Streetsblog Capitol Hill

"Cash for clunkers," the White House's much-touted program encouraging trade-ins for more fuel-efficient autos, had an "uncertain" impact on economic recovery, according to a new audit from the independent Government Accountability Office (GAO) -- largely because it remains unclear how many of the car sales it spurred would have occurred without taxpayer subsidies.

The GAO report casts doubt on several of the Obama administration's claims about the success of the "clunkers" plan, including the extent of its economic benefits and the emissions savings achieved by replacing older autos with more gas-sipping vehicles.

While the GAO's nonpartisan auditors concluded that "clunkers" program achieved its overall goal of promoting economic growth, they could reach no consensus on how to measure that stimulative effect. A laudatory "clunkers" report from the White House Council of Economic Advisers reached similar conclusions concluded that 64 percent of "clunkers" sales were "incremental," meaning that the trade-ins would have occurred regardless of whether government subsidies were on offer.

The U.S. DOT, using its own surveys, concluded that 88 percent of trade-ins under the program were effectively pushed forward in time; however, the GAO questioned the reliability of that data because the department "did not follow some generally accepted survey design and implementation practices." (ed. note. Streetsblog Capitol Hill contributor Ryan Avent made similar observations in August.)

Apart from its effect on vehicle sales, the trade-in program was also credited by the administration with increasing the U.S. gross domestic product. But the GAO found that assertion equally difficult to prove, citing interviews with auto executives who confirmed only that "clunkers" sales decreased their inventory. "[I]t is not clear how much of the reduction in inventory led to increased automobile manufacturing and, therefore, a positive impact on Gross Domestic Product," the auditors wrote.

The GAO found more holes in the administration's assertions about pollution savings achieved by the $3 billion "clunkers" plan.

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In its second Earth Day release, the U.S. DOT today unveiled a 600-page analysis of transportation emissions mandated by Congress in the 2007 energy bill. In addition to weighing in on many potential tactics for limiting transport's contribution to the changing climate, the document notably recommits the Obama administration to that goal at a time when Democrats are weighing a delay in the energy debate.

Indeed, the analysis concludes with a candid assessment that the nation's existing methods of transportation and land use planning have generated an unsustainable reliance on fossil fuel consumption:

The ingenuity of transportation planners and engineers has produced a vast network of transportation infrastructure and services to support the mobility and economic vitality of the Nation. However, our historic approach to transportation and land use has created an energy-intensive system dependent on carbon-based fuels and automobiles.

The authors, including three dozen aides at the U.S. DOT's Center for Climate Change and more than a dozen private consultants, also take a direct tone in evaluating the various emissions-cutting policy proposals that are available to the Obama administration.

For instance, the analysis identifies several upsides to increasing the gas tax, which has "a strong precedent for [its proceeds] being dedicated to transportation investments," as opposed to a broader carbon tax or cap-and-trade system, where multiple competing interests would -- and did, as the House climate bill shows -- lay claim to a share of the resulting government revenue to help finance efficiency upgrades.

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While state DOTs marked Earth Day by depicting roads as unsung heroes of livability, the Federal Transit Administration (FTA) and the transit industry celebrated in their own ways by releasing reports on local rail and bus systems' roles in reducing U.S. transport emissions.

The FTA's updated report [PDF] on transit's value in combating climate change includes average emissions for various modes of transportation (see above chart), calculated using the government's National Transit Database. The emissions totals, which reflect average ridership estimates, show that transit averages about half the CO2 poundage per passenger mile of a single-occupancy vehicle.

But the FTA also breaks down individual transit systems' average emissions, illustrating how much of a difference high ridership -- and cleaner-burning sources of electricity -- can make when it comes to the energy efficiency of local rail.

Take the San Francisco metro area's heavy rail system, known as BART, which achieves average emissions of just 0.085 pounds of CO2 per passenger mile. That rock-bottom total is made possible by electricity generated largely through hydropower. Washington D.C.'s Metrorail, meanwhile, comes in at an average of 0.347 pounds of CO2, making it four times less efficient than BART.

