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Auto Industry Supporting Levin-Bond Fuel Economy Amendment

15 June 2007

The auto industry is supporting the new Levin-Bond Amendment—developed by Michigan Democratic Senators Levin and Stabenow, and now presented with broader co-sponsorship—to the Senate energy bill. This amendment establishes fuel economy standards of 36 mpg by 2022 for cars and 30 mpg by 2025 for trucks—a fuel economy proposal that is less aggressive that the proposal currently in the bill, and mirroring the targets of the pending House bill. (Earlier post.)

In an email sent to more than 30,000 US employees late Thursday, Chrysler Group President and Chief Executive Officer Tom LaSorda voiced his support for proposed legislation, saying that “it constitutes an acceptable approach because...[it] respects the challenge of developing affordable technologies and recognizes that there are inherent differences between cars and trucks.” The existing proposal in the bill calls for combined car and truck fuel economy of 35 mpg by 2020, with a 4% annual increase thereafter.

While it will be a stretch to meet the CAFE goals of the Levin-Bond Amendment, the impact of the proposed energy bill (H.R. 6) without the amendment would cripple our business.

—Tom LaSorda

Those supporting the Levin-Bond Amendment include Toyota, BMW, Ford, General Motors, Mazda, Mercedes-Benz, Mitsubishi, Porsche, VW, Chrysler, the UAW and National Automobile Dealers Association, according to LaSorda.

Among the measures of the Levin-Bond Amendment are:

  • Mandatory 30% ramp up of fuel economy standards to at least 36 mpg for cars by 2022 and at least 30 mpg for trucks by 2025 (actual standards set to maximum achievable levels at or above these floors by the National Highway Traffic Safety Administration—NHTSA).

  • No “off-ramps” permitting lower standards. The concept of off-ramps is in the current proposal—i.e., if it is determined that the specified fuel economy target isn’t possible, it could be adjusted downward.

  • Authorizes NHTSA to set attribute-based, multiple model year standards for passenger vehicles, as well as new commercial medium- and heavy-duty on-highway vehicle standards.

  • Requires each manufacturer to produce (and sell) 50% advanced technology vehicles (such as hybrids or clean diesel) or flexible fuel vehicles by 2015.

  • By 2017, at least 10% of those vehicles must be advanced technology.

  • Provides an even playing field for all advanced technology and flexible fuel technologies.

  • Extends credits for flexible fuel vehicles to support greater demand and availability of ethanol and consumer acceptance of these vehicles and then phases out the credit by 2020.

  • Authorizes increased funding for research, development and demonstration in the areas of advanced batteries, hybrids, plug-in hybrids, clean diesel, diesel hybrids, and flex fuel hybrid technologies, hydrogen storage and fuel cell membranes; as well as cellulosic-based ethanol, and other biofuels, such as biodiesel, to replace conventional diesel fuel.

  • Prohibits anti-competitive barriers that limit the ability of service station retailers to sell biofuels such as E85.

  • Requires the Secretary of Energy and Secretary of Transportation to conduct a study of the feasibility of the construction of dedicated ethanol pipelines.

  • Expands access to alternative fuel refueling stations on federal property.

June 15, 2007 in Fuel Efficiency, Policy | Permalink | Comments (19) | TrackBack (0)

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Once again, the ethanol "flex-fuel" myth lets the American automakers continue to have a loophole to get out of raising their real fuel economy.

These targets are irrelevant. If US car manufacturers can't do a whole lot better than this, they're dead anyway when the price of gas goes north.

This is just window dressing. Yet the auto manufacturers just don't look out the window. They only want to keep an eye on the rear view mirror.
Rising fuel prices will force market acceptance of cars with higher fuel standards than these, ultimately rendering this bill meaningless.

Remember the statement printed in the rear view mirror:

OBJECTS IN MIRROR ARE CLOSER THAN THEY APPEAR.

Perhaps they don't take this message seriously themselves...

I was wonder how long it would take for people to realize that CAFE standards are just that....averages.

For every car that they make thats a plug in that averages 150mpg they can still pump out 5 15mpg SUVs and hit the 2022 target of 36mpg

Toss in other cars and hybrid systems and the targets are in fact quite reasonable.

This means so long as less than 20% of the population does what makes sense. They can still manufacture cars for those with insecurities and small wee wee's or a thirst for power and maintain the average just fine

This seems like a fair and reasonable approach. When the price of fuel goes up the cost effectiveness will determine whitch technology or automaker makes it.

The good news is that consumers are reacting to higher fuel costs. In the short term this is masked by reducing prices of unpopular vehicles. In the long term that cannot be sustained.

People tend to ignore what doesn't hurt. That is not some ignorance unique to Americans. It is human nature.

Energy costs are beginning to hurt in the US. They have hurt for a long time in Europe and many other places. And those places consume less energy.

The bad news? The government tinkers endlessly to shield domestic industry for the consequences of folly. This hides actual prices which sends efforts down blind alleys.

In Congress we are witnessing a new search for the Grail*. If only we add another clause encouraging some catalyst or anode or hybrid corn. Maybe add a nod toward another fuel. Or direct bureau to make another annual report, or.....

* Holy Grail, elixir, magic bullet, voodoo, Golem. Call it what you choose, the intent is to avoid consequences by conjuring.

