Streetsblog Capitol Hill

"What do we want? More of the same! When do we want it? Now!" Image: Untold Entertainment

It’s sad, really. Tremendous gains in vehicle fuel efficiency have been squandered, MIT’s Christopher Knittel demonstrates in a study published in the American Economic Review. Knittel’s analysis quantifies how, while automakers have applied meaningful fuel economy innovations over the past several decades, these have produced only modest gains in miles per gallon, because at the same time the companies inflated horsepower and vehicle size. As MIT’s press release put it:

Thus if Americans today were driving cars of the same size and power that were typical in 1980, the country’s fleet of autos would have jumped from an average of about 23 miles per gallon (mpg) to roughly 37 mpg, well above the current average of around 27 mpg. Instead, Knittel says, “Most of that technological progress has gone into [compensating for] weight and horsepower.”

Based on this history, Knittel rightly concludes that market forces cannot drive the social and environmental good of fuel efficiency; he supports an increase in the gas tax. Unfortunately, he goes on to perpetuate a convenient fallacy that has provided cover for an industry looking to evade regulation and avoid responsibility:

“I find little fault with the auto manufacturers, because there has been no incentive to put technologies into overall fuel economy,” Knittel says. “Firms are going to give consumers what they want, and if gas prices are low, consumers are going to want big, fast cars.”

In response to calls for less polluting or less dangerous vehicles, the auto industry has often depicted itself as hostage to a voracious, and quite imaginative, consumer mob that stands in the way of such progress. Apparently, car buyers expend great energy dreaming up spectacular new ideas for cars, which they then conspire to demand from the industry.

NHTSA should act swiftly and decisively on the plethora of distracting technologies being built into vehicles.

The truth is, consumers rarely want a product that they don’t know exists or that doesn’t exist yet. As marketing expert James Twitchell puts it, “In reality people often do not know what they want until they learn what others are consuming. Desire is contagious, just like the flu.” It isn’t until they see others wanting a product — in the media or in real life — that consumers start to want it.

Suburbanites across America were not collectively thunderstruck in the 1980s by the realization that living the good life meant clambering up into a giant vehicle. Instead, automakers, eager to sell more high-margin products, took advantage of regulatory loopholes to push bigger and bigger vehicles. They repositioned clunky trucks as “sport utility vehicles,” transforming them into symbols of wealth, leisure, and suburban family values. In ads, they implied that SUVs were safer by virtue of their heft and hammered on the need for capacious cargo space. The effort was so successful that despite the recession and outcry over gas prices, SUVs and SUV crossovers currently account for 31 percent of U.S. auto sales.

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As though to prove compromise isn’t as stiff a corpse as it appears, the Obama administration announced on Friday that it had reached a key agreement with an industry proficient at stonewalling government regulation: the automakers. The deal, which meaningfully raises fuel economy standards, was something of a welcome surprise, with the industry putting aside its usual act as regulatory victim and playing the role of committed partner.

The fuel standards championed by environmentalists are still far in the future, but the Obama administration extracted impressive concessions from an industry resistant to change.

President Obama’s claims to the historic nature of the agreement are not overblown. Under the proposal, by 2025, car companies will now be required to reach a 54.5 mpg goal for Corporate Average Fuel Economy (CAFE), meaning that each maker’s fleet of cars or light trucks sold domestically must achieve that mileage per gallon in a particular model year. It’s weighted based on sales, too, so automakers can’t just create a token fuel-sipper and continue to sell nothing but guzzlers.

This is the second time this administration has wrangled higher CAFE standards; in 2009, the near collapse of the industry and bailout allowed it to secure a 35.5 mpg standard for 2016. These achievements—the tremendous environmental and economic benefits of which are outlined well by the Natural Resources Defense Council’s Roland Hwang—follow decades of inaction when successful lobbying stifled progress.

