Obama: Let California Regulate Greenhouse Gases
Published January 26, 2009
The writing is on the wall. California laws requiring the rough equivalent of 45 to 50 mpg are in the works.
President Barack Obama will fulfill a campaign pledge today by telling the Environmental Protection Agency to reconsider its rejection of California’s rules to regulate greenhouse-gas emissions. The action follows a request for new public review of the Bush-era decision from both California governor Arnold Schwarzenegger and the head of the California Air Resources Board, Mary Nichols.
President Obama announced an Executive Order on Jobs, Energy Independence and Climate Change at the White House. He is joined by Secretary of Transportation Ray H. LaHood and Lisa Jackson, Administrator, US EPA.
In practical terms, if the waiver is now granted, automakers will have to comply with new, more stringent rules that cut fuel consumption across the vehicles they sell in California and other states. National laws require an average of 35 miles per gallon by 2020, but California’s regulations require the rough equivalent of 45 to 50 mpg. Automakers, dealers, and their allies have reacted with alarm, raising the familiar refrain of a “patchwork” of laws that differ in each state.
It started in 2002, when California adopted a state law that required it to regulate greenhouse gas emissions. Under the Clean Air Act, the state had legally set its own exhaust emissions limits more than 50 times since the early 1970s, with waivers routinely granted by the EPA. Its rules were completed by December 2005, so it requested a new waiver—and got no response.
President Obama announces his orders to have the EPA immediately review California's request for a waiver to establish stronger tailpipe emissions standards.
After two years, the agency denied the waiver but proposed new CAFE rules that raised fleet mileage to 35 mpg by 2020, which automakers reluctantly accepted as the lesser of two evils. California promptly sued the EPA. In the waning days of the last presidency, the Department of Transportation postponed issuing the new CAFE rules; the Obama Administration is planning to deliver those rules by April 1.
While the Supreme Court said greenhouse gases like CO2 can legitimately be regulated as exhaust emissions, automakers argue that California’s limits are de facto regulation of fuel economy—which can only be set by national CAFE laws. Indeed, traditional pollutants like carbon monoxide, oxides of nitrogen, and hydrocarbons are reduced by exhaust treatment, but CO2 is almost directly proportional to petroleum burned—although the use of biofuels can break that relationship.
“Patchwork” Excuse—Used Twice
By now, 17 other states, covering more than half the US population, have agreed to adopt the California standards. The automakers’ fear is a “patchwork” of emissions laws, and indeed that has become the buzzword to summarize their objections. Last week the National Automobile Dealers Association released a study called “Patchwork Proven: Why A Single National Fuel Economy Standard Is Better for America Than A Patchwork of Regulations,” using the word twice. It warns of “irreparable harm” and extreme “unintended consequences” to domestic carmakers already struggling to avoid bankruptcy.
President Obama suggested that approval of the California waiver could resolve the "patchwork" issue. This opens the possibility for establishing California-level standards on a 50-state level.
The challenge comes in the definition of compliance, which depends on the mix of vehicles sold in each state. Dealers say that they might be forced to switch off sales of trucks by August to meet the limits. Automakers couldn’t simply ship them whatever sells, but would have to vary the model mix state by state. Buyers could still buy vehicles in other states—a loophole—and new automakers from China and India would be exempt for a few years.
The devil is always in the details, and these fears may have some relevance. But they’re also sadly reminiscent of automakers’ absolute intransigence toward any regulation of their products or industry in any form over the last 50 years. The counter-proposal is no more than, “Stick with what’s there, don’t do anything new.” And these days, Detroit has less public credibility or support than it once did.
In the end, the important question is not what Obama will do, but whether the automakers have been planning for this day by preparing to deliver more efficient vehicles of all sizes, including hybrid gas-electric cars.
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Buyers could still buy vehicles in other states - a loophole...
This is exactly why it takes more incentive than having fuel efficient vehicles.
Used cars will be kept on the road longer is another loophole not mentioned in the article.
The price of fuel must also be raised to provide the disincentive for buying less efficient vehicles...
President Obama's stance on energy is enthralling. I hope he continues to back up his motto of 'change'. I especially hope that he works to further the green sector. I think it is particularly important for us, as consumers, to support green business. For example, http://www.simplestop.net stops your postal junk mail and benefits the environment. I hope the new administration supports the movement.
