Praise for a Climate Policy in Regression?
The praise keeps pouring in for the Administration’s recent first steps toward withdrawing EPA’s objections to California's effort to implement tough emission standards for automobiles. I wrote about this earlier, pointing out that Congress needs to act quickly or get left behind.
Today’s editorial page of the Washington Post suggests that the most effective action might not be regulation at all, or at least not regulation alone -- state or federal. The editorial writers at the Post say the best way to proceed would be to “change the incentives so that people want to buy fuel-efficient vehicles; then companies will make such cars, even without commands from Washington.”
The Post is right, and here’s why: we can impose emissions restrictions on the cars Detroit produces or we can shape the demand for Detroit’s products. Emission regulations like the ones California will pursue will do the former, but a consistent and high gasoline price signal will do the latter. If it were adopted, it would likely produce real emissions reductions more quickly and efficiently. There are many ways to do this, and Congress knows all of them. But the important thing is to support gas prices at consistent and high enough levels to allow market incentives to go to work. Cap-and-trade? Perhaps. Or a gas tax? Perhaps. And rebates to the public, as the Post says, are entirely consistent with this strategy.
It’s only been six months since John McCain and Hillary Clinton called for gas tax holidays during the Presidential race. President Obama wisely refused to support those efforts. Is he willing to go even further and work for a “a gradual rise in fuel prices that would not shock the system,” as the Post put it? Is Congress willing to do the same? That would be leadership.
It would also be leadership if the auto manufacturers took the initiative, as I suggested yesterday, and softened the path for the Administration and Congress by convening key interest groups and agencies to join with them in fashioning a single omnibus vehicle performance standard. Who knows? Out of such a group might come consensus on a gradual rise to a sustained gas price level that would incentivize people to buy fuel-efficient low-GHG emissions cars.
California 1, US 0
The Obama Administration has taken the first steps toward withdrawing EPA’s objections to a California's effort to implement tough emission standards for automobiles. Could that be bad news for those hungry for federal action on transportation emissions?
At first glance, the news seems to be a win for federal leadership, since the lifting of the roadblock in Washington makes California's efforts possible. But the roadblock's removal could soon be seen as a victory for the states. And that could end up leaving Washington's aspirations to lead the regulation of emissions from cars in the dust.
For years, the Bush administration rebuffed California's effort to regulate carbon emissions from cars, officially a waiver of a Clean Air Act allowing the state to regulate greenhouse gases (GHGs) in automobiles. The automobile industry has objected strongly to state-based regulation efforts, stating that different standards in different states are confusing and expensive. In practice, state standard-making forces the industry to design cars to meet all standards, which means the decision is up to the strictest state with a market that the autos can't ignore. Enter the California Air Resources Board.
If Congressional action doesn't follow an Obama decision in due course, we'll all be looking to the states led by bellwether California for emission standards for the auto industry. And how might the auto manufacturers best proceed to get the best deal from Congress in the Obama era? Consensus solutions and public-private collaboration to break policy deadlock are the new watchwords. The auto manufacturers might take a page from the many highly diverse multi-stakeholder groups that have sprung up recently to address everything from climate legislation to chemical testing and production.
The manufacturers might be well advised at this point to ask key state and federal agencies, labor unions, fleet purchasers, non-governmental environmental and consumer organizations, and other potential legislative “deal-breakers” to join with them in fashioning a single omnibus vehicle performance standard for mileage, emissions, air-conditioning refrigerant, electrification, and other green elements. This might be the best path to a uniform federal approach to autos in climate legislation.
Greening the Detroit Bailout
Detroit’s request for a bailout presents the Obama administration with an opportunity to “put its money where its mouth is.” President-elect Obama’s pledge to advance the dual goals of energy independence and reducing greenhouse gas (GHG) emissions can be advanced by imposing the following condition on the Detroit bailout: insist that Detroit commit to development of plug-in electric hybrid cars.
As Thomas Friedman notes in his outstanding new book Hot, Flat and Crowded, electric plug-in hybrid cars “have the potential to make a huge impact on lowering energy demand, promoting renewable energy and reducing carbon emissions.” (You can add making Detroit competitive to the list of reasons for moving toward plug-in hybrid cars.)
Friedman’s argument is impregnable. Approximately 30 percent of GHG emissions come from the transportation sector, so weaning our vehicles off gasoline could make a big difference. Conceptually, plug-in hybrids would be all-electric; that is, they would be powered entirely by electricity from the grid. Thus, converting to plug-in hybrids would dramatically shift the US away from dependence on foreign oil.
You may ask: Given that 50 percent of the electricity on our grid is derived from coal, and given that plug-in hybrids simply utilize electricity from the grid, why would plug-in hybrids reduce GHG emissions? The answer: electricity coming from coal translates to less GHG emission than gasoline! According to Friedman:
That’s right -- it is cleaner and greener, as well as being much cheaper, to generate electricity even from coal and convert that electricity into the motive force necessary to propel your car than to combust gasoline in the vehicle’s internal combustion engine. The reason is that, from well to wheels, an electricity-powered system has far fewer energy losses along the way than a gasoline-fueled system, when you include all the losses in the gasoline system from oil extraction, transportation, refining and distribution of the gas -- plus the lower efficiency of an internal combustion engine.
Hot Flat & Crowded, at 291.
But why should Obama commingle the goals of the Detroit bailout (i.e., survival of the US auto industry and the 3 million jobs that depend on it) with the goals of energy independence and reducing GHG emissions? Because they intersect: Plug-in hybrids offer Detroit an opportunity to regain its competitive edge over foreign imports. Based on the success of Toyota’s Prius in the US, plug-in hybrids are likely to appeal to the increasingly green-leaning Americans. In addition to demonstrating their environmental creds, plug-in hybrid purchasers will be demonstrating their patriotism by buying US products and freeing us from addition to foreign oil. Finally, pushing the development of plug-in hybrids advances the goal of creating those “green jobs” we keep hearing about, and creating them in Michigan where unemployment currently hovers at 9 percent.
