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Analysts Mull White House’s New Vehicle Emissions Standards

May 19, 2009 at 6:20 PM EST
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The Obama administration's new vehicle emissions standards would increase the fuel economy of automobiles to a minimum of 35.5 mpg by 2016. Analysts mull the plan's costs and benefits and assess the challenges ahead for the auto industry.
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TRANSCRIPT

GWEN IFILL: Today’s announcement appeared to mark a rare meeting of the minds from parties usually at opposite ends of the table, but there are still plenty of loose ends to come.

We explore that with Dave McCurdy, president of the Alliance for Automobile Manufacturers, which represents 11 domestic and overseas carmakers, and Daniel Becker, the founder of the Safe Climate Campaign, an advocacy group. He’s been working on global warming issues for nearly two decades.

So here you sit at the same table in agreement. Let’s talk about this agreement.

But, first of all, how much, Mr. McCurdy, will it affect someone who goes out to buy a car? I read somewhere today that this agreement will add $600 to the cost of a car; I read somewhere else today that it would add $1,300 at a minimum to the cost of a car. Which is it?

DAVE MCCURDY, Alliance of Automobile Manufacturers: Well, government figures are an average of $1,300 per car, again, over the life of this program. So any advanced technology, any new technology is going to cost more.

And the key here, though, is that we expect fuel prices to increase over time. And if consumers purchase a fuel-efficient vehicle, they do improve savings for them, improves their cost at the pump, but this does cost automakers up front.

GWEN IFILL: And how is it that they suddenly agreed to this? This becomes, I guess, the obvious question, which is, if this has been on the table for years, this discussion about higher fuel efficiency, why now?

DAVE MCCURDY: It was a unique opportunity. It was convergence of concerns about climate and energy security, but there was a new administration and I think a president who is talking about providing solutions.

We approached the administration and said, “We think there’s an opportunity here, and we’d like to see an Obama national approach.” They seized that. They created the table. They pulled people together. And it took a lot of work.

In your segment with Carol Browner was absolutely correct. She deserves a lot of credit, as does the president and her team, to really pulled people together to find an outcome.

Moving quickly to make progress

Daniel Becker
Safe Climate Campaign
We have the technology to implement this agreement and then some, but we need to begin to move very quickly, if we're going to make real progress.

GWEN IFILL: OK, Mr. Becker, you've been trying to get to something approaching this outcome for some time. What in your point of view was different? Could it have been that the automakers were in a weaker position?

DANIEL BECKER, Safe Climate Campaign: The automakers are weaker. They've run out of rope. The Congress won't listen to them anymore. The Supreme Court told the government to get with it and create standards like these. And the president finally pulled the plug and said, "All right, we're going to get you guys together and we're going to make this progress."

This could have happened 20 years ago, but the auto companies fought it year after year, but it's a little bit like painting a bridge. By the time you finish painting the bridge, it's time to start at the other end.

And now it's time to thank the administration for the great work that they've done and implement this agreement, but it's also time to begin to plan the next phase, which is, after 2016, we need to have tougher standards so that we can actually break our addiction to oil and begin to look at and drive new vehicles with new technology and get rid of the internal combustion engine.

GWEN IFILL: You're already moving -- you're already ahead of today's agreement on to the next thing?

DANIEL BECKER: Well, what we've learned is, if we just wait for the industry to do it themselves, it won't happen. And we have the technology to implement this agreement and then some, but we need to begin to move very quickly, if we're going to make real progress.

California ahead of curve

Dave McCurdy
Alliance of Automobile Manufacturers
The important thing is that the administration was able to bring together not only automakers, but the different agencies and the states said, "We need to harmonize this."

GWEN IFILL: How does this affect states like California, which were ahead of the curve on this? They had already decided -- asked the government for a waiver to impose their own stiffer regulations, and now comes along this plan. Does California just step back now?

DAVE MCCURDY: They accept the national program because the stringency will be there. They will be able to count the greenhouse gas reductions. When you increase fuel economy by 30 percent, you have a commensurate reduction in greenhouse gases.

And we're not here to debate. And there's revisionist history here. But I will tell you, we supported the energy bill two years ago, which increased standards by 40 percent. That was historic. We now are accelerating that timeline from 2020 to 2016. We actually initiated this with the administration in working with them.

So it's a very positive thing. And the important thing is that the administration was able to bring together not only automakers, but the different agencies and the states said, "We need to harmonize this." And then they reached out to the environmental community and said, "Look, we all share the same goal, and that is reducing greenhouse gases and improving fuel economy."

DANIEL BECKER: There's another very important piece of California's power. They're going to begin this program by regulating for the next two to three years while this agreement begins to be implemented. And, very importantly, they have preserved their power to regulate at the end.

Because California is really the engine that has made this effort move. Whenever it's come to cars, California has been the first out of the gate. And their ability to set the 2002 30 percent reduction in global warming emissions was the thing that the president has now nationalized, but had they not done that, we wouldn't be here today. So California must preserve its ability to move forward in the future.