Shines,
That only works if the automakers produce decent cars that get good gas mileage. To wit that has been the US automaker's problem over the last couple of years. Left to their own the Detroit 3 were not making quality cars with good gas mileage even with high gas prices. And to be clear the average American needs more than a roller skate like the Smart Car to get around. We need good gas mileage cars that comfortably seat at a minimum a family of four. Perhaps GM has turned a page with the new Malibu and hopefully, the Volt will move things along for GM, but at $40K its about twice as expensive as it needs to be.
To be fair, I don't think the German car manufacturers quite get it yet. They are still bent on producing high horsepower, heavy vehicles with some tweaks to pump up the fuel efficiency. Diesel doesn't cut it, because it takes more crude oil to produce than gasoline.
Let the lobbying begin! While I agree patchwork regs are not good for business the industry has complained forever, not smart and a waste of money at that. They should have meet with Obama to discuss this move maybe agree to terms but delaying it to 2025 instead but this is what they get if they don't work with regulators. Working out a long term plan saves money in production and lobbying. Again why not use the 25b or ask for more loans to meet regulations.
Good article as always!
Though I am happy that the law of the land has finally been set down making it clear what is to be mandated, I am also saddened that the Federal government is being superceded. The whole idea of this new presidency was to lead to change.....it is however, just leaving it to the states, which don't consult or work together on these rules. These things go beyond fuel economy alone though. For example, European models, though essentially the same car as some here, have minute details changed all over to meet standards. These range from the color of the tail light to the structural steel for safety. Making vehicles for different markets is possible, as evidenced by europe, but it adds cost to an already costly endeavor and raises the prices unnecesarily to us consumers. I am saddened by the lack of leadership.
On a more hilarious note, the fact that this can simply be circumvented by buying in the next state over is just too funny. I envision huge truck dealerships popping up in Nevada and Arizona right on the border mocking Californian law. It's sad, but really shows the futility of state by state rules. The inconvenience that this rule will create will certainly bother small business and utilities as they will have to go on little excursions to get their vehicles. Somehow.....I see California changing their mind at the last minute just like they did with the EV stuff.
O....and I am a Californian....so I am happy that the state is trying to limit pollutants.....I just wish they would do it in a half-way intelligent manner, like a gas tax......but I guess intelligence is too much to expect from a legislature.
I think that if CA and the other 17 states adopt these new regs, automakers will just make models that meet 50 state criteria like they have been doing for many years despite CA and the New England states having stricter emissions rules. Back in those days, you couldn't just buy a dirtier car and bring it across because if it didn't meet CA emssions you had to pay a higher fee (later found unconstitutional I think).
I don't really see what all the fuss is about. The Prius, Civic and Insight hybrids basically meet these standards already 11 years ahead of time. Once the plug-ins are into production, they will exceed these regs by so much that automakers could still sell a smaller number of non hybrid trucks and SUVs and still achieve an average of 45-50 mpg. The Hummers will be gone for good even if gas stays cheap because it would take too many green cars to offset the carbon from each of them.
I agree w/ Anon. that the domestics may have less trouble meeting these regs than the German companies who rely more on diesel and aren't in the middle of a big retool to make green cars (with a lot of help from us taxpayers).
Simplest solution: after a short period of national dialog, the Obama administration adopts California's GHG rules as the FEDERAL standard: all the public benefits, no grousing about patchworks, reduced scope for lobbyists. Automakers get a predictable baseline & timing.
Our Federalist approach works well at experimentation and fine-tuning public policies such as taxation, education or public smoking; not so well with respect to existential issues like climate change or national security threats.
Disclosure: opinion expressed is my own, not that of my employer GM.
At least Ford made a good small car this century. In March 2004 Consumer Reports had the following:
“Consumer Reports announced today that it has named the Ford Focus its Top Pick for 2004 in two categories—Small Sedan and Fun to Drive.”
What exactly does California hope to accomplish with this? They are completely ignoring the laws of unintended consequences. They are assuming that vehicle sales will remain unchanged, but the reg's will absolutely kill sales of California car dealerships if this passes. As some have already mentioned, it will
1) Encourage people to buy new cars elsewhere; outlaw importing cars made after the date the law passes and it will
2) Encourage people to keep their old (less efficient) vehicles as long as they can (unless fuel prices go way up), after which they will
3) Buy used cars from other states made before the law passed,
4) etc., etc., etc.
