Detroit Free Press
AMERICA NEEDS AN OIL POLICY CHANGE
GOOD: Get smarter about CAFE
Set mileage rules with an eye on industry realities
EDITORIAL
May 13, 2007
Copyright © 2007 Detroit Free Press

Let's face it -- CAFE has been a flop. Since the corporate average fuel economy standards were imposed on the U.S. auto industry as an oil-conservation measure in 1975, U.S. oil consumption and imports have done nothing but grow. Even the onset of $3-plus gasoline has done little to slake America's thirst for oil. And every stride the auto industry takes to improve mileage seems to be taken by the driving public as permission to drive more, drive bigger and own more vehicles.

In spite of all that, some influential members of Congress, with a boost from President George W. Bush, now seem determined to jack up CAFE so they can appear to be doing something about both high gas prices, global warming and America's costly dependence on foreign oil. A bill that popped out of the Senate Commerce Committee this week would set the standard for new cars and trucks at 35 m.p.g. by 2020, meaning about a 4% annual increase in mileage over the next 13 years.

CAFE now requires 27.5 m.p.g. for passenger cars and 21.6 m.p.g. for trucks, vans and SUVs. The U.S. industry averages 29.8 m.p.g. for cars and 22.2 m.p.g. for trucks.

Now if Congress insists on using CAFE to assuage its collective guilt about this country's long lack of a comprehensive energy policy, there certainly is a smarter way to do it than by simply setting unrealistic standards in the current system and then financially flogging the auto industry for failing to meet them.

If the goal is truly saving oil, then CAFE must become more MAFE -- model average fuel economy -- with more standards reflecting not just cars and trucks but the variety of each type of vehicle, from subcompact to heavy duty, that are available today. The current standards cut unfairly against U.S. automakers that sell more of the larger vehicles and fewer compacts. That's a direct result of consumer demand, which does appear to be changing as gas prices stay high. But there also will be a continuing strong demand for trucks, which the Japanese automakers are obviously aware of as they aggressively go after a share of that market.

And the mileage standards should not be set by members of Congress based on what they'd like to see, but by experts from the National Highway Traffic and Safety Administration who, as Michigan U.S. Sen. Carl Levin puts it, "understand what can and cannot be done from a technology standpoint."

Federal mandates can, indeed, inspire innovation, but they also can be incredibly costly. If the Bush administration is right, the new mileage rules would cost the U.S. auto industry $80 billion to meet (the industry's estimates are higher) -- costs that are going to be built into the price of a vehicle on top of the $1,500 or so the industry estimates it requires for its health care expenses.

The object of CAFE should be saving oil, not further increasing the disadvantage a core American industry faces against foreign competitors.

That’s because my perspective -- and my ambitions -- are different.

I am just a simple Polish lawyer from Detroit who is trying to craft a climate change bill in a bipartisan manner that will pass the House, pass the Senate, and be signed into law by the President.

It is neither my place, nor my purpose, to provide a point-by-point rebuttal to last week’s speech. I admire Senator Obama’s enthusiasm and his desire to focus on solutions. But -- with all due respect, as the Sopranos would say – I would not travel to Chicago for the purpose of teaching people how to butcher hogs.

Detroit is an ideal place to begin a sober and serious discussion about climate change. This city was founded by an explorer named Cadillac. It was seized by a warrior named Pontiac. And it is probably best known for a visionary named Ford. These names no longer represent individual men, or single companies. They stand for an industry that has made our state and our country great.

Michigan’s auto industry – indeed, America’s auto industry – is part of a past worth celebrating. And I believe that auto manufacturers – along with other corporate leaders - can be important partners in building a future we can all look forward to.

In fact, I’m counting on their participation. Because today I face the most singularly difficult task I’ve confronted in all my years in Congress.

One of the many wise things my father once said was that, “You will never be able to turn to your neighbor and say, ‘Pardon me, but your end of the ship is sinking.’”

His point then – and my point now – is that we are all in this boat together. If we are going to survive – and, thrive - we must all start paddling in the same direction.

The day after the 2006 election, many of us began looking toward drafting climate change legislation. In the months since then, we’ve made great progress.

Since the beginning of this year, the Committee on Energy and Commerce has conducted 15 climate change hearings. We’ve heard from approximately 90 witnesses – including business leaders, environmental experts, elected officials, leading academics, and even a former Vice President.

The best, most impartial science we have has settled the debate on climate change. This is no longer an argument over whether the Earth warmed a degree last year. And, as you all know, Congress is not the only branch of government examining this issue.

Last month, the Supreme Court ruled that the U.S. government has the authority to regulate carbon dioxide emissions. In my judgment, the ruling was more reflective of political priorities than sound legal principles, but it is now a fact. I’m told that the Bush Administration’s response may be forthcoming as early as today.

Lately, I have been asked, “Dingell, how does the Court decision affect what you’re going to do in Committee?” My answer: it doesn’t change a thing. It’s time for comprehensive climate change legislation. I intended to write that legislation before the Court decision – and after. I assure you this legislation will be constructed in a bipartisan manner in which everyone has a chance to be heard. And it will be developed in an open, fair and transparent fashion.

There are two key reasons I’m optimistic about what we can achieve this year.

First, when it comes to protecting our environment, the Committee on Energy and Commerce has a solid record of accomplishment. Our Members have come together to write our most significant environmental laws: the Clean Air Act, the Safe Drinking Water Act, Superfund, and many more.

Second, both industry and environmental organizations are engaged. I’ve told both sides that they can participate in writing a bill they may not like -- or they can choose not to participate in writing a bill they will surely hate. While there is still a fair amount of posturing and positioning, I’m seeing sober and serious deliberations about what a real climate change policy should look like.

