of months; a final GHG national rule wouldn't be finalized until one year from now, at earliest. With the waiver within its grasp, there is absolutely no way California drops its waiver request in return for promised more stringent national standard. If one does emerge a year from now and it's at least as stringent as California's program, then California and the other states could create an option to accept a sufficiently stringent federal GHG program as an alternative compliance pathway within their own programs.

Second, a single national standard cannot be done just through a strengthened fuel economy standards (the US fuel economy program is called "CAFE"). As we have said repeatedly, GHG and fuel economy standards are not identical. Using a CAFE standard to meet a GHG target is ultimately a less effective and more expensive way to meet a GHG target. That's because the CAFE program gives much too much credit to alternative fuel cars (include flex fuel vehicles that never run on ethanol) and ignores completely cheap reductions in air conditioning systems (the refrigerant is 1300 times more powerful than CO2 as a global warming pollutant). Therefore, a single national standard must be done by EPA as a GHG gas standard where all four of the motor vehicle GHG pollutants are simultaneously addressed. EPA is well equipped and is well prepared to do these standards.

Third, and perhaps most importantly, the automakers can meet a national GHG standard that's equivalent to applying California's program nationwide. In December, I analyzed GM and Ford's business plans and found that they where essentially in compliance with a national GHG standard at the California levels. More recently, I've used my same methodology to analyze the February 17th GM Restructuring Plan. My new analysis is showing that GM complies in most years and that they have variety of options, including using credits accrued in early over compliance years, introducing some new models slightly earlier, and/or making more simple improvements to the air conditioning systems, that will allow them to still comply with national version of the California program.

We are still waiting for Mr. Wagoner to tell us "Yes We Can". We think they are getting closer. Stay tuned.

Bob Lutz's Environmental Legacy in GM's Hands

2009-02-09T23:50:38Z

Today GM announced Bob Lutz, their 76-year-old GM product development chief and vice chairman, would retire by end of this year.

When it comes to the environment, Bob Lutz's legacy is shaped by two, somewhat paradoxical ways. The quote that environmentalist will forever remember him by is his proclamation about a year ago that global warming "is a total crock of sh*t". On the other hand, there is chance that his eco-legacy maybe be defined by his championing of the Chevy Volt, the plug in hybrid that is supposed to come to market in late 2010.

Which he will most remembered for? The answer depends on whether GM is willing to move beyond its "just say no" attitude towards fuel economy and global warming pollution regulations.

To the environmental community, Bob Lutz was emblematic of an entire auto industry that "just doesn't get it". When Mr. Lutz arrived at GM, he epitomized the swaggering, macho Detroit attitude that bigger is better and a product plan philosophy that seemed to consist of "back to the future" (think Pontiac GTO and Cadillac "Sixteen" concept car).

While Mr. Lutz may have brought focus and some good sense to their product design (thank you Mr. Lutz for banning body cladding from the Pontiac lineup), he was mosty a retrograde influence on moving GM more rapidly into the 21st century when fuel economy and pollution performance matters. And with quotes like global warming "is a crock of sh*t" and his recent, short sighted pronouncement that Americans still want big SUVs, GM must be painfully aware that he is a political liability as the company returns to a skeptical Congress for more bailout money.

The question is whether GM will harness the focus Mr. Lutz instilled so that GM can finally be part of the solution, rather than a big part of the problem. To complete this transformation, GM must start by moving boldly and swiftly in supporting a national adoption of the California Clear Cars program (as I called for in a previous blog) while simultaneously dropping all current and future litigation against the California program. This will clear the path for Congress to consider another round of bailout money, and for the critical, but skeptical green-minded consumers to adopt the Volt as the green car of choice.

Mr. Lutz's environmental legacy is in GM's hands.

NADA's got it wrong: California standards are more stringent than CAFE

2009-02-03T04:53:40Z

I blogged on January 24, 2008 on the National Automobile Dealers Association's (NADA) new report complaining about complying with the California Clean Cars Program. The study makes the following claim: "On a national level, the new federal CAFE standards will be higher than what CARB has adopted..." (see page 9 of their study).

