And that’s why NRDC applauds today’s announcement by Governor Schwarzenegger of California and Governor Ritter of Colorado of their support for a AAM campaign called “EcoDriving”.This public education campaign aims to teaches drivers how to conserve fuel by accelerating slower, keeping their tires inflated and other changes, that can cut fuel consumption by up to 15 percent. While a cynic might call this automaker greenwashing, it’s also true that better driving habits can cut demand for gasoline which in turn acts to cool down oil prices.
On the other hand, we know more drilling isn’t the solution. The Energy Information Administration, the statistics branch of the U.S. Department of Energy, estimated last year that opening the coasts to offshore drilling would not have a significant impact on oil prices before 2030. The number of new offshore drilling permits has tripled since 2001– and yet we’re also paying triple what we were in 2001.
What the market has shown is that reducing demand can have an immediate impact on lower oil prices. Oil prices peaked in early July at over $145 a barrel and now are at about $113. It is well accepted that this 22% drop is caused primarily by softening global demand which, as discussed in my colleagues blog, has been driven largely by reduced U.S. gasoline consumption.
In fact as chronicled in my colleagues blog, over the first 7 months of 2008 compared to the same period last year, the U.S. as a whole reduced it’s consumption by an astonishing 860,000 barrels per day, roughly 4.2%. Americans have cut back on gasoline consumption in the face of higher fuel prices, and programs like EcoDriving can likely help us save even more.
There is good evidence from Europe, where nine countries have EcoDriving programs, that better driving habits can reduce gasoline consumption. Tests indicate that if drivers practice EcoDriving techniques, they can reduce consumption by roughly 5 to 10%. Less clear is how many drivers have actually changed their habits because of the campaign and if they have, how long their EcoDriving behavior lasts. Effectiveness in the U.S. will largely depend upon the advertising resources that the auto industry and the government put into the campaign.
Because of these limitations, it is clear that EcoDriving type programs will never fully replace the need for stricter fuel economy or CO2 standards, especially since we need much deeper cuts in CO2 emissions to solve global warming and break our dependence on oil. But reducing demand, assisted by programs like EcoDriving, stricter standards and other measures, must be front and center for any credible policy response to cooling down oil prices.
]]>Their situation was predictable. In fact just 3 years ago, I co-wrote a report called In the Tank: How Oil Prices Threaten Automakers’ Profits and Jobs that showed that Detroit Big 3 profits would take the brunt of higher oil prices, if they continued to be in state of denial. Perhaps equally predictable was the reaction of the Detroit Big 3 executives which was to dismiss our results as alarmist. I would like to be able to say that I had profound insight into the world oil markets and regulatory trends that was unavailable to the Big 3, but I didn’t. All the information I used was available to the Detroit Big 3 CEOs, if they chose to look for it and think critically about the world outside of their own industry’s echo chamber.
In another blog, I will list the eerily accurate predictions we made in 2003. But most importantly at this point, the question is: Are the Detroit Big 3 on the right path to cope with the new reality of the marketplace and global warming regulations?
Rich Wagoner’s triage plan for saving GM does not go far enough because Detroit’s problems run deeper than simple band-aid fix. CEOs for Detroit’s Big 3 must embrace, not fight, new global warming legislation at the federal level and auto global warming pollution standards at the state level. CEOs must reframe their perspective from viewing regulations as a threat to see what the truly are, an opportunity. Here’s specifically what they must do:
Retooling incentives along with clear, long-term performance targets for their industry will allow Detroit to do what it should have been doing over the past two decades: planning for, investing in, and building products that recognize the real world, and not based on a state of denial.
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Today’s gas prices are high because oil companies, auto companies and politicians have not stepped up to provide Americans with real, sensible transportation choices to cut our demand for oil. The solutions are clear: more fuel efficient cars; clean, alternative fuels; and smarter growth to reduce the amount we drive. Wasting less oil means lower fuel bills and exerts downward pressure on global oil prices.
Because we can’t solve global warming without wasting less oil, the Climate Security Act is also an energy security bill. The Climate Security Act will cut oil imports, promote fuel efficient cars, and require oil companies to start selling cleaner fuels, like electricity for plug-in hybrids.
Our analysis clearly shows that with the Climate Security Act we can cut global warming pollution and have lower fuel bills compared to today’s costs. We estimate that annual household transportation fuel bills in 2020 and 2030 are likely to be $530 to $590 lower than 2007 levels even though Climate Security Act will require oil companies to hold carbon emission allowances for the fuel they produce. Higher fuel efficiency and greater use of electricity to power cars reduce the demand for gasoline and outweigh the increase in gasoline prices due to carbon emission allowances. As shown in Table ES1, household fuel bills are 16 percent less in 2020 and 18 percent less in 2030, resulting in an annual savings of $530 to $590. Our analysis uses the US Department of Energy’s estimate for fuel costs under the Climate Security Act.
