Saturday, February 03, 2007

Big 3's call for U.S. aid gets cool reception

Wednesday, January 31, 2007
Big 3's call for U.S. aid gets cool reception
Carmakers want cash for alternative fuel research, not efficiency mandates.
David Shepardson and Gordon Trowbridge / Detroit News Washington Bureau

WASHINGTON -- The opening round of congressional hearings this year on global warming and alternative fuels showed one fact is clear: The climate for automakers on Capitol Hill is becoming increasingly unforgiving.

While General Motors Corp. asked Congress on Tuesday to dramatically increase federal support for the development of advanced powertrain technologies, it faced skepticism from lawmakers clamoring for tougher fuel economy mandates.

Momentum is building in Washington to force automakers to markedly improve the fuel efficiency of their vehicles -- a requirement that could cost them billions of dollars by forcing them to produce smaller cars and more hybrids, or even drop out of some market segments.

President Bush proposed in his State of the Union address that automakers improve the efficiency of vehicles an average of 4 percent per year beginning in 2009 for passenger cars and 2011 for light trucks. Bush wants to cut gas consumption 20 percent by 2017.

The costs involved would be huge considering that modest light truck standards issued in March requiring fuel efficiency improvements of just 1.2 percent per year will cost the Big Three automakers an estimated $6.2 billion. Nearly all the foreign and domestic automakers have called the Bush proposal very aggressive.

Several proposals in Congress would go even further, mandating a specific yearly increase, while the Bush proposal leaves the final increase to the National Highway Traffic Safety Administration, which would set the new figure with input from automakers.

Rough road expected

A Senate hearing Tuesday on fuel economy standards and another on climate change underscored the rough road Detroit automakers face in trying to beat back tough new mandates.

At the center of the debate is the growing consensus that global warming is not only a real threat, but also is poised to become a major issue in upcoming elections.

Environmentalists and many others want the Big Three to take a greater role in reducing tailpipe emissions linked to global warming. U.S. vehicles consume one of every nine gallons of gas used on the planet and account for 6 percent of greenhouse gas emissions.

U.S. Sen. Gordon Smith, R-Ore., wondered whether Detroit's automakers would be slashing jobs and losing market share had Congress forced them to improve fuel efficiency standards years ago. Passenger cars' fuel efficiency rules haven't changed since 1985.

"Are there autoworkers in Detroit who would be employed today if we had done this?" he asked at a Senate Energy and Natural Resources Committee hearing. "Maybe we need to help you help yourselves. It surely seems to me that we're not helping you by backing off from pushing you."

Beth Lowery, GM vice president for energy and environment, told the panel that research into new technology is the answer. She argued the government should fund a major effort to boost research and development in battery technology and support manufacturing of advanced batteries.

She also said government should expand funding of hydrogen and fuel cells, purchase more government vehicles that can run on alternative fuels and expand infrastructure of alternative fuels.

"Well-crafted tax incentives can accelerate adoption of new technologies and strengthen domestic manufacturing," she said.

Advances in battery technology are critical to making plug-in hybrid concepts like the Chevy Volt a reality. She said it will take several years "to see if the battery technology will occur that will let us bring to market a plug-in hybrid."

U.S. Sen. Robert Menendez, D-N.J., suggested if GM wants help, it should do its part by improving fuel efficiency. "I think this is a shared responsibility," he said.

Several panelists expressed worry that the U.S. auto industry was falling behind on battery research. Japan provides 60 percent of the world's lithium-ion batteries, and South Korea and China share most of the rest, said Menahem Anderman, president of California-based Advanced Automotive Batteries.

Also on Capitol Hill on Tuesday, the Senate Environment and Public Works Committee held a hearing on global climate change to gauge senators' positions. Several called for automakers to do more.

U.S. Rep. Joe Knollenberg, R-Bloomfield Township, spoke out for Detroit's automakers.

"There are many smart ways to reduce our dependence on foreign oil and curb the emissions of greenhouse gases. We don't have to kill auto jobs to save the polar bears or wean ourselves from Saudi oil," Knollenberg said.

U.S. Sens. Carl Levin and Debbie Stabenow -- both Michigan Democrats -- in testimony at the Senate hearings opposed new fuel economy mandates.

"There is a faster way to achieve our goal," Stabenow said, embracing the tax proposals suggested by GM. Said Levin: "We can make leaps in hydrogen use, in hybrid use, including plug-in hybrids, and biofuels, if we focus on the leap-ahead technologies, and give the incentives to manufacturers to move to those technologies."

New fuel economy mandates are "a peanut in the scheme of things" and "highly discriminatory against American vehicles and American workers," Levin said.

U.S. Sen. Barbara Boxer, D-Calif., who chairs the Environment and Public Works Committee, noted dryly to Levin that "you could have stayed away (from the hearing). This is not a happy issue for you back home, I know that."

At the Energy and Natural Resources Committee hearing, the senators praised Honda Motor Co.

John German, manager of environmental and energy analysis for Honda, said "we have a culture of being the technology leader."

GM, Ford Motor Co. and DaimlerChrysler AG were disappointed their request for $500 million in federal funds over five years for research into advanced batteries was not mentioned during the State of the Union. It is not likely to be part of the president's budget request set to be unveiled Monday.

Ford used federal grants

Energy Department grants -- to the tune of about $44 million -- funded just over half of Ford's plug-in hydrogen fuel cell vehicle unveiled last week in Washington.

Next week, U.S. Energy Secretary Samuel Bodman is to testify in front of the House Energy and Commerce Committee on the president's proposal to dramatically increase fuel standards.

Scheduled to testify next month is former Vice President Al Gore, a leading advocate of reducing greenhouse gas emissions.

You can reach David Shepardson at (202) 662-8735 or

GM's proposalsBeth Lowery, GM's vice president for energy and environment, is set to testify today before the Senate Energy and Natural Resources Committee. According to a draft of her remarks obtained by The Detroit News, Lowery was to propose that:

The federal government fund a major effort to increase research and development of battery technology. Similar efforts and funding should be expanded for the development of hydrogen power and fuel cells.

Biofuels production and infrastructure should be expanded. Government should continue incentives for the manufacture of biofuel-capable flex fuel vehicles; increases in biofuels production; increases for R&D into cellulosic ethanol; and increased support for broad-based infrastructure conversion.

Federal government purchasing should set the example. The government should continue to purchase flex fuel vehicles; demand maximum utilization of E-85 in the government flex fuel fleets; use federal fueling to stimulate publicly accessible pumps; provide funding to permit purchase of electric, plug-in and fuel cell vehicles into federal fleets as soon as technology is available.

There should be further incentives for advanced automotive technology to be adopted by large numbers of consumers. Income tax credits should be focused on technologies that have the greatest potential to actually reduce petroleum consumption and provide support for manufacturers/suppliers to build/convert facilities that provide advanced technologies.
Source: General Motors Corp.

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