This claim is very misleading. The bottom line is that California's standards are more stringent and would reduce more global warming pollution if applied on a national level than the proposed federal fuel economy standards. When comparing the standards on the basis of actual global warming pollution reductions, the California program is more stringent by the equivalent of 1.7 mpg in 2015. Here's why:

First, the proposed CAFE standards that the NADA study presents do not take into account the very generous flex fuel vehicle (FFV) credits that the CAFE program allows. The way the credit works is that the automobile industry in say 2015 is allowed to achieve 1.0 mpg lower fuel economy than the nominal standard just by building relatively cheap FFVs. These vehicles, while capable of being run on gasoline or ethanol, never actually run on ethanol (the so-called "FFV loophole"). That is, the supposed 31.6 mpg standard in 2015 is in effect only 30.6 mpg (for 2011-14, the credit is 1.2 mpg). For more details, see the California Air Resources Board's recent study comparing their program to CAFE (table 1, page 4).

Second, the CARB analysis that NADA cites assumes that automakers will substantially improve air conditioning systems to make use of CO2 credits in the California program. However, since the CAFE program ignores air conditioning emissions, there is no reason to believe the automakers will make such improvements in absence of the California program. Thus, the CAFE program would have to raise its standard by an additional 1.0 mpg in 2015 to make up for the global warming pollution benefits of air conditioning improvements assumed by CARB. The 31.3 mpg fuel economy equivalence CARB estimates for 2015 actually provides the equivalent of 32.3 mpg of global warming pollution benefits with improved air conditioning properly accounted for.

Applying the above more accurate assumptions to the numbers in the NADA study yields an "apples to apples" comparison on the basis of global warming pollution benefits as shown below. The table shows that a national version of the California program reduces more global warming pollution, equivalent to a 0.5 to 2.1 mpg increase in fuel economy levels over the proposed CAFE standards.

Comparison on GHG Emission Benefit Basis

Model Year CAFE California Gap

2011 26.6 27.2 0.5

2012 28.0 30.1 2.1

2013 29.3 30.8 1.5

2014 29.8 31.3 1.5

2015 30.6 32.3 1.7

California Clean Cars Program will benefit drivers

2009-01-26T23:34:48Z

I thought I would quickly post some answers to some basic questions that have come up today as the media and others have reacted to the President's announcement today.

First, drivers in the states with the California Clean Cars Program will benefit tremendously in reduced fuel costs. The best analysis currently is probably a study done for the Florida Department of Environmental Protection for their recent regulatory adoption proceedings. This study estimated, at $3.15/gallon gasoline, that drivers will save from $1000 to $2300 over a ten year vehicle life (or $100 to $230 per year). Moreover, the slightly higher costs of the technology pay for itself in 1 to 3 years, depending on the vehicle type. Below are some results from the more detailed document from the Florida study:

10-year NPV (cost savings)

Small car = $1079 3 year payback

Large Car = $1579 1 year payback

Minivan = $1445 2 year payback

Small Truck/SUV = $2294 1 year payback

Large Truck/SUV = $1595 2 year payback

Second, there are 14 states plus D.C. that currently have fully adopted the California Clean Cars program with another four states that are in the process of adopting. The 14 states represent at least 37 percent of the nation's vehicle population. Add the four states in the process raises the level to 46.5 percent of the vehicle population. There are several more states that have been debating the program and, if they move forward, it will represent well over half the nation.

States that currently have the California Clean Cars Program

= 37% of nation's vehicle population

California

Arizona

Connecticut

Maine

Maryland

Massachusetts

New Jersey

New Mexico

New York

Oregon

Pennsylvania

Rhode Island

Vermont

Washington

+[District of Columbia]

States in process of adopting California Clean Cars Program

= 46.5% of nation's vehicle population when added to above

Colorado

Florida

Utah

Iowa

If there are anymore questions, post them below, and I'll try to answer as soon as possible.

President Obama to give green light to California Clean Cars Program

2009-01-26T06:19:03Z

According to reports in the New York Times and Washington Post, President Obama is expected to announce tomorrow (1/26/08) that he will instruct federal agencies to act quickly to grant California a waiver to regulate automobile tailpipe emissions and also to raise fuel efficiency standards for the nation's automobiles. NRDC's president, Frances Beinecke, has issued a statement applauding the president, and my colleague David Hawkins has blogged on his reaction to these importants decisions.

Clearly it's a great decision for this country, moving us forward on solving global warming and reducing our dangerous dependence on oil. For those like myself that have worked on the California Clean Cars program since the beginning, this decision marks the culmination of over six years of hard work battling the auto industry to compel them to build cleaner cars.

Needless to say, I personally am thrilled about this decision and extremely happy for the original author of the bill, Fran Pavley, and all those at the California Air Resources Board that worked so hard to make this program one of the crowning achievements of their agency.