Table ES1. Household Fuel Expenditures in 2020 and 2030 with the Climate Security Act
| 2007 | 2020 | 2030 | |
| Transportation fuel expenditures, 2006 $/household per year | $ 3,220 | $ 2,690 | $ 2,630 |
| Change in expenditures from 2007 | n/a | -16% | -18% |
| Savings, 2006 $/household | n/a | $530 | $590 |
Even if base gasoline prices do not decline from 2007 levels, household fuel bills are still estimated to be lower. To demonstrate this, we develop an alternative scenario where the base gasoline prices do not decline from 2007 level and retail fuel prices rise when carbon allowance costs are included. As shown in Table ES2, we estimate households still save $230 to $390 in 2020 and 2030, despite the increase in retail fuel prices.
Table ES2. Household Fuel Expenditures in 2020 and 2030 with the Climate Security Act Assuming Constant 2007 Gasoline Prices ($2.77 per gallon)
| 2007 | 2020 | 2030 | |
| Transportation fuel expenditures, 2006 $/household per year | $ 3,220 | $ 2,990 | $ 2,830 |
| Change in expenditures from 2007 | n/a | -7% | -12% |
| Savings, 2006 $/household | n/a | $230 | $390 |
As demonstrated by our analysis, we can solve global warming, reduce our dependency on oil, and have lower gas bills with the Climate Security Act. For too long oil companies have been part of the problem; the Climate Security Act will force them to be part of the solution.
]]>Although only 46, Alex made an enormous contribution to the field of environmental policy in a relatively short period of time. He was a key thinker on a number of critical issues, including biofuels and regulatory impacts of innovation. NRDC in particular will miss his invaluable contributions in the area of design of California’s Low Carbon Fuel Standard, and as a member along with NRDC trustee Bob Epstein of the Environmental Technology Advancement Committee for the California Air Resources Board.
Alex will be well remembered by all of those staff at NRDC that had the good fortune to work with him over the years. It is hard to imagine how the community will be able to replace his keen intellect and insightful contributions to our understanding of some of our most challenging environmental problems. We are, however, able to gain some comfort in the knowledge that his intellectual-- and humanitarian--contributions will continue to live on in the form of the inspiration that he has provided to his students and many others who had the opportunity to work with him.
]]>Perhaps this was the question on minds of the Board members when the California Air Resources Board (“Air Board”) voted last Thursday (3/27) to change its landmark Zero Emissions Vehicle (ZEV) program. Originally conceived of in 1990, the California ZEV program has morphed over time from just an electric car mandate to incorporate a broad spectrum of clean, advanced technology vehicles, such as hybrids. 2008 required another tune up based on the opinion of the Air Board’s own independent technology review panel which said that fuel cells cars are not ready for mass commercialization.
But the Air Board adroitly recognized that reducing the number of fuel cell cars does not necessarily mean weakening the program. While they reduced the number of fuel cell vehicles required from 25,000 to 7500 in the 2012 to 2014 period, for every fuel cell vehicle reduced, they required automakers to produce over three times more plug-in hybrid vehicles. That is, they reduced the fuel cell requirement by 17,500 cars, but strengthened the program by requiring 58,000 plug-in hybrids. That’s a net gain of 40,500 zero emission technology cars on the road. And since over a dozen other states either have the California Low Emission and ZEV programs or are in the process of adopting them, these numbers could be multiplied by a factor three for the nation as a whole.
While it’s true that plug-in hybrids are not truly zero emissions, they will also be affordable and have broad market appeal. This makes them very attractive to consumers which in turn means more clean vehicles on the road. More clean vehicles on the road means less smog emissions, global warming pollution, and oil consumption. Assuming that using hydrogen or electricity to replace gasoline gets from 50 to 80 percent greenhouse gas reductions and plug-in hybrid reduces emissions by 40 to 50 percent, then the change actually produces 70 to 340 percent more global warming pollution reductions across the fleet. This is about 70,000 to 150,000 additional metric tons of carbon dioxide in 2014 alone.
Our joint analysis clearly shows that plug in hybrid vehicles coupled with a cleaner electricity grid can be a key part of our strategy to cut global warming pollution by 80 percent by 2050, the level which scientists tell us is necessary to avert dangerous global warming. Scientists also tell us we can’t wait any longer to start reducing global warming pollution. That means we can’t wait for the perfect solution. We have to get as many zero emission technology vehicles on the road as soon as possible. That’s why plug in hybrids, which face no infrastructure hurdle and just one technical challenge (a reliable affordable battery), is one of our best hopes in the next decade for a massive scale up of clean vehicle technologies.
Zero means zero. Those are important words. But equally important are the facts. More clean vehicles mean less pollution. To meet California’s ambitious global warming targets, California needs to match its strong words with the right actions. By requiring plug-in hybrids, the Air Board has done just that.