As recently as last week, the industry appeared to be gearing up for an intensified public relations campaign against stricter standards, with its largest lobbying group, the Alliance of Automobile Manufacturers, airing radio ads warning the standards would destroy the economy.

In the end, the automakers were satisfied with what their still-considerable influence in Washington brought them in concessions, including a target mpg lower than the 60-plus supported by leading environmental health groups and diluted standards for so-called light trucks, including SUVs and pickups. Goals for the vehicles that are the most gas-guzzling and polluting—and the most profitable—will be phased in more slowly than goals for cars, with a loophole for big pickups described by Automotive News as a “major plum” for Detroit.

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It’s no fireside chat, but Transportation Secretary Ray LaHood has been doing a series of video “dialogues” with people who submit questions online. Today’s installment is all about livability: one person asks what USDOT is doing to improve and expand bicycle infrastructure, another expresses excitement about high-speed rail expansion and asks about LaHood’s personal transportation habits, and another wants to know why all cars aren’t getting 60 miles to the gallon already.

Source: NRDC Switchboard

House Republicans are calling for offshore oil drilling as an answer to foreign oil dependency and high gas prices — and they’re not the only ones. President Obama recently announced his intention to cut oil imports by one-third by 2025, partly by increasing domestic production was the answer to the country’s energy woes. In his speech announcing the plan, Obama barely mentioned transit and land use, even though more and more evidence points to these as real solutions for high gas prices.

The Natural Resources Defense Council has provided this neat graphic illustrating how demand side solutions — like better land use planning, transit access and more fuel efficient vehicles — match up against the tired “drill, baby, drill” mentality that has made the country so fossil-fuel dependent in the first place. The graphic is based on an NRDC analysis examining how much fuel could be saved using a variety of smart conservation policies, given the limits of our existing technology. Then the group compared the savings with the best available information about the country’s remaining domestic oil resources.

The result is a stark demonstration of the inadequacy of oil drilling as a solution. The analysis indicates that the United States could cut oil imports by 44 percent by focusing on clean energy technologies — about eight times what could be produced by domestic drilling. Previous studies have documented that better transit and community planning alone could reduce vehicle miles traveled in the country by 20 percent.

The implications for political leaders should be clear, says Luke Tonachel, writing for NRDC’s Switchboard blog. Unfortunately, the budget proposal introduced by House Budget Committee Chairman Paul Ryan last week only affirms the oil subsidies and transit cuts that have led to our current predicament.

“As our analysis demonstrates, we have the know-how to break our oil addiction and meet the President’s goal of reducing oil imports by one-third,” he said. “The real question is whether we have the political will.”

Many transportation reformers were disappointed last week when the Pew Center on Global Climate Change released a report indicating that only clean car technology had a shot at significantly reducing greenhouse gas emissions. The report dismissed smart growth development strategies and transit as trivial contributors to a lower-carbon economy.

Cleaner fuels might reduce the smog but you're still left with this traffic jam. Image: Boxoid

Pew has a well-earned reputation for integrity, commitment to hard-hitting research, and impact on policy debates. And the report, “Reducing Greenhouse Gas Emissions from U.S. Transportation,” does an excellent job of analyzing the potential of various vehicle technologies to reduce emissions. But when it comes to Pew’s conclusions on transit and smart growth, the report is skewed by major omissions and dubious assumptions.

I asked Pew project manager Nick Nigro why the acknowledgments specifically state, “This report is not a publication of the National Cooperative Highway Research Program, Transportation Research Board, National Research Council, or The National Academies.” It turns out the report was funded by the National Cooperative Highway Research Program, a program of the Transportation Research Board that works in close collaboration with AASHTO, the American Association of State Highway and Transportation Officials.

“They provided the funding,” Nigro told Streetsblog, “but it’s a Pew report. They were just a source of funding.”

The authors Pew enlisted, David Greene and Steven Plotkin, have unassailable credentials in fuel economy research and alternative fuels. But how much do they know about transit and smart growth? Their resumés are thin in those areas. So whom did they pull in to offer further depth of understanding? A longtime official from the Federal Highway Administration.

