Bush Orders Stricter Rules On Auto Mileage [WSJ]
By JOHN D. MCKINNON, JOHN J. FIALKA and MIKE SPECTOR
May 15, 2007; Page A1
President Bush ordered up new rules aimed at increasing automobile fuel efficiency and the use of alternative fuels -- and at putting a Republican stamp on energy conservation while Democrats in charge of Congress remain gridlocked on the issue.
Mr. Bush's pledge yesterday to toughen standards signals the inevitability of new burdens on auto makers and gasoline refiners, even if legal challenges were to delay implementation of the changes. Within the next few years, auto makers will have to make more fuel-efficient vehicles, while refiners will have to increase their use of ethanol and other alternatives to oil products in the gasoline they produce. And with the cost likely passed through to consumers, the new rules also are likely to mean higher prices for vehicles and the fuel needed to drive them.
Congress may even try to speed the timetable for such changes. While the first of Mr. Bush's steps are slated to go into effect at the end of 2008, some Democrats yesterday asserted they would enact legislation that could take effect sooner. Mr. Bush's initiative could face additional delays, too, if beleaguered U.S. auto makers, which fear tighter fuel-efficiency requirements, contest new rules in court.
As outlined yesterday, the White House plan would essentially impose through regulation the changes the president proposed in his January State of the Union address, although details of the final rules have yet to be written. The White House goal is to reduce U.S. gasoline consumption by 20% over the next 10 years from projected levels, and Mr. Bush now is telling federal agencies to begin the process of putting into place rules that will achieve that target.
Industry interests offered cautiously positive responses, in large part because they think the Republican administration is likely to write rules that are more flexible and less onerous than any produced by the Democrats who control Congress.
In his State of the Union address, Mr. Bush proposed an increase in alternative- and renewable-fuels use to 35 billion gallons a year by 2017, nearly five times the current 2012 target, and improvement of fuel-efficiency standards for cars and light trucks by 4% a year through 2017. Mr. Bush's proposal has the dual goals of curbing the country's reliance on foreign oil and its production of carbon-dioxide emissions that contribute to climate change.
The move also allows Mr. Bush's lame-duck administration to claim a rare policy advance at a time when the president's popularity has hit new lows and he is battling Congress over Iraq war funding and other issues. It could even jolt Congress to act on energy legislation that would go further, perhaps by placing new limits on power plants.
The political battle over global warming has intensified since Democrats captured Capitol Hill and pledged to take action on the energy front. But while they haven't backed away from their goals, lawmakers remain divided over several competing proposals. At the heart of the debate is how severely to cut emissions, how fast to do it and how to divide up the economic pain.
President Bush announces his plans to cut gasoline consumption and improve fuel efficiency by 2017. Video courtesy of Reuters.
"When it comes to energy and the environment, the American people expect common sense, and they expect action," Mr. Bush said. "It makes sense to do what I proposed, and we're taking action by taking the first steps toward rules that will make our economy stronger, our environment cleaner, and our nation more secure for generations to come."
Administration officials said a recent Supreme Court ruling that the administration has legal authority to regulate so-called greenhouse gases through the federal Clean Air Act opened the door to the new regulatory initiative.
Currently, cars and light trucks produce about one-fifth of U.S. emissions of CO2 through the burning of gasoline, diesel and other fuels. The current federal fuel-efficiency rule, known as Corporate Average Fuel Economy, or CAFE, requires that auto makers' passenger-car fleets reach an average of 27.5 miles per gallon -- a standard unchanged since 1985. Light trucks must meet a standard of 22.2 miles per gallon. And while the use of ethanol, which emits fewer greenhouse gases than gasoline, is rising rapidly, that is from a very small base of about five billion gallons each year currently.
Under the plan laid out in Mr. Bush's State of the Union speech, there would also be a significant change in the way passenger-car fuel economy is regulated -- one much desired by the Big Three auto makers. The new system would assign fuel-economy targets to models based on their size, instead of mandating a fleetwide average. A car such as the full-size Chevrolet Impala, for example, would be required to meet the standard for its size class.
Depending on how the rules were written, this could give Detroit more freedom to sell its more-profitable, lower-gasoline-mileage cars without having to rev up sales of less-profitable, more efficient models.
Mr. Bush's announcement garnered mixed reviews. Dan Becker, director of the environmentalist Sierra Club's global-warming program, expressed hope the move could add to pressure on Congress to act. "Right now, they seem to be saying things the right way," he said.
Some critics countered that the White House has been stalling all along on global warming, and continues to do so. "After six years of hemming and hawing on setting fuel-economy standards, the president has suddenly discovered the regulatory powers he has had all along," said Rep. Edward Markey, a Massachusetts Democrat who heads a special House committee on global warming.
The initiative also could renew opposition from U.S. auto makers, which fear they won't be able to adapt to higher efficiency standards as readily as their Japanese competitors. General Motors Corp., Ford Motor Co. and Chrysler Group all posted billion-dollar losses last year and are closing plants and slashing tens of thousands of blue-collar jobs.
U.S. auto makers and their allies would prefer that any carbon regulation be levied "economywide" to hit all industries -- and thus lower the burden on the auto industry.
[Putting the Brakes on Oil Consumption]
"Auto makers support reforming and raising car fuel-economy standards, consistent with the need to preserve jobs and consumer choice," said Dave McCurdy, president and chief executive of the Alliance of Automobile Manufacturers, which represents Detroit's Big Three and Japan's Toyota Motor Corp. "Determining the right level for the future will require sound science and engineering, in an open process that involves everyone."
Mr. McCurdy's reference to job preservation reflects a fear of the United Auto Workers that jobs could be lost to more-flexible overseas competitors. And his nod to "consumer choice" signifies a view among U.S. auto makers that consumers crave bigger, faster and thus more fuel-thirsty cars and trucks.
Yesterday, Rep. John Dingell, a Michigan Democrat and chairman of the House Energy and Commerce Committee, said he is determined to craft an economy-wide policy to reduce CO2 emissions.
The economic cost of cutting a ton of carbon-dioxide emissions depends on how it is done. Several studies suggest it would be cheaper and logistically easier to get emissions cuts through efficiency improvements and fuel switching at power plants than from vehicles made by the auto industry. Under the approach being pushed by Mr. Dingell, companies that met the cap on emissions -- such as power plants -- could sell "emissions credits" to auto makers. The car makers could use those to reduce their obligation to improve the mileage of cars and trucks they make.
Environmentalists say that under such a scenario, there would probably be little improvement of car and truck mileage, without a very tough fuel-economy mandate.
Red Cavaney, president and CEO of the American Petroleum Institute, which represents most of the oil industry, applauded Mr. Bush's call for a lengthy rule-making process. But he said his group would point out the "big risk" in Mr. Bush's plan from relying on cellulosic ethanol, which is made from the fibrous parts of plants such as corn stalks but has yet to be commercially proven.
David Doniger of the Natural Recourses Defense Council, a New York-based environmental group, said one motive for a federal regulatory approach is to prevent California and 11 other states from developing stronger alternative standards for reducing greenhouse-gas emissions from automobiles.
The administration appears to have left several wide loopholes in developing new standards. For instance, it said regulators would consider public comment, as well as "safety, science and available technology and...benefits and costs before they reach any decisions."
Any administration efforts could still be overtaken by a Congress run by Democrats. Indeed, administration officials said they continue to push lawmakers to act, because legislation is less vulnerable to litigation than rules are.
Bills calling for more ethanol use and upgraded standards for vehicle fuel efficiency are already headed for Senate floor debate later this month. The House is expected to propose somewhat similar bills by midsummer. |