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The decline in American driving that began at the start of the recession, fueled by record-high gas prices, came to an end late last year. But the Obama administration believes that its transport and energy policies have ushered in a long-term shift, "changing the fuel mix in ways that will drive down gasoline demand," according to a senior adviser to Energy Secretary Steven Chu.

The Chu adviser, Matt Rogers, made his comments on gas demand during a House hearing last week.

His remarks appeared to reflect a high degree of confidence within the administration that even if the nation's vehicle miles traveled continue to increase, the total energy consumption of U.S. transportation would decrease thanks to the rise of alternative-fuel vehicles such as hybrids and plug-in electric cars.

One of the most remarkable changes that has already occurred is we probably saw the peak demand for gasoline in the United States in 2007. And since then, the demand for gasoline has been going down in the United States and will continue to go down for more than the next decade as a result of a combination of renewable fuels, CAFE standards, and an increasing electrification of the transportation fleets.

So, we are seeing in front of us right now, a restructuring of the transportation sector to allow it to require substantially less fossil fuel ... you can actually see demand going down even as the economy continues to grow.

Rogers' remarks track with the conclusions of the Energy Information Administration, which predicted last year that the growing popularity of fuel-efficient vehicles would make 2007 the peak of demand, and the U.S. DOT's research arm, where the most recent available data shows a drop in demand for refined petroleum products in 2008.

The total energy consumption of the transport sector also fell in 2008 by more than 1 quadrillion Btus (British thermal units). Government energy data from last year, when the downturn in nationwide driving began to reverse itself, is not yet available.

Average gas prices are expected to hit $2.92 during this summer's peak driving season, with fossil-fuel consumption rising overall as the economy begins to recover from a recession that limited U.S. emissions growth, according to a forecast released this week by the federal Energy Information Administration (EIA).

The EIA's latest short-term fuels outlook stopped short of predicting the return of the $4-per-gallon gas prices seen in the summer of 2008, which gave new political momentum for alternative energy expansion -- though some financial analysts are still betting that fuel costs will rise significantly this year.

The EIA also projected that total emissions from Americans' fossil-fuel use would start to rise after falling by 6.6 percent last year, with a 2.1 percent increase predicted in 2010 and a 1.1 percent increase in 2011. U.S. emissions first began falling in 2008 as the global financial crisis took hold; conversely, the EIA said a future return to rising emissions would be driven by "economic growth."

But what future growth won't do, according to the federal government's energy crystal ball, is power a sizable new uptick in summer gasoline use. From the EIA report:

During this summer season, projected motor gasoline consumption increases by 0.5 percent over last summer, substantially lower than the 0.8 percent growth rate recorded last summer. Gasoline consumption last summer was stimulated by both the beginning of economic recovery and a $1.37 per gallon decline in gasoline prices from the previous year.

Another reason for the increase in fuel consumption last summer, per the EIA, was the downturn in transit ridership -- suggesting that local service cuts or fare hikes may have helped push travelers into their cars.

If the EIA's prediction holds true, Democrats may not be able to make as much political hay of high fuel prices as they attempt to pass a climate change bill during the summer. White House press secretary Robert Gibbs told reporters last month that "my guess is there will be a clamoring for an energy bill when gas prices go up, as they normally do, as we get closer to more driving as we get closer to the summer.”

In financial reports that publicly traded companies file to their investors and the Securities and Exchange Commission (SEC), the words "material adverse effect" are often found.

Put simply, the phrase is a red flag for any factor that could significantly hurt a firm's profits or condition. But "material adverse change" clauses can also be written into deals to give businesses an escape hatch if disaster strikes, as the public learned during the congressional probe of the Bank of America-Merrill Lynch merger.

So with Congress weighing national emissions limits -- and potential fuel taxes -- as part of a climate change bill, and the Obama administration vowing to step in via new regulations if lawmakers do not act, it's worth asking which of the country's top carbon-generating companies are truly concerned that pollution caps would hurt their business.