Any loophole they plug will be gotten around by another tactic. The only way that their idea will work is if it accompanied by a higher gasoline tax, which would make the fuel-efficiency requirements redundant! Just raise the tax!
This sort of moronic thinking sounds more like a two-year old wanting to have its way, right or wrong, rather than the rational, results-oriented actions that are needed to address our issues. It sounds like California's fight is going the way of many well-intentioned struggles that forget where they were headed, and now are just trying to not lose face by admitting this is a stupid idea. This strategy will fail, and will only give opponents of petroleum consumption reduction (whether for global warming or national security)more "fuel" for their argument.
I would encourage anyone who wants the right kind of "change" to write to President Obama and try to convince him that this is merely "feel good" politics that does nothing beneficial and only harms state residents, dealers, and manufacturers. The goals in mind could be had much cheaper in other ways.
Interestingly, a few more details about the CA law that I hadn't been aware of:
The CA rules through 2016 apply only to brands that sell an average of 60,000 vehicles a year over three years. (After 2016, the limit might drop to 4,000 vehicles a year.) So while the Detroit Two and a Half, plus Toyota, Nissan, and Honda would have to meet the standards, companies such as Volkswagen, Hyundai -- and perhaps BMW -- would not. And as noted, the rules would not apply to new competitors, such as automakers from China or India. Also, only 2 of the 8 lowest-mileage cars listed by the EPA would fall under the rules, because small luxury brands are excluded.
This comment is adapted from material published here: http://www.freep.com/article/20090127/BUSINESS01/901270329/1002/NLETTER0...
A note to the writer: you should be objective. There is a difference between an "excuse" and a "well thought out reason." For that matter, I think the California legislators are avoiding the obvious solution (a higher state gasoline tax, which might also help balance their budget) by tacitly using "political infeasibility" as an excuse for not doing what's right. This way they can supposedly pawn off the responsibility (for whatever their goal is) to the manufacturers instead of taking it on themselves. But they are ignoring the damage it will do to their own businesses - the car dealers.
If they want to make a statement about global warming (which is all it amounts to - a statement), the state should do it in a way that doesn't spread the pain outside the state. That's what the federal government is for.
@AP: Indeed, a gas tax is the subject of an article soon to come ... although it's worth pointing out that I believe CA already has higher gasoline taxes than most states.
writer, I believe you're right, but if the current tax+price isn't enough to push people into more efficient vehicles, doesn't it seem like mandating the fuel-efficient vehicles (which will either be much smaller or much more expensive) will produce supply of these vehicles with no demand? This will mean dropping car sales in CA, in favor of retaining older cars and buying cars elsewhere.
I think everyone needs to question the California legislature's tactics and motives here as much as people typically to the domestic automakers. They aren't automatically right, even if their intentions are good. I am at a loss as to what they hope to accomplish (anything beneficial, anyway).
How many people paid extra to buy cars that had air bags when they were still optional equipment? Then they became mandatory in the mid 90's and now everyone buys them. No arguements about how much extra they cost or how long it takes to pay for themselves or whether people would buy cars from Mexico to get around the requirment etc etc etc. And if anybody keeps their cars longer so as not to buy a new more expensive car, or buys a used car instead, well it creates a lot of greenhouse gases to manufacture new cars too. That's what recycle and reuse are all about.
SS, you're right that producing new cars produces CO2, but look at it this way: If California's aim is to reduce CO2 emissions by mandating new cars be more fuel-efficient and no one buys new cars, their policy has done nothing (so what's their point?).
On the other point, airbags certainly came down in price, but airbags atarted from ground zero. We have already increased fuel efficiency immensely from where we were, so we're closer to the point of diminishing returns. The more you've improved, the more each small improvement costs, and the smaller the improvement gets.
The right answer for the consumer (vehicle price vs. payback) depends on fuel prices, not on mandates.
Very good point SS.
It is much easier for car manufacturers to make money on a gas guzzler then on a more complicated fuel efficient car.
As it is the car manufacturers duty to make the most money for the shareholders it has to pursue this strategy. Foreign car manufacturers have been able to persuade their shareholders to take a more long term view and invest in fuel efficient cars earlier on. American car manufacturers have chosen or were not able to do this and have decided on the short term profit taking.
They have poured a lot of money in promoting these gas guzzlers and they have managed to convince a large part of the US population that they need one of these.