I don't think any of us who worked hard to pass the original bill (AB1493 Fran Pavley) realized what we were starting. It's been over 6 long years of regulatory battles, seemingly endless lawsuits, and pitched state-by-state adoption battles (13 states plus DC and counting).

President Obama's decision finally gives the green light for California to continue to lead the way in the fight for cleaner cars. It's been quite a ride, but it looks like the finish line is in sight.

No More “NADA”: Carmakers should meet California’s global warming standards nationwide

2009-01-24T23:20:19Z

All signs are that the Obama Administration is planning to give California the long-delayed waiver to implement its ground-breaking global warming standards for new motor vehicles. At her confirmation hearing, the new EPA Administrator, Lisa Jackson, promised to "immediately reconsider the waiver". California started the ball rolling last week when it formally asked EPA and President Obama to reverse the Bush Administration's waiver denial of last year.

These days, the main objection you hear from carmakers and their dealer allies is that the waiver would create a "patchwork" of state-by-state regulations. Thirteen other states and the District of Columbia have adopted the California program, and four more states are in the process. Together, they represent almost half of the nation's vehicle population. The latest "patchwork" complaint comes in a new report by the National Automobile Dealers Association - affectionately known as "NADA."

The automakers and dealers contend they'd have to meet the California average separately in each jurisdiction (true), and that this would be a big burden (not true).

In any case, the automakers have in their own control a simple, obvious solution to this alleged problem: they can agree to implement California's global warming standards nationwide.

The top three reasons that the carmakers should adopt this common sense solution are:

Reason #1: They can do it. GM and Ford have effectively conceded that they can meet the California standards on a nationwide basis. In a recent report, I showed that the fuel economy improvements in the business plans that GM and Ford submitted to Congress last December will allow them to comply with nationwide version of California's global warming standards. And if GM and Ford can do it, certainly Honda, Toyota, and other automakers can. A recent New York Times editorial that cited my analysis framed it perfectly: "Now they say they can do it".

Reason #2: Build trust and credibility with a skeptical public and Congress. Trust and credibility are now Detroit's most valuable currency in Washington D.C. One of the big issues in last year's bailout battle was whether companies fighting the states' cleaner-car standards should get federal taxpayer help. The carmakers almost surely will ask Congress for billions more bailout money this year, perhaps as early as March. Imagine if, instead of resisting new standards, they embraced making the dramatically cleaner, more fuel efficient vehicles we need in a world of volatile oil markets and intensifying global warming? Hiding behind surrogates such as NADA will not help revive Detroit's credibility.

Reason #3: It's the key to their own survival. Ironically for the automakers, the very regulations they used to claim were their death knell will actually force them to be more competitive in the future. Does anybody in Detroit believe that oil prices won't head back up? Does anyone believe concerns about global warming will go away? The events of 2008 have dramatically demonstrated the dangers of over-dependence on gas guzzlers. California's global warming standards have the virtuous co-benefit of saving money at the pump and cutting our national dependence on foreign oil. Another study I did (cited in Thomas Friedman's new book, Hot Flat Crowded,) shows that regulation spurs innovation and innovation is key to competiveness.

Now is the time to rebuild trust: No more NADA. Carmakers should agree to implement California's global warming standards nationwide.

Saving Fuel Through "EcoDriving" Can Help Cool Off Oil Prices

2008-08-18T06:41:08Z

It’s not often the main automaker lobbying association, the Alliance of Automobile Manufacturers (AAM), and NRDC find themselves on the same side of an issue. Usually, we are fighting about stricter fuel economy and CO2 pollution standards. But we do seem to agree that conserving fuel through changes in driving habits has great potential to help bring drivers relief at the pump.

And that’s why NRDC applauds today’s announcement by Governor Schwarzenegger of California and Governor Ritter of Colorado of their support for a AAM campaign called “EcoDriving”.This public education campaign aims to teaches drivers how to conserve fuel by accelerating slower, keeping their tires inflated and other changes, that can cut fuel consumption by up to 15 percent. While a cynic might call this automaker greenwashing, it’s also true that better driving habits can cut demand for gasoline which in turn acts to cool down oil prices.

On the other hand, we know more drilling isn’t the solution. The Energy Information Administration, the statistics branch of the U.S. Department of Energy, estimated last year that opening the coasts to offshore drilling would not have a significant impact on oil prices before 2030. The number of new offshore drilling permits has tripled since 2001– and yet we’re also paying triple what we were in 2001.

