It's Getting Hot in Here: The High-Stakes Debate Over Fuel Economy and Climate Standards

(MoneyWatch)  Sometimes you have to read between the lines of public hearing testimony, and that's never truer than in the high-stakes negotiations over fuel-economy and climate standards.

Automotive Corporate Average Fuel Economy (CAFE) standards have been notoriously stagnant, barely changing for 20 years. But in May, automakers, the Obama administration and California's regulators agreed to an historic compromise that would require cars and trucks to reach 35.5 mpg by 2016. The agreement covers both reducing U.S. foreign oil dependence (we currently import more than half of what we use) and global warming, since 35.5 mpg also means cars will be held to 250 grams per mile of carbon dioxide.

The forthcoming standards, from the Environmental Protection Agency and the Department of Transportation's National Highway Safety Administration (NHTSA) are subject to public comment, and hearings are underway. The first session was held in Detroit yesterday, and the second (which I will be attending) is in New York tomorrow. A final hearing is October 27 in Los Angeles.

The Alliance of Automobile Manufacturers, representing 11 automakers (including all three American ones) sent vice president Julie Becker up to bat in Detroit. Unlike the National Automobile Dealers Association (which joined with the U.S. Chamber of Commerce in a lawsuit against California's greenhouse regulations), AAM is generally supportive of the EPA agreement because it presents a single national standard instead of a "patchwork" of state and federal laws with different requirements.

The auto industry, Becker said, "has done more to reduce greenhouse gas emissions than any other sector of the U.S. economy." The new CAFE standards, she said, would save 62 billion gallons of fuel and cut 656 million metric tons of carbon dioxide during the useful life of cars sold during the agreement (2012-2016).

Now here's the sticky part. Becker said the standards should be "designed in a way that challenges all manufacturers fairly by including appropriate implementation and compliance flexibilities without affecting overall greenhouse gas reductions."

Dan Becker (no relation to Julie), director of the Safe Climate Campaign at the Center for Auto Safety, was a formidable campaigner for clean car laws during his tenure at the Sierra Club, and has continued the work in his current post. The other Becker's testimony, he said, is a reference to "the many loopholes they have been lobbying for. They are pushing to be allowed to make vehicles that guzzle and pollute more if they make a few that run on electricity or many that could theoretically run on ethanol or if they fix the leaks of air conditioner coolant. Luxury manufacturers want more time to comply. Why can't these guys just comply with the law rather than wheedle the government to dodge it?"

Charles Territo, a spokesman for the Alliance, denies any attempt to weaken the regulations. Manufacturers earning credits for air-conditioning improvements was proposed by the state of California, he said, and credits for ethanol vehicles was a program created by Congress that will no longer be available after 2016. "Ultimately, this flexibility is what gave automakers the confidence that they could meet a 40 percent increase in fuel economy standards in such a short period of time," Territo said. "We are ready to film the movie, and now isn't the time to rewrite the script."

Also testifying yesterday was Josephine Cooper, a vice president for public policy at Toyota. "Meeting the overall fleet average of 35.5 mpg by 2016 will be a challenge for our engineers and product planners," she said. "It will require every ounce of their ingenuity and creativity."

Whether Toyota will push for loopholes is unclear. Cooper said the company is "examining the details of this complex proposal and to the extent that issues need to be clarified we will be submitting written comments." Toyota is a member of the Alliance, and it's also a member of the U.S. Chamber of Commerce, which joined with NADA in suing over the California regulations.

Today, the Plug-In America advocacy group called on Toyota to quit the U.S. Chamber. Plug-In America is asking Toyota to stop opposing clean energy by aligning with the retrograde Chamber and to commit immediately to putting a plug-in vehicle into showrooms," said President Dan Davids. Toyota responded with a statement. "Our record on environmental leadership speaks for itself," it said. "No one group has all the answers. But the more we engage with each other, the closer we'll get to the change we all desire."

General Motors consultant Rob Kleinbaum also testified in Detroit and expressed reservations that GM was fully committed to clean cars. "Of chief concern is that people who actively ignored the research on the importance of fuel economy and believe in their hearts that climate change is a 'crock' are still in senior positions and spread throughout GM," he said. "The net result is a deep concern that while they will say the right words, they will still under-invest in fuel-efficient vehicles."

Now is a time of alignment and maneuvering over how the standards will be implemented, but most of the players are now reconciled to the 35.5-mpg standard.

Flickr photo/Eyasu Solomon