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But one argument is conspicuous by its absence. When Administrator Johnson originally announced his waiver denial decision last December, he claimed that the California’s program is less effective at cutting global warming pollution than the new federal fuel economy standards. That’s flat wrong, and the California Air Resources Board (CARB), NRDC, and the New York Times called him on it.
CARB has continued to refine its analysis. The latest CARB analysis released on February 25th finds that on a cumulative basis, the California clean cars program provides the citizens of California twice as much greenhouse house gas benefits by 2020 as the federal fuel economy standards, for a total of 79 million metric tons of additional CO2 reductions. When the 12 additional states that have California’s program in regulation now are included, the additional cumulative CO2 benefits rise to 204 million metric tons, 89% higher more than the federal fuel economy standards.
These national benefits will increase when the five states that are in the process of adopting the California standards finalize their regulations. The benefits of the California program are slightly lower in states outside of California because others states have more light trucks which are held to a less stringent pollution standard in the California program.
The reason the California is better for reducing global warming pollution is simple: California standards are more stringent than the federal fuel economy standards. The federal 35 mpg fuel economy standard in 2020 reduces CO2 emissions from the average new vehicles by just over 30% from today’s vehicles. But the average California new vehicle would be 43% cleaner than today’s vehicle under the Clean Car program. And according to another CARB analysis at $3.00/gallon gasoline (looking like a bargain now), a California Clean Car will save its driver more than $8,000 over a 200,000 mile lifetime, more than enough to offset the estimated $955 increase in cost from today’s car.
Administrator Johnson can no longer hide behind the excuse that the California clean car standards are less effective than the federal fuel economy standards at cutting global warming pollution. That’s an open and shut case.
]]>It's important to understand that not all biofuels are created equal. Just like electricity can be produced from dirty sources like coal or clean sources like photovoltaics, biofuels too can be made in dramatically different fashions. Biofuels that are grown on crop-land in an unsustainable manner have much greater environmental challenges than, say, those made from other sources, such as some agricultural and municipal wastes. These sources, with the proper safeguards, can be much better for the environment because they do not compete with agricultural land, thereby avoiding the the carbon debt associated with land conversion. The problem is that without the right rules established by the government, the market will choose what is currently easier and cheaper to produce (and unfortunately less sustainable).
There are two critical activities occurring now that can steer biofuels in the right direction. Nathanael blogged about the critical importance of the federal government, in this case specifically the US EPA, to implement the Renewable Fuel Standard with the proper greenhouse gas standards and environmental safeguards.
At least equally as important is for California to move expeditiously and intelligently forward on its proposed new regulation, the world’s first Low Carbon Fuel Standard. Biofuels will happen with or without California's regulations, but California can be a key factor in determining what kind of biofuels we get. Just like it has catalyzed the development of a whole host of cleaner technologies, such as 3-way catalytic converters and low sulfur gasoline, California has the opportunity to catalyze the development of "green" biofuels. To do so, it is clear California must include the impacts of direct and indirect land use conversion in its lifecycle accounting, as well as put into place any other environmental safeguards that are needed.
For the last four decades, California has played a leadership role when it comes to setting pollution standards that are scientifically sound, as well as environmentally sensible and necessary, even in the face of stiff industry opposition. With adoption of a strong Low Carbon Fuel Standard, California can once again reprise its role as an environmental leader.
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Let's say plug-ins become the dominant technology in 2030. The problem is that every year 17 million cars and light trucks are sold in the U.S. and each one of them will be responsible for 75 tons of global warming pollution over its lifetime. And CO2 pollution hangs in the atmosphere for about 200 years. We simply can’t wait two or three decades to start taking carbon out of cars to solve global warming.
Maintaining a healthy, vibrant auto industry is critical to financing the investment in new, clean technologies that will be necessary to solve global warming. GM’s ability to be a leader, not a follower, in a green market is highly in doubt if they continue to have an internal disconnect between public policy, product planning, and their engineers. How can GM unleash their engineering prowess necessary to be fuel economy leaders if their lobbyists fear if they commit doing such, Congress will make it a requirement? How can engineers secure the necessary resources to aggressively seek fuel economy improvements on every vehicle when their lobbyists tell them their official position is “it can’t be done”? (For more on this, read this commentary from the University of Michigan's Walter McManus.)
Here’s a wild idea. Why doesn’t GM step up to the plate and challenge the best of the foreign manufacturers on being truly green? Make a truly high volume product (lightweight hybrid?) to compete and beat the Prius on every environmental dimension? Why not turn Saturn into a full Green Line division? Every Saturn a hybrid or at least with a stop start system to turn engine off at idle.
It all starts with GM's lobbyists calling a truce on the losing battles they have been waging in Congress against CAFE standards and in court against the California Clean Car programs. Science, politics and the law are on the side of solving global warming. It’s time for GM to get its internal house in order on a truly green strategy and fight to regain their leadership in a world gone green.