Fiona Harvey How the car industry learnt to love vehicle efficiency standards

Efficiency standards for vehicles are not controversial in most developed, and an increasing number of developing, countries.

In the US, however, raising efficiency standards has been difficult. President George W Bush’s administration had little interest in the issue, and vehicle manufacturers lobbied against higher standards for years. They were worried that such a move would put them at a disadvantage compared with foreign manufacturers, which tended to make more efficient cars.

The US automotive industry has in fact entered into extensive litigation in many states, such as California which has proposed stringent improvements to efficiency. They have challenged in courts across the US the right of states to put in place “clean cars” programmes. And they have spent many more millions in lobbying against higher standards in Washington.

The car makers, requiring a huge injection of public cash to stay alive, are suddenly compliant. The US automotive industry welcomed President Obama’s proposals on emissions standards with open arms. There was no talk of competitive disadvantage, no threat of attempts to challenge the rules – instead a humble promise to meet the new standards.

What a difference the threat of bankruptcy makes.

Under the new rules, new passenger cars sold in the U.S. would have to meet an average mileage requirement of 39 miles per gallon by 2016. Light trucks would have to deliver an average of 30 mpg. That would bring the overall average of cars and light trucks on U.S. roads to 35.5 mpg by 2016, four years earlier than current federal law requires.

The White House estimates the new federal car standards, to be implemented in model years 2012-2016, will reduce greenhouse gases by 900 million metric tonnes, comparable to removing 177 million cars from the road or retiring 194 coal-fired power plants.

That would be a 5 per cent annual improvement in fuel economy from today’s fleet average of 25.1mpg, to 35.5 mpg in 2016.

Environmental groups took care not to crow too much. They welcomed the conversion of the automotive companies to green aims.

“The White House forged a new agreement by bringing together broad bipartisan geopolitical interests,” said Fred Krupp, president of Environmental Defense Fund, a green campaigning group. “By finding common ground with midwestern auto makers, heartland labour interests, coastal governors, and environmentalists, the White House and Congressional leaders are bringing diverse interests together, adding momentum to the drive for comprehensive climate legislation.”

One question – if governments around the world are as keen as they profess to be to tackle global warming, and are intent on pouring trillions of taxpayers’ money into companies’ coffers, then why are we not seeing more governments act like the US and bring green standards to bear on the sectors that benefit from the bail-outs?

Take the UK: the government’s car scrappage scheme contains no green stipulations, so consumers can trade in their old cars for new cars with higher greenhouse gas emissions, if they like. In fact, the UK Treasury admits that the scheme is unlikely to result in lower emissions and will probably result in higher greenhouse gas levels.

It looks like some countries have missed a real opportunity for change – unlike the US.

Related links:

Obama unveils fuel efficiency alliance (FT, 19/05/09)