From the perspective of the country it is better to have fuel efficient cars for the many reasons that have been discussed on these forums at length.
Legislation is the only way we can redirect American car makers in this direction.
On APs point: The progress is less then you think. A 1927 Model T had a fuel economy of 21 MPG. That is 80 years ago. There are very few places in technology where we have made so little progress. Now you can say that we made improvements in horse power, top speed and acceleration but given that oil is such a valuable commodity I would argue that mpg is one of the most important statistics when looking at progress in the automotive industry.
Paul, I've seen the comparison between the Model T and current vehicles before. It's perfectly valid if you'd like to drive a car without electric headlights, no heater (which would be pointless without a top or sealed windows), crappy brakes, cruddy steering, a top speed of 35 MPH, a 90 day warranty, a crank start, no seat belts, airbags, turn indicators, etc., etc., etc. I doubt that most customers would want it, and the government wouldn't let you sell it if they did. I'm tired of that comparison.
I agree with you that legislation is the only way to "redirect American carmakers in this direction." Do you know why? It's because the American consumer is a fickle fan of fuel economy.
Currently, most customers only care about fuel economy when it hits them in the pocketbook (readers here excluded). Then they forget about it when prices drop again (and yes, it will happen again). If history has taught us anything, it's that people learn nothing from history.
Legislation is indeed needed, but it needs to be a higher fuel tax, so that the customer wants the cars you want domestic makers to build. Not everyone thinks like you and I do. As I've stated before, mandating supply of fuel-efficient cars without encouraging demand is a recipe for disaster.
The US is the only country that has relied on fuel-efficiency standards to reduce consumption. It's also the only country that has failed to get results. See a pattern?
If the auto manufacturers don't like building cars to two separate standards, then let's adopt the California standards nation-wide!!
Need2Change:
I think the automakers would be fine with that, but that's not what's happening. I think instead of letting one state mandate this, the EPA should deny their wavier and regulate emissions themselves.
Actually, what I think the Feds should really do is line up our emissions and safety regulations to match Europe's so all the automakers could import all their clean efficient European models unmodified. Our options for clean modern fuel efficient cars would be amazing! Alas, my little pipe dream...
A global emission standard or at least European/US standard would be great. I vote for that.
@Dorn: I would just point out that harmonizing US standards to European ones (in emissions OR safety) would open the agencies to charges of going backwards. Euro emissions standards are more lenient than US standards, as are certain (not all) of their crash safety requirements.
How should the EPA, for instance, respond to a senator demanding in front of the TV cameras, "How can you spend taxpayer's money to imperil the health of the American Public by allowing these dirty, unsafe vehicles to be imported?"
Raising the gas tax is a good idea,
it is THE SOLUTION
California looooves to over-regulate
CAFE doesn't work
How about
50c per gallon federal tax + $1 per gallon state tax on gasoline
($1.50 total)
SULFUR limit 15 ppm
Premium unleaded fuel ONLY (93 octane US) would be sold
15c federal + 70c state tax on E85
35c federal + 65c state tax on regular diesel or B5 bio
30c federal + 55c state tax on B20 Biodiesel
20c federal + 35c state tax on B50 Biodiesel
10c federal + 20c state tax on B99 Biodiesel
ELIMINATE CAFE
Also, self-serve would be ILLEGAL for gasoline
but would remain legal for diesel and biodiesel
This would also create some jobs as a bonus
and yes, I'm from NJ!
I think that having a north america wide legislation more efficient vehicles would be a bonus. Also, I think other countries should be petitioned to take measures to curb emissions like India and China. I also think that automakers should be considered for bail out but with limitations, such as becoming more efficient with their operations profiles, integration of technology improvements to utilize automation and pressure to go fuel efficient. The technology is there as was proven by the guy that built the Tesla, but the industry has been coddled and through the old boy's network allowed to stay in the stone age.
I have seen a lot of good technology out there, but through government regulations those ideas have been smothered out of existence. We would never have seen the advent of the light bulb if government had been so regulatory then.
[the writer] said
"I would just point out that harmonizing US standards to European ones (in emissions OR safety) would open the agencies to charges of going backwards. Euro emissions standards are more lenient than US standards, as are certain (not all) of their crash safety requirements.