What the market has shown is that reducing demand can have an immediate impact on lower oil prices. Oil prices peaked in early July at over $145 a barrel and now are at about $113. It is well accepted that this 22% drop is caused primarily by softening global demand which, as discussed in my colleagues blog, has been driven largely by reduced U.S. gasoline consumption.

In fact as chronicled in my colleagues blog, over the first 7 months of 2008 compared to the same period last year, the U.S. as a whole reduced it’s consumption by an astonishing 860,000 barrels per day, roughly 4.2%. Americans have cut back on gasoline consumption in the face of higher fuel prices, and programs like EcoDriving can likely help us save even more.

There is good evidence from Europe, where nine countries have EcoDriving programs, that better driving habits can reduce gasoline consumption. Tests indicate that if drivers practice EcoDriving techniques, they can reduce consumption by roughly 5 to 10%. Less clear is how many drivers have actually changed their habits because of the campaign and if they have, how long their EcoDriving behavior lasts. Effectiveness in the U.S. will largely depend upon the advertising resources that the auto industry and the government put into the campaign.

Because of these limitations, it is clear that EcoDriving type programs will never fully replace the need for stricter fuel economy or CO2 standards, especially since we need much deeper cuts in CO2 emissions to solve global warming and break our dependence on oil. But reducing demand, assisted by programs like EcoDriving, stricter standards and other measures, must be front and center for any credible policy response to cooling down oil prices.

Detroit Big 3 Must Embrace Global Warming Laws

2008-06-05T21:45:22Z

This year, every monthly auto sales report has brought gloomy news for the Detroit Big 3. Unfortunately for the past two decades, the Detroit Big 3 CEOs have been living in a virtual “state of denial” regarding oil prices and global warming. 2008 has literally shattered their alternative reality, as SUV and pickups sales have plummeted, along with their profits. And yes, the Detroit Big 3 could have avoided their calamity if they had listened, not denied, their critics, including myself. But it’s not too late for Detroit’s auto industry but only if they have the foresight to embrace new global warming regulations.

Their situation was predictable. In fact just 3 years ago, I co-wrote a report called In the Tank: How Oil Prices Threaten Automakers’ Profits and Jobs that showed that Detroit Big 3 profits would take the brunt of higher oil prices, if they continued to be in state of denial. Perhaps equally predictable was the reaction of the Detroit Big 3 executives which was to dismiss our results as alarmist. I would like to be able to say that I had profound insight into the world oil markets and regulatory trends that was unavailable to the Big 3, but I didn’t. All the information I used was available to the Detroit Big 3 CEOs, if they chose to look for it and think critically about the world outside of their own industry’s echo chamber.

In another blog, I will list the eerily accurate predictions we made in 2003. But most importantly at this point, the question is: Are the Detroit Big 3 on the right path to cope with the new reality of the marketplace and global warming regulations?

Rich Wagoner’s triage plan for saving GM does not go far enough because Detroit’s problems run deeper than simple band-aid fix. CEOs for Detroit’s Big 3 must embrace, not fight, new global warming legislation at the federal level and auto global warming pollution standards at the state level. CEOs must reframe their perspective from viewing regulations as a threat to see what the truly are, an opportunity. Here’s specifically what they must do:

First and foremost, Detroit needs to drop its opposition to the California Pavley CO2 tailpipe standards. With both presidential candidates supporting the waiver, it’s clear, Detroit will lose. Every day Detroit spends fighting the standards -- in Illinois, in the courts, in Congress, and with the next presidential administration -- is a precious day their product planners and engineers lose in making plans on how to comply with new standards. To state what is painfully clear today: Detroit’s strategy of fighting higher federal fuel economy standards and state CO2 standard has badly backfired and lulled them into their predicament over the last decade of building Hummers when its hybrids that matter.

Second, Detroit must become leaders and champions -- yes, champions -- of new federal global warming legislation, especially the Climate Security Act and similar bills. The Climate Security Act is the only possible stable, long-term source of funding to retool auto factories. It would provide $68 billion dollars over the next four decades for Detroit to retool its factories to build hybrids, clean diesels and fuel cell cars. Detroit will not find a better deal in any other bill.

Retooling incentives along with clear, long-term performance targets for their industry will allow Detroit to do what it should have been doing over the past two decades: planning for, investing in, and building products that recognize the real world, and not based on a state of denial.