Automakers, for the most part, foresee problems if the administration's recent move to raise U.S. fuel-efficiency standards is not extended beyond its current 2016 expiration date. Ford's year-end financial report openly fretted about the consequences of individual states, such as California, acting on their own to hike fuel standards in 2017 in the absence of another national agreement:

Compliance with [multiple fuel-efficiency] regimes would at best add enormous complexity to our planning processes, and at worst be virtually impossible.  If any of one these regulatory regimes, or a combination of them, impose and enforce extreme fuel economy or GHG standards, we likely would be forced to take various actions that could have substantial adverse effects on our sales volume and profits.

General Motors released its financial report today, declaring itself "committed to meeting or exceeding" the new fuel-efficiency minimums but warning that adverse consequences could result if consumers fail to embrace electric cars:

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Eight Democrats yesterday joined nearly the entire transportation universe, from road-builders to transit advocates, to warn the three Senate authors of a new climate bill against raising gas taxes without using the money for infrastructure. Their message, translated from the often impenetrable language of Washington: Imposing new fuel fees that are not routed to transport projects could torpedo the next long-term federal bill -- which is already on life support.

The climate measure being crafted by Sens. John Kerry (D-MA), Lindsey Graham (R-SC), and Joseph Lieberman (I-CT) is not expected to hit the street until Earth Day later this month. But with Graham indicating that a significant portion of the legislation's new gas fee would be repaid to consumers via rebates, the group of eight senators questioned the effectiveness of adding new fuel charges without attempting to make the nation's existing infrastructure more efficient.

"While we support your work to develop comprehensive legislation," the eight Democratic senators wrote to Kerry, Graham, and Lieberman, "we are concerned that your approach may not result in sufficient emission or oil consumption reductions from the transportation sector and may inadvertently hinder our efforts to pass a surface transportation authorization bill this year."

Many details of the Kerry-Graham-Lieberman approach remain unclear, including how much of the revenue raised by the new fuel fee would be rebated back to taxpayers rather than set aside for other uses. But one Hill source familiar with the issue said that the very act of raising gas taxes for non-transportation purposes would be a very bad sign for future federal reform efforts.

"Raising the gas tax and not putting it towards transportation will be debilitating to the transportation bill," the source told Streetsblog Capitol Hill. "At what point is it less debilitating than not? That's hard to say ... We're not going to raise the gas tax 15, 20 cents through this linked fee and turn around six months later to [raise it to] pay for transportation. It's just not going to happen."

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As Sens. John Kerry (D-MA), Lindsey Graham (R-SC), and Joseph Lieberman (I-CT) prepare to unveil a new climate change measure that includes a tax on motor fuels, eight of their colleagues are urging the trio not to forget local transportation planning -- and warning that any new gas tax should be used to help pay for a new federal infrastructure bill, not redirected for other purposes.

In a letter sent today to Kerry, Graham, and Lieberman, the eight Senate sponsors of a proposal to guarantee clean transport a share of the revenue generated by a cap-and-trade system for cutting emissions asked that their bill's core mission be preserved in the upper chamber's new "tripartisan" climate bill.

The Senate letter follows a similar missive sent to Kerry, Graham, and Lieberman last week by 27 groups representing road, transit, bicycling, engineering, and labor interests.

Those groups warned the trio bluntly that using proceeds from a new fuel tax for purposes other than funding new transportation projects -- such as rebating the money back to consumers, as Graham suggested last month -- would exacerbate the already significant funding crisis facing federal infrastructure policymakers.

But the hesitation of Kerry, Graham, and Lieberman's colleagues ultimately could carry the most weight, given that the trio's forthcoming climate bill would need to win backing from nearly every Democratic senator in order to overcome a GOP filibuster.

"We are concerned that, in addition to realizing insufficient transportation emissions reductions, your legislation may not invest revenue generated from the transportation sector into our crumbling infrastructure," the group of eight wrote.

