Sunday, March 18, 2007

Big 3, Toyota to Congress: Emissions not just car issue

Wednesday, March 14, 2007
Big 3, Toyota to Congress: Emissions not just car issue
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- In a high-stakes appearance on Capitol Hill today, U.S. auto industry leaders aim to make two crucial points -- higher fuel economy mandates can't solve America's dependence on foreign oil and a broad array of approaches across all industries is needed to fight global warming.

A subcommittee of the House Energy and Commerce Committee will hear testimony from General Motors Corp. Chairman Rick Wagoner, Ford Motor Co. CEO Alan Mulally, Chrysler Group CEO Tom LaSorda, Toyota Motor North America President Jim Press and United Auto Workers President Ron Gettelfinger.

The rare joint appearance comes amid growing pressure on automakers to increase the fuel efficiency of vehicles.

Automakers have long detested the Corporate Average Fuel Economy system -- first adopted in 1975 in the wake of the Arab Oil Embargo -- because they say it perverts the market by forcing them to make smaller, lighter vehicles people don't want to buy.

In recent days, the automakers' top lobbyists have exchanged drafts of their respective CEOs testimony in an effort to make sure they are in lockstep on key issues. They also are preparing for a meeting with President Bush on alternative fuels expected March 26, The Detroit News has learned.

"As an industry, we have an obligation to be part of the solution, not the problem," Press will tell lawmakers, according to a copy of his testimony.

Progress to be highlighted

The CEOs are expected to highlight their companies' progress toward developing flexible fuel vehicles, hybrids and other fuel-saving technologies. They, along with Gettelfinger, also are expected to warn that steep fuel economy mandates will increase costs and job losses.

Automakers have been successful in beating back fuel economy legislation for decades.

But some allies have been dropping recently as worries about climate change and foreign oil dependency have increased.

U.S. Rep. Mike Castle, R-Del., said Tuesday he believes "the science has caught up with the politics" and automakers are capable of finally improving fuel economy.

U.S. Sen. Ted Stevens, R-Ala., also dropped his longstanding opposition to stricter fuel economy rules and filed a bill that would require automakers to average 40 miles per gallon by 2017.

In 1975, Congress ordered carmakers to boost fuel economy for passenger cars, which was at 13 miles per gallon, to 27.5 miles in 10 years. Since 1985, new engine technology that saves fuel has been offset by the fact that vehicles have become larger and more powerful. SUVs now account for about half of all vehicles.

At the same time, the number of vehicles on the roads has increased to 230 million and is expected to reach 300 million in seven years.

Since President Bush proposed raising corporate average fuel economy (CAFE) mandates by an average of 4 percent starting in September 2009 for passenger cars and September 2011 for light trucks, automakers have been girding for a fight.

The big issue is the cost of fuel economy mandates. A Dec. 13 Bush administration analysis pegs the cost of increasing fuel economy by 4 percent a year at $114 billion from 2010 to 2017, with the Detroit automakers' share at $85 billion. The pressure isn't letting up. A group of CEOs led by FedEx, Southwest Airlines and Dow Chemical along with retired generals will be on hand earlier today to push for stricter fuel economy regulations.

GM doesn't back changes

While the testimony of the CEOs is expected to be fairly similar, GM is the only automaker not to specifically support higher fuel economy mandates. Toyota seeks to play up the company's green credentials -- and even endorses "increased reliance on mass transit" as one solution.

GM spokesman Greg Martin said Wagoner hopes "we would have a frank discussion on how CAFE has failed to meet its intended goals. Any rush to increase CAFE without regard to what is technically feasible could have a devastating effect on the industry."

Said Ziad Ojakli, Ford's vice president for governmental affairs: "We want to be part of the solution, but we don't want to be the entire solution."

DaimlerChrysler CEO Dieter Zetsche said in January at the Washington Auto Show that fuel economy rules have outlived their purpose. "Trying to sell people what they don't want is not a winnable business proposition. And it is that 'anti-free market element' of CAFE that makes life difficult for us," he said. Automakers should "look to innovation, and to increasingly substituting petroleum products with biofuels," he said.

Honda, whose auto fleet is the leader in U.S. fuel economy, wasn't invited to the hearing.

The hearing comes as Europe is poised to aggressively regulate tailpipe carbon dioxide emissions, rather than miles per gallon. California has proposed reducing the carbon content of fuels by 10 percent by 2020, which would put part of the burden on highly profitable oil companies.

U.S. Rep. Ed Markey, D-Mass., introduced a bill that would achieve Bush's goal of increasing fuel economy by 4 percent into law, and then would tack on annual increases of 4 percent starting in 2018. "It is a national security imperative," Markey said.

In a recent interview, U.S. Rep. John Dingell, D-Mich., noted that some lawmakers see the automakers as devils "wearing horns and carrying pitchforks."

"We are not going to concentrate on one industry or on one part of the problem," he said. "Everyone will have to make appropriate contribution into the collection pots."

Detroit's automakers have built millions of vehicles that run on E85, a fuel made of 85 percent ethanol, but just 1,100 of nation's 170,000 pumps offer it. The automakers also get credits toward meeting fuel economy mandates, even if the E85-ready vehicles never use the fuels.

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

© Copyright 2007 The Detroit News. All rights reserved.


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