Global Warming Bill Reduces Gas Bills

2008-06-04T18:59:48Z

The oil companies and their allies have been claiming that gasoline prices will go up under the global warming bill currently being debated in Congress, Climate Security Act of 2008 (CSA). However, not surprisingly they fail to point out that it is the total transportation fuel bills, not the price per gallon of gasoline, which matters most to household budgets.

Today’s gas prices are high because oil companies, auto companies and politicians have not stepped up to provide Americans with real, sensible transportation choices to cut our demand for oil. The solutions are clear: more fuel efficient cars; clean, alternative fuels; and smarter growth to reduce the amount we drive. Wasting less oil means lower fuel bills and exerts downward pressure on global oil prices.

Because we can’t solve global warming without wasting less oil, the Climate Security Act is also an energy security bill. The Climate Security Act will cut oil imports, promote fuel efficient cars, and require oil companies to start selling cleaner fuels, like electricity for plug-in hybrids.

Our analysis clearly shows that with the Climate Security Act we can cut global warming pollution and have lower fuel bills compared to today’s costs. We estimate that annual household transportation fuel bills in 2020 and 2030 are likely to be $530 to $590 lower than 2007 levels even though Climate Security Act will require oil companies to hold carbon emission allowances for the fuel they produce. Higher fuel efficiency and greater use of electricity to power cars reduce the demand for gasoline and outweigh the increase in gasoline prices due to carbon emission allowances. As shown in Table ES1, household fuel bills are 16 percent less in 2020 and 18 percent less in 2030, resulting in an annual savings of $530 to $590. Our analysis uses the US Department of Energy’s estimate for fuel costs under the Climate Security Act.

Table ES1. Household Fuel Expenditures in 2020 and 2030 with the Climate Security Act

	2007	2020	2030
Transportation fuel expenditures, 2006 $/household per year	$ 3,220	$ 2,690	$ 2,630
Change in expenditures from 2007	n/a	-16%	-18%
Savings, 2006 $/household	n/a	$530	$590

Even if base gasoline prices do not decline from 2007 levels, household fuel bills are still estimated to be lower. To demonstrate this, we develop an alternative scenario where the base gasoline prices do not decline from 2007 level and retail fuel prices rise when carbon allowance costs are included. As shown in Table ES2, we estimate households still save $230 to $390 in 2020 and 2030, despite the increase in retail fuel prices.

Table ES2. Household Fuel Expenditures in 2020 and 2030 with the Climate Security Act Assuming Constant 2007 Gasoline Prices ($2.77 per gallon)

	2007	2020	2030
Transportation fuel expenditures, 2006 $/household per year	$ 3,220	$ 2,990	$ 2,830
Change in expenditures from 2007	n/a	-7%	-12%
Savings, 2006 $/household	n/a	$230	$390

As demonstrated by our analysis, we can solve global warming, reduce our dependency on oil, and have lower gas bills with the Climate Security Act. For too long oil companies have been part of the problem; the Climate Security Act will force them to be part of the solution.

In Memory of Professor Alex Farrell

2008-04-18T20:36:02Z

We at NRDC will sorely miss Professor Alex Farrell, who died at his home in San Francisco last Sunday. Alex worked with a number of NRDC staff, helping to guide and inspire our thinking on innovative environmental policies.

Although only 46, Alex made an enormous contribution to the field of environmental policy in a relatively short period of time. He was a key thinker on a number of critical issues, including biofuels and regulatory impacts of innovation. NRDC in particular will miss his invaluable contributions in the area of design of California’s Low Carbon Fuel Standard, and as a member along with NRDC trustee Bob Epstein of the Environmental Technology Advancement Committee for the California Air Resources Board.

Alex will be well remembered by all of those staff at NRDC that had the good fortune to work with him over the years. It is hard to imagine how the community will be able to replace his keen intellect and insightful contributions to our understanding of some of our most challenging environmental problems. We are, however, able to gain some comfort in the knowledge that his intellectual-- and humanitarian--contributions will continue to live on in the form of the inspiration that he has provided to his students and many others who had the opportunity to work with him.

California Air Resources Board ZEV decision puts us on the road to solving global warming

2008-03-28T22:20:23Z

This election season, the issue of “just words” has been hotly debated. Do words like “zero emissions” matter when it comes to solving pollution problems? Of course. But equally as important are the facts. To the environment, “zero emissions” are just words unless we have the clean cars on the road.