Consumer incentives

Daniel Becker
Safe Climate Campaign
The reality is that the industry has the capability to do this. They've got the technology. They need to take it off the shelf and put it onto the cars.

GWEN IFILL: OK, another question from the consumer's point of view. If I want to go out and buy a car that meets these standards, is the industry prepared to produce enough of these cars? Does it have that technology? And if the industry did have that technology, does that mean we're all going to be driving hybrids or Smart cars?

DAVE MCCURDY: Well, Gwen, first of all, it doesn't matter how many cars you make. It matters how many cars they buy, the consumers buy. When we had $4 gas...

GWEN IFILL: That's how this efficiency is measured?

DAVE MCCURDY: That's how it's measured, correct. And when we had $4 gas, we couldn't make enough hybrids or fuel-efficient small vehicles. But now that gas is at $2, then we see lots full of these.

So it takes a combination. And I think, in this case, it's going to take some incentives. Government has provided incentives for tax credits for hybrid purchases.

GWEN IFILL: I heard Carol Browner not answer that question when Judy asked her about that.

DAVE MCCURDY: Well, it may be proven true for that, but they are supporting cash for clunkers, which is a fleet modernization bill that worked in Germany, increased sales by 22 percent, and improved fuel efficiency, and got old gas-guzzlers off the road, and replaced them with newer vehicles.

You know, you were talking about a weakened industry. It's weakened because we have a credit crunch; we had a financial collapse; we have a recession; people lost value in their home. And the autos are the second-largest purchase that a consumer makes.

We have to restore that confidence there. And that's what the government has to do. What we have to do is produce technology, continue to make cars that people want to buy.

I represent an industry that's global in nature, and so it's not just Detroit. It's Japanese manufacturers and German manufacturers, Europeans that all came together. They stood with the president today because they signaled that this was an historic event and a new beginning.

GWEN IFILL: Mr. Becker, is the car industry ready to do this?

DANIEL BECKER: I hope so.

GWEN IFILL: Capable?

DANIEL BECKER: They are certainly capable. This is auto mechanics, not rocket science. G.M., Chrysler, Ford, and all the rest can do this. The question is whether they will.

And, yes, of course, it depends upon what consumers buy, but if you don't make it, they can't buy it. And until 10 years after Toyota made the first hybrid in Japan, G.M. didn't make any hybrids in this country.

And the reality is that the industry has the capability to do this. They've got the technology. They need to take it off the shelf and put it onto the cars.

A 'new day' for automakers

Dave McCurdy
Alliance of Automobile Manufacturers
The important thing today was that it signaled a new beginning and is, I think, an era where we're going to work constructively with government. We'll have a single standard. We eliminate these conflicting rules and regulations.

GWEN IFILL: Let me ask you something. Mr. McCurdy just said that, now that gas prices are low, you see a lot of these fuel-efficient vehicles sitting on lots. What happens if gas prices stay low? Should there be a gas tax or something to drive the price up in order to maybe get some of these cars off the lot? Because if people don't want to buy them, it won't matter how...

DANIEL BECKER: Sure. First of all, we're seeing everything sitting on the lot. And when this cash for clunkers program was proposed to incentivize the purchase of the most efficient vehicles, the auto companies came in and said, "No, no, no, we really want it to move the new clunkers that we're making," the giant gas hogs.

So what we need to do is a combination of create some fair incentives to move the most efficient vehicles that are good for our society, because, remember now, the auto companies work for us. We own them.

And they need to recognize that they've got the technology to move forward. The cost for consumers is relatively modest as long as you can count the savings at the gas pump.

So this is a good deal for consumers. We will save more at the pump than it costs to buy the better technology in the vehicle upfront.

GWEN IFILL: A final question, briefly to both of you, what happens now? I mean, how quickly will this actually be affecting people? Can they go out and buy a car tomorrow and all of a sudden realize...

DAVE MCCURDY: Well, there are 130 models on the market today that get more than 30 miles per gallon. There are over 27 different models of hybrids. There's advanced diesel, which is 30 percent more fuel-efficient. There are vehicles there.

And, actually, it's a great time for consumers to buy cars. And there are hybrids. I have a hybrid. But, you know, it costs $5,000 more than the exact version that's not hybrid.

So, you know, gas prices do make a difference, but I think, again, the important thing today was that it signaled a new beginning and is, I think, an era where we're going to work constructively with government. We'll have a single standard. We eliminate these conflicting rules and regulations. And I think we're going to see strong leadership from the administration.

DANIEL BECKER: I really do hope it's a new day for the auto industry, because they need to make clean cars to survive, and we need for them to make clean cars to survive, because it's the atmosphere that is being poisoned, and our addiction to oil causes a lot of trouble for us. So hopefully it's a new day and maybe we can work together now.

GWEN IFILL: A new day. Dan Becker, Dave McCurdy, thank you both very much.

DANIEL BECKER: Thank you.

DAVE MCCURDY: Thank you, Gwen.