Now, deciding that we should do something is easy. Deciding what to do – that’s hard.

Although we haven’t yet assembled a detailed plan, I can tell you several things:

First, we are working to fashion an economy-wide cap-and-trade policy. Now, I realize that everyone says Europe’s cap-and-trade policy is a mess. But who says we have to emulate their mistakes? I also realize that just about every economist -- including President Bush’s former chief economist -- says that a carbon tax would be a better approach. That’s probably true. But it’s also true that many Members of Congress remember only too clearly the letters B, T and U. So cap-and-trade may be the most realistic way to reduce greenhouse gas emissions.

Second, we are going to have to address the role of coal. I’ve heard a lot of concerns about the environmental impact of coal. I’m also reminded by my friends from coal country that the US is the Saudi Arabia of coal. That’s a tension we will have to resolve. I expect a similarly vigorous discussion about the role of nuclear energy.

Third, as auto industry leaders are well-aware, every industry will have to tithe.

Which brings me to one of the subjects discussed by last week’s guest. CAFE has served an important purpose. But I think it’s time to move beyond what has become a stale and sterile debate over Corporate Average Fuel Economy standards. As the needs of the Nation, and the technology of vehicles and fuels, have evolved, it is becoming clear that regulating miles per gallon is no longer adequate.

The CAFE system has effectively served as a form of carbon cap. The auto industry today is the only industry in the country with a carbon constraint. But the light duty vehicle fleet only accounts for about 25 percent of our economy’s greenhouse gas emissions. Rather than ratchet down only on cars and light trucks, I propose that we spread the burden evenly and equally.

I would further propose that we find a more effective way to reduce both petroleum consumption and greenhouse gas emissions. Vehicles and fuels exist together as a system.

Consider this: Car A gets 35 miles per gallon burning Middle Eastern oil. Car B gets 30 miles per gallon burning a carbon neutral biofuel grown right here in the USA. Which car better serves our national goals?

With these facts in mind, we should be moving forward. We do so by going beyond CAFE. We do it by encouraging and even requiring renewable fuels, new technologies and new ways to reduce carbon dioxide emissions.

Here in Michigan, we are making some exciting strides. The University of Michigan, Michigan State University and Wayne State are all engaged in research and development work focused on developing alternative energy sources, biofuels, and other technologies. U of M has also submitted recommendations for legislation that encourages increased collaboration between policymakers, the academic community and the automotive industry.

And you may have heard about “Spartan corn” -- a new type of corn created at Michigan State that would make ethanol production more cost-effective and efficient. I am encouraged by these innovations – and by other pollution-reduction technologies being realized here in Michigan. Congress should look for ways to foster more of this work.

I also want to mention that we are going to have to address the international dimensions of climate policy -- for environmental, economic and, quite frankly, political reasons.

American labor fully supports efforts to address climate change. Labor is deeply – and understandably – concerned that if this legislation is not done correctly, it could lead to a massive outsourcing of jobs to countries that are not carbon constrained. We will need some mechanism to encourage broader international participation. Whether that is a carrot, a stick, or both, remains to be seen. But I would note that the current lack of international commitments from certain countries does not excuse inaction on our part.

Finally, the bill I hope to produce and see signed into law during this session of Congress will mark the beginning of our work on climate change -- not the end. We will have to constantly monitor our progress to ensure that we've created policies which protect our global environment while allowing American industry to remain competitive.

On these matters, I do not believe Congress should abdicate its responsibilities and delegate all authority to the Executive Branch. Nor do I believe in giving unfettered authority or discretion to any Administration or President – whoever she may be.

As with the Clean Air Act, I would like to see new provisions that place specific requirements for action on the Executive Branch. I further hope to see cooperation from the White House as we move forward.

I’ve been in Washington long enough to have learned that good legislation – the kind that is most effective and most easily approved - is written from the center. And I expect that the climate change legislation we develop this year will be no exception.

One of the nastiest jobs for any Committee chair is bringing both sides together. I’m spending a lot of time right now working to build coalitions and consensus among my colleagues.

I am also in the process of finding out who’s willing and ready to work with us and who is not. It’s becoming apparent that certain people in the environmental community may not actually want climate change legislation now, preferring to wait until 2009, when a different Administration - and, perhaps, different Congress - may be more responsive to their concerns.
There are also some in the business community who claim to want new legislation this year but are really hoping that we in Congress will get distracted and, in the end, do nothing.

But I don’t think that will be the case. Even if we can’t arrive at the perfect solution this year, I am confident we can make great progress. In fact, I’m committed to it. And those of you who know me are well aware that, when I sink my teeth into an issue, there’s no letting go.

Each year - for more than half a century now - I have introduced a bill before Congress that would provide universal access to health care coverage. And I will continue to do so until the American people have the health care they deserve. Some see this as an act of great optimism. Some see it as an act of profound stubbornness. Some probably see it as, frankly, an act of sheer foolishness. But, to me, it is simply the right thing to do.

Taking action on climate change is also the right thing to do. And I’m looking forward to following through with this.

And I’m not going to give up. Not on health care. Not on climate change. And not on any of the business leaders, community partners and environmental advocates willing to join me in this work. I hope you will be part of it. And I invite you all to be involved in developing the solutions we need. Future generations are depending on it.

Thank you for you time today. I look forward to your questions.

Prepared by the Committee on Energy and Commerce
2125 Rayburn House Office Building, Washington, DC 20515

Copyright © 2007 Detroit Free Press