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No More “NADA”: Carmakers should meet California’s global warming standards nationwide

Roland Hwang

Posted January 24, 2009

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All signs are that the Obama Administration is planning to give California the long-delayed waiver to implement its ground-breaking global warming standards for new motor vehicles. At her confirmation hearing, the new EPA Administrator, Lisa Jackson, promised to "immediately reconsider the waiver". California started the ball rolling last week when it formally asked EPA and President Obama to reverse the Bush Administration's waiver denial of last year.

These days, the main objection you hear from carmakers and their dealer allies is that the waiver would create a "patchwork" of state-by-state regulations.  Thirteen other states and the District of Columbia have adopted the California program, and four more states are in the process.  Together, they represent almost half of the nation's vehicle population. The latest "patchwork" complaint comes in a new report by the National Automobile Dealers Association - affectionately known as "NADA." 

The automakers and dealers contend they'd have to meet the California average separately in each jurisdiction (true), and that this would be a big burden (not true).

In any case, the automakers have in their own control a simple, obvious solution to this alleged problem: they can agree to implement California's global warming standards nationwide.

The top three reasons that the carmakers should adopt this common sense solution are:

Reason #1: They can do it. GM and Ford have effectively conceded that they can meet the California standards on a nationwide basis. In a recent report, I showed that the fuel economy improvements in the business plans that GM and Ford submitted to Congress last December will allow them to comply with nationwide version of California's global warming standards. And if GM and Ford can do it, certainly Honda, Toyota, and other automakers can. A recent New York Times editorial that cited my analysis framed it perfectly: "Now they say they can do it".

Reason #2: Build trust and credibility with a skeptical public and Congress. Trust and credibility are now Detroit's most valuable currency in Washington D.C. One of the big issues in last year's bailout battle was whether companies fighting the states' cleaner-car standards should get federal taxpayer help.  The carmakers almost surely will ask Congress for billions more bailout money this year, perhaps as early as March.  Imagine if, instead of resisting new standards, they embraced making the dramatically cleaner, more fuel efficient vehicles we need in a world of volatile oil markets and intensifying global warming?  Hiding behind surrogates such as NADA will not help revive Detroit's credibility. 

Reason #3: It's the key to their own survival. Ironically for the automakers, the very regulations they used to claim were their death knell will actually force them to be more competitive in the future. Does anybody in Detroit believe that oil prices won't head back up? Does anyone believe concerns about global warming will go away?  The events of 2008 have dramatically demonstrated the dangers of over-dependence on gas guzzlers. California's global warming standards have the virtuous co-benefit of saving money at the pump and cutting our national dependence on foreign oil.  Another study I did (cited in Thomas Friedman's new book, Hot Flat Crowded,) shows that regulation spurs innovation and innovation is key to competiveness.

Now is the time to rebuild trust:  No more NADA.  Carmakers should agree to implement California's global warming standards nationwide.

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Jim Bullis, Miastrada Co.Jan 25 2009 03:23 PM

Where can we read said California's Standards for Global Warming?

Hi Jim:
The best source of information is the California Air Resources Board webpage:

The program is a performance-based, technology neutral greenhouse gas emission standard for new cars and light trucks. Automakers have complete flexibilty in what technologies and fuels they wish to deploy to meet the standards. By model year 2016, new passenger vehicles will have to be 30 percent lower emitting for greenhouse gases than otherwise.

Jim Bullis, Miastrada Co.Jan 25 2009 04:05 PM

I asked the question above as a first step to try to reduce confusion about global warming. Any sane discussion needs to begin with numbers.

Jumping ahead though, it is possible to show some examples of how things can work out wrongly.

First, though the hybrid according to the Prius standard is a clear improvement for about $5000 (Nova), it is erroneous to say that making these into plug-ins by adding batteries at an additional cost of about $10,000 is a further improvement. If the electricity comes from coal it will actually cause more CO2 emissions (EPRI study funded by NRDC). If the electricity comes from natural gas it will modestly reduce CO2 emissions, though is this the best way to spend $10,000?

Now California law comes into the act by preventing much of the previous generation of electricity by coal plants. This would make the plug-in somewhat better, but would this be worth the cost of increased rates for electricity?

The ultimate irony is that things look not so bad for California electricity rates right now, but this is an illusion since that condition would be up in smoke if the rest of the country forced coal out of the picture for electricity generation. Why? you might ask. The answer is that this exclusion of coal will put a huge demand increase for natural gas into the picture, and that fuel is seriously limited. Then California will see electricity become seriously unaffordable for many. This is the kind of thing that will get the governor, then sitting, recalled.

I keep hoping for solar costs to get to a point where it makes sense for me. I also look for wind to come into the picture. But hold on about wind. Why are the existing wind machines in the windiest place in California (the Altamont Pass) mostly standing idle? That question never seems to get answered.

Jim Bullis, Miastrada Co.Jan 26 2009 10:47 PM

Thanks Roland for directing my focus on the bigger picture.

In regard to California standards for vehicles, as described through the link you provided, the technology neutral standards are entirely appropriate.

Uh, well maybe they are not nearly strict enough.

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