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You may have heard last week that a former Shell executive predicted that gas prices would reach five dollars a gallon by the end of next year. John Hofmeister is now the head of Citizens for Affordable Energy, which advocates for increased coal, gas, and oil production in the U.S. He’s also the author of a book called “Why We Hate the Oil Companies: Straight Talk from an Energy Insider.”

The SUV: "We're Back." Photo: Auto World

Hofmeister told Platts in an interview last week, “If we stay on our current course, within a decade we’re into energy shortages in this country big time.” He’s predicting “blackouts, brownouts, gas lines, rationing” and says it’s the result of politically-driven decisions to “fritter at the edges” of renewable energy.

Conservatives are going after Obama for rising oil prices (more on this soon), blaming him for canceling Bush-approved oil leases and slowing production after the Gulf oil spill. Hofmeister warns that with the economy recovering, demand is going back up worldwide, especially in Asia.

Although the news media has gone wild over Hofmeister’s predictions, no economist is willing to get behind them. Even John Kingston, the news director of Platts – where Hofmeister first made his prediction – has refuted his numbers.

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The Obama administration today released its final rule raising U.S. auto fuel-efficiency standards to an average of 35.5 miles per gallon (mpg) by 2016, winning plaudits from environmental groups while offering extra benefits to makers of electric and luxury cars.

Transportation Secretary Ray Lahood, at left, with EPA chief Lisa Jackson at right. (Photo: Getty Images)

The final rule was jointly unveiled by Transportation Secretary Ray LaHood and Environmental Protection Agency (EPA) chief Lisa Jackson, who described the higher fuel standards -- known as CAFE, for Corporate Average Fuel Economy -- as "a win for automakers and drivers, a win for innovators and entrepreneurs, and a win for our planet." 

Environmental advocates joined the auto industry in welcoming the higher CAFE standards, which the EPA estimates would yield $240 billion in total benefits over the life of the rule -- compared with a total cost of $52 billion for carmakers and drivers.

“By completing these rules, the Obama administration is putting our country on the road to creating thousands of clean energy jobs and cutting our dangerous dependency on oil," Roland Hwang, transportation director at the Natural Resources Defense Council, said in a statement.

Dave McCurdy, president of the Alliance of Automobile Manufacturers, urged the White House to follow the rule by beginning "to work on [fuel standards for] 2017 and beyond.” 

The new CAFE rule includes a notable break for electric cars, giving a zero-emissions rating to the first 200,000 such vehicles made by each manufacturer despite the fact that carbon emissions would result from the power needed to charge them.

Jackson said the benefit was included to bolster the administration's "bullish" stance on plug-in technology. "We all know that's not entirely true," she acknowledged of the government's zero-emissions designation, "because when you plug in, there's some emissions associated with the power you're using  ... but we wanted to incentivize them."

In the text of the final rule, the EPA described its 200,000-vehicle zero rating as a compromise with green groups that objected to its initial proposal to offer the rating to all electric vehicles.

As the federal government moves forward on a mandate to set stronger fuel-efficiency rules for trucks and buses, a new report from an independent scientific body is urging lawmakers to take another approach: raise fuel taxes.

The 2007 federal energy law aimed to set new fuel-efficiency rules for trucks as well as buses. (Photo: TTI)

The National Research Council (NRC), which often advises Congress and the executive branch on environmental and transportation issues, yesterday reported on several strategies to decrease emissions from heavy-duty vehicles.

Several technological improvements scored high on the NRC's fuel-savings scale. Adding hybrid powertrains to big rigs, for example, could cut fuel use by up to 50 percent over five years, and phasing out gas engines in favor of diesel-powered ones could achieve up to 24 percent in fuel savings.