It does not matter how much congress stumbles on its own feet, higher fuel prices will force better fuel economy. The only problem is figuring out how high, when will SUV sales plummet? $4 a gallon, $5,$6, etc?

Raising the CAFE standards, barring signficant increases in gas prices, will require the auto companies to modify their price structure to raise their prices on gas guzzlers and lower their prices on cars that get good gas. That is, if they do not also get the sham E85 loophole. The profit margins on small cars are already problematical, as it is. The decreased demand for SUVs and trucks will kill them because that is where there bread and butter is.

I am in no way trying to justify their resistance to CAFE standards but I agree that it is a very convoluted and questionable way to meet the real goal, which is to reduce oil consumption.


I can even imagine a scenario where the auto companies would have to sell high mileage cars at a loss to meet the standards.

And higher CAFE standards have no impact on miles driven. If anything, they might even increase miles driven. Miles driven is the biggest factor in our current fuel consumption. CAFE standards just affect new cars and take years to have much of an impact on the overall fuel consumption.

The real payback would be in the area of miles driven. The only way to do this is to raise gas taxes or ration gas until the desired effect is achieved. A number of other structural and cultural changes must occur, but this is where one must start.

Congress, with its reliance on CAFE standards, is demonstrating that it is not really serious about reducing oil, energy consumption, and greenhouse emissions.

Heretofore, I have been a big supporter of higher CAFE standards. The more I look at this, the more rediculous they seem, especially with the E85 loophole, which gives use the comfortable illusion that we are meeting the standards.

CAFE is a combination of good intentions and political cowardice, IMHO. A better, simpler, fairer approach is to raise gasoline taxes gradually and offset the added revenues with lower income taxes or tax credits for low-income taxpayers. Use more, pay more. Let the rich drive whatever they want; the market will demand fuel efficiency for the masses.

"The real payback would be in the area of miles driven."
Miles driven is highly inelastic, people got to drive to work no matter what.
CAFE is the only way to reduce gas consumption in the short (3 year) term.
Taxes will work in longer term, past 5-6 years.

Heck that weak stuff. 40 MPG in 4 years!

Harass your congressman. Harass your senator. 40 MPG in 4 years!!!

DS--

I beg to differ. Higher costs for one transportation mode over another will make a difference in the short term, more so than increasing CAFE. New CAFE standards will be phased in over time, and only apply to new cars/trucks. Most people will be driving their existing ride for the short term, and changing CAFE will have no effect on their short term choices.

Yes, it's true that some commuters have no choice, but many others do. Car pooling might start to look a lot more attractive with higher costs for driving, even if it's less convenient. Same thing for taking mass transit, bicycling for those who have the option, etc, etc.

Besides tax policy, another thing that would help would be some moral leadership on the global warming and oil dependency issues. Why isn't our president making speeches about the importance of conservation, how everyone can pitch in, etc? (Yes, I have my own opinion about why GWB isn't doing such obvious things, but I'll let it pass...)

"Miles driven is highly inelastic, people got to drive to work no matter what."

Only over the short term. There is nothing to say that the built environment in this country has to be laid out the way it currently is. People may like the current state of affairs, but that doesn't matter if it is unsustainable.

"CAFE is the only way to reduce gas consumption in the short (3 year) term."

Nonsense, because CAFE only affects the fuel efficiency of new vehicles, not older vehicles or how far either new or old vehicles are driven. Higher taxes would work in both the short term and the long term, depending on how much they were and if they were constantly increasing.

This last point is important. It is the national fuel consumption that counts. If just new cars meet it, then we still have quite a large fuel consumption issue that can be resolved by behavioral changes like carpooling, mass transit, telecommuting and other methods. I have heard no talk about any of that.

"For every car that they make thats a plug in that averages 150mpg they can still pump out 5 15mpg SUVs and hit the 2022 target of 36mpg"

No - the average isn't calculated like that. It's actually calculated as 1/(average gallons per mile), not average miles per gallon.

So with 5 15MPG vehicles and a 150 mpg, you'd get an "average" of 1/((1/15+1/15+1/15+1/15+1/15+1/150)/6)=17.65MPG

I don't understand why your car makers need so much time. Even if you made it say, next week that the CAFE standards started, GM and Ford could import the cars they make in Europe and Australia/Asia that could easily meet the standards while they restart their factories making the same cars.

Where is the rocket science that would take 15 years?

Why not just raise fuel prices with taxes and do the same thing?

Ender,

I agree regarding the importance of higher fuel taxes -- a $1/gallon fuel tax would make CAFE irrelevant. But it's VERY unpopular. See the earlier post updating the Senate Energy Bill.

http://www.greencarcongress.com/2007/06/update_on_the_u_2.html#more

SA 1546, sponsored by DeMint "Limitations on legislation that would drive up average fuel price for autos."

At the same time they debate energy efficiency, CAFE, ethanol, etc., they talk about NOT allowing higher fuel prices. In 2-3 more years there will be many more choices for efficient vehicles -- more hybrids, PHEVs, diesel hybrids, clean diesel ICEs, and even a few mass-market BEVs. With more choices consumers will be able to lead the way. Unfortunately our legislators are too influenced by special interests to do the right thing, especially if it's not popular.

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