Perhaps this was the question on minds of the Board members when the California Air Resources Board (“Air Board”) voted last Thursday (3/27) to change its landmark Zero Emissions Vehicle (ZEV) program. Originally conceived of in 1990, the California ZEV program has morphed over time from just an electric car mandate to incorporate a broad spectrum of clean, advanced technology vehicles, such as hybrids. 2008 required another tune up based on the opinion of the Air Board’s own independent technology review panel which said that fuel cells cars are not ready for mass commercialization.

But the Air Board adroitly recognized that reducing the number of fuel cell cars does not necessarily mean weakening the program. While they reduced the number of fuel cell vehicles required from 25,000 to 7500 in the 2012 to 2014 period, for every fuel cell vehicle reduced, they required automakers to produce over three times more plug-in hybrid vehicles. That is, they reduced the fuel cell requirement by 17,500 cars, but strengthened the program by requiring 58,000 plug-in hybrids. That’s a net gain of 40,500 zero emission technology cars on the road. And since over a dozen other states either have the California Low Emission and ZEV programs or are in the process of adopting them, these numbers could be multiplied by a factor three for the nation as a whole.

While it’s true that plug-in hybrids are not truly zero emissions, they will also be affordable and have broad market appeal. This makes them very attractive to consumers which in turn means more clean vehicles on the road. More clean vehicles on the road means less smog emissions, global warming pollution, and oil consumption. Assuming that using hydrogen or electricity to replace gasoline gets from 50 to 80 percent greenhouse gas reductions and plug-in hybrid reduces emissions by 40 to 50 percent, then the change actually produces 70 to 340 percent more global warming pollution reductions across the fleet. This is about 70,000 to 150,000 additional metric tons of carbon dioxide in 2014 alone.

Our joint analysis clearly shows that plug in hybrid vehicles coupled with a cleaner electricity grid can be a key part of our strategy to cut global warming pollution by 80 percent by 2050, the level which scientists tell us is necessary to avert dangerous global warming. Scientists also tell us we can’t wait any longer to start reducing global warming pollution. That means we can’t wait for the perfect solution. We have to get as many zero emission technology vehicles on the road as soon as possible. That’s why plug in hybrids, which face no infrastructure hurdle and just one technical challenge (a reliable affordable battery), is one of our best hopes in the next decade for a massive scale up of clean vehicle technologies.

Zero means zero. Those are important words. But equally important are the facts. More clean vehicles mean less pollution. To meet California’s ambitious global warming targets, California needs to match its strong words with the right actions. By requiring plug-in hybrids, the Air Board has done just that.

EPA Denies Waiver but does not dispute California program is better than CAFE

2008-03-01T17:32:55Z

On Leap Day, EPA announced a giant leap of logic. EPA finally released its explanation for denying California permission to implement its landmark Clean Cars program to cut global warming pollution from tailpipes. EPA’s claim that California does not meet the legal requirement of demonstrating a “compelling and extraordinary conditions” is legally and factually incorrect, as clearly explained by my colleague, David Doniger.

But one argument is conspicuous by its absence. When Administrator Johnson originally announced his waiver denial decision last December, he claimed that the California’s program is less effective at cutting global warming pollution than the new federal fuel economy standards. That’s flat wrong, and the California Air Resources Board (CARB), NRDC, and the New York Times called him on it.

CARB has continued to refine its analysis. The latest CARB analysis released on February 25th finds that on a cumulative basis, the California clean cars program provides the citizens of California twice as much greenhouse house gas benefits by 2020 as the federal fuel economy standards, for a total of 79 million metric tons of additional CO2 reductions. When the 12 additional states that have California’s program in regulation now are included, the additional cumulative CO2 benefits rise to 204 million metric tons, 89% higher more than the federal fuel economy standards.

These national benefits will increase when the five states that are in the process of adopting the California standards finalize their regulations. The benefits of the California program are slightly lower in states outside of California because others states have more light trucks which are held to a less stringent pollution standard in the California program.

The reason the California is better for reducing global warming pollution is simple: California standards are more stringent than the federal fuel economy standards. The federal 35 mpg fuel economy standard in 2020 reduces CO2 emissions from the average new vehicles by just over 30% from today’s vehicles. But the average California new vehicle would be 43% cleaner than today’s vehicle under the Clean Car program. And according to another CARB analysis at $3.00/gallon gasoline (looking like a bargain now), a California Clean Car will save its driver more than $8,000 over a 200,000 mile lifetime, more than enough to offset the estimated $955 increase in cost from today’s car.

Administrator Johnson can no longer hide behind the excuse that the California clean car standards are less effective than the federal fuel economy standards at cutting global warming pollution. That’s an open and shut case.