But the NRC's most surprising advice came on the topic of higher fuel taxes, which the report described as an efficient way to correct the "social inefficiency" that results when private businesses decline to cut emissions "since the private return is too low." The report also projected that higher fuel taxes would encourage freight-carrying firms to make wider use of other gas-saving tactics.

"Although the committee recognizes the political difficulty with increasing fuel taxes, it strongly recommends that Congress consider fuel taxes as an alternative to mandating fuel efficiency standards for medium- and heavy-duty trucks," the NRC authors wrote.

Another benefit of raising fuel taxes to spur emissions cuts, according to the report, is the prospect of more immediate economic and environmental benefits.

The auto industry today aligned with the White House in the debate over a congressional bid to block the Environmental Protection Agency (EPA) from regulating carbon emissions while lawmakers work to pass a climate bill, warning that such an attempt to yank EPA authority "would collapse" last year's agreement to raise fuel-efficiency standards.

(Photo: TreeHugger)

"Automakers agree with the fundamental premise that Congress should determine how best to reduce greenhouse gas emissions," Alliance of Automobile Manufacturers president Dave McCurdy wrote in a letter to congressional leaders of both parties. "However, if these resolutions are enacted into law, the historic agreement creating [a higher national fuel standard] would collapse."

The congressional proposals at issue are sponsored by Republicans and Democrats alike. Sen. Lisa Murkowski (R-AK) has won Democratic support for her resolution of disapproval aimed at the EPA's ability to regulate emissions under the Clean Air Act, though she has stopped short of seeking a vote as Sen. Jay Rockefeller (D-WV) pursues a separate plan to force a two-year delay in EPA activity on the issue.

The Obama administration, which has used the specter of EPA action as a means to spur congressional movement on climate change, argues that any bid to remove the agency's clean-air authority would nullify its deal with automakers to raise fuel-efficiency (CAFE) standards to 35.5 miles per gallon by 2016.

In his letter, McCurdy echoes the White House's concern and counters assertions made by auto dealers and other business groups that the Murkowski and Rockefeller resolutions would not imperil any CAFE deal. Automakers view the anti-EPA resolutions as "express[ing a] legitimate concern," McCurdy wrote, but would prefer lawmakers focus on crafting a national fuel-efficiency policy that ranges beyond 2016.

An excerpt from McCurdy's letter follows after the jump.

Environmental Protection Agency (EPA) chief Lisa Jackson extended an olive branch this week to lawmakers who are pushing to block her from regulating carbon emissions in the absence of a congressional climate bill, but Jackson's promise to delay action until next year appears to have made no headway with Republicans and coal-state Democrats. 

Carol Browner, at right, with the president. (Photo: TreeHugger)

If Congress succeeds in blocking the EPA from following through on a Supreme Court mandate to regulate emissions, a legislative path to nationwide pollution limits would effectively become the sole means for the Obama administration to follow through on commitments it made at last year's Copenhagen climate summit.

But White House climate adviser Carol Browner noted today that a congressional block on the EPA's authority would have a second wave of consequences for transportation policy -- it would jettison the Obama administration's much-heralded deal to raise auto fuel-efficiency standards to 35.5 mile per gallon by 2016.

"I don't know why members [of Congress] would want to go out and vote against the science of climate change," Browner told attendees at a climate conference sponsored by The New Republic.

Without EPA authority to regulate emissions under the Clean Air Act, she explained, "there is no car rule" -- referring to the agreement to adopt California's landmark efficiency standards as a national model.

"If the car rule were not to go forward, California would still have all its authorities," Browner added, meaning that the auto industry's fears of compliance with a "patchwork" of regional fuel standards would become a reality.

Browner's comments came as climate legislation continues to lose momentum in the Senate, giving more political ammunition to lawmakers and industry representatives who seek to stall the process.

Yet Sen. John Kerry (D-MA), one of three negotiators working on a "tri-partisan" climate deal in the upper chamber, took a notably upbeat tone today on the prospects for action this year, and Browner concurred with Kerry's sentiment.