The letter was spearheaded by Sens. Tom Carper (D-DE) and Arlen Specter (D-PA), lead authors of the so-called "CLEAN TEA" bill, and signed by Sens. Kirsten Gillibrand (D-NY), Frank Lautenberg (D-NJ), Ben Cardin (D-MD), Bill Nelson (D-FL), Michael Bennet (D-CO), and Jeff Merkley (D-OR).

Their letter notes that the U.S. DOT estimates that $30 billion more per year is needed simply to maintain the nation's existing transport infrastructure. "Improving our infrastructure to provide for the maximum economic benefit," they continued, "will require an additional investment of $75 billion per year. If your legislation raises revenue from the transportation sector but does not reinvest funds into infrastructure, our efforts to enact a surface transportation authorization bill in the near future will be constrained." 

More than three dozen transportation reform and environmental groups followed today with a third letter making similar points. An excerpt from that letter follows after the jump, along with the full transportation industry letter sent last week.

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The senior Republican on the Senate environment panel has criticized the House transportation bill for strengthening federal involvement at the expense of states -- but when it comes to last year's agreement to raise national fuel-efficiency standards, Sen. Jim Inhofe (OK) is making the opposite argument, accusing the White House of letting one state dictate auto policy.

Inhofe's office warned in a Friday release that California, the home state of environment committee chairman Barbara Boxer (D), would continue to ratchet up fuel-efficiency floors for the U.S. auto fleet during talks on how to extend the White House pact beyond 2016. From Inhofe's weekly newsletter:

The problem is California, which sees this deal as a spring board to tougher standards after 2017. California believes it has the authority under the Clean Air Act to set its own GHG standards - and it wants to make them tougher than what the feds have proposed. This could create the very patchwork the autos want to avoid. Or it could force yet another deal after 2017 in which the Golden State reigns supreme. ...

We see great merit in reducing dependence on foreign oil and promoting automotive innovation and technology. But we also see, and wish to thwart, the economic bomb dropping after 2017, as California seeks to impose its automotive vision on the entire nation. ...

Inhofe's depiction of a national fuel-efficiency (or CAFE) standard driven by California is more than a one-shot rhetorical volley. The auto industry, having backed the White House in fighting congressional efforts to limit federal authority on emissions, is already looking to 2017 and the next round of negotiations over CAFE policy.

Consumer groups have reported that last year's agreement to raise CAFE standards to 35.5 miles per gallon by 2016 could have imposed even stronger emissions limits while lowering gas bills for drivers and overall public health costs.

But Inhofe's fiery denunciation of that CAFE rule -- which he depicts as lacking a "legal basis" and being "a launching pad to realize California's green vision writ large" -- portends a stronger push to weaken the terms of the administration's sequel on fuel standards. Stay tuned ...

The federal government can reap significant pollution-reduction benefits by focusing on a national freight plan that replaces older diesel equipment with newer, cleaner-burning train cars while building out regional networks more efficiently, the Environmental Defense Fund (EDF) said yesterday in a new report [PDF].

The EDF report, aimed at lawmakers crafting the nation's next long-term transportation bill, uses freight's growing share of U.S. carbon emissions as a jumping-off point to call for broad reforms.

Freight currently accounts for 25 percent of the transport sector's annual greenhouse gas production, according to EDF, but the government has reported that freight's share of total emissions is growing twice as fast as that of passenger transport -- thanks principally to the rise of truck freight movement.

One of the report's first examples of local freight reform is the CREATE project, a federally funded effort to better align freight and passenger train movement in the Chicago area. But the EDF's policy agenda is not limited to rail; efforts to retrofit and clean up diesel vehicles, such as California's Carl Moyer program, get their due.

Two more auto-centric recommendations from EDF are increased use of tolling, which the group believes could be a tool for reducing emissions, and electrifying truck stops. How do idling truckers contribute to freight's greenhouse gas production? From the report:

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