How should the EPA, for instance, respond to a senator demanding in front of the TV cameras, "How can you spend taxpayer's money to imperil the health of the American Public by allowing these dirty, unsafe vehicles to be imported"
I'm not talking about importing their OLD cars, just the new models. and I would argue that most 2009 model European vehicles would be plenty safe and clean (including their diesel cars) compared to a 2009 US model. Sure they're might be a few small differences, but I don't read about Europeans dying en mass in car accidents. The idea that European cars are dirty and unsafe is ridiculous. We'd better ban the sale of used cars too because they're dirty and safe!
I for one feel it is borderline criminal that we CAN'T buy European cars in the US. We could reduce our fuel consumption very quickly and at much less cost by taking advantage of Europe's significant lead on us in regards to fuel economy.
CanadianGuy, I disagree that it is the "Old Boy" network that has hindered Tesla. They are running into the same problems GM ran into with the EV1: battery capacity and cost. But I do agree that regulations can certainly defeat progress.
Which is why I think the whole idea of mileage standards is useless. The original CAFE regulations (late 1970's) only worked until gasoline prices fell - then everyone bought trucks and used more gas (and you can't outlaw trucks). Gasoline prices are what really control fuel consumption, so that's the way we need to attack it. The fuel standards are for show, as far as I can see. Either that, or else the politicians promoting this are too stupid to know that they won't help.
A few comments and corrections for the record:
1. “By now, 17 other states, covering more than half the US population, have agreed to adopt the California standards.” Actually, it’s 14 states, D.C., and Bernalillo County, NM that have adopted California standards.
2. “It warns of...extreme “unintended consequences” to domestic carmakers already struggling to avoid bankruptcy.” Actually, the word “extreme” is not used anywhere in the report, and the unintended consequences apply to all regulated automakers, not just domestic automakers.
3. “President Obama suggested that approval of the California waiver could resolve the "patchwork" issue.” Actually, the President said, “This refusal to lead risks the creation of a confusing and patchwork set of standards that hurts the environment and the auto industry.” Since the only patchwork fuel economy regulation under consideration is the one put forth by CARB, I assume those are the standards the President was referring to. Additionally, approval of the California would not resolve the “patchwork” issue, it would implement it.
4. “This opens the possibility for establishing California-level standards on a 50-state level.” Actually, the Bush Administration’s CAFE proposal was 31.6 mpg for the fleet in 2016; CARB’s proposal was 31.3 mpg in 2015. Moreover, if CARB’s regulation were to take effect in all 50 states, as they have publicly advocated, the resulting 50-state patchwork would require automakers to manage 50 unique state fleets and to individually meet CARB’s standard 50 different ways.
5. “The counter-proposal is no more than, “Stick with what’s there, don’t do anything new.” And these days, Detroit has less public credibility or support than it once did.” The authors of the report do not represent automakers. NADA’s does support doing something new, however, -- i.e., implementing the new federal CAFE law which mandates one single national standard.
Finally, the “patchwork” is not an “excuse,” but an actual creation of the California Air Resources Board and the states that have adopted it. If you read the state, county and city regulations adopting California’s rule, which are reprinted at the end of the report, you will see that the totality of these regulations comprise a patchwork regulatory regime. Thanks, Michael
If your readers want to learn more, they can go to
http://www.nada.org/patchwork and read the report themselves.
Well said, Michael. I noticed another interesting line:
"In the end, the important question is not what Obama will do, but whether the automakers have been planning for this day by preparing to deliver more efficient vehicles of all sizes, including hybrid gas-electric cars."
Given the price of gasoline now, and the price volatility of the last year ($1.39 - $4.39), what vehicles would you plan to build if you were an automaker (that wanted to make a profit), considering it will take 5 years to get them to market? If you plan for $6 gas and put in the technology to meet consumer demands, and gas is $2, you'll lose your shirt, since no one will pay what the car's worth. If you think it will stay at about $2, and it goes to $6, no one will want your "gas guzzler," and you will also lose your shirt.
It does matter what (President) Obama does. If he stabilizes the price of gas at a higher level, manufacturers can plan for and meet the market. If not, it's all just talk.
I ROCK! i rock better then cole and these hybrids cars do!!
heck yes GO ME!
Dom, even new European models don't come up to snuff to our own safety and emission standards. They sacrifice safety and emissions levels to save a few gallons of gas. It is silly and hurts the people there. I would rather the European safety standards come up to ours.
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