2004

At a time when SUVs are rapidly growing in popularity in Europe and several auto manufacturers, including Volkswagens Audi and General Motors Opel, have plans to launch new models, the vehicles have come under legislative and rhetorical fire in both France and the United Kingdom.

France is imposing a new tax on vehicles that emit the most greenhouse gases ranging from €1600 to €3200. This tax is aimed primarily at SUVs, but includes large passenger cars as well. Smaller vehicles that still emit the gases will be taxed from €400 to €800, while purchasers of “clean” cars will be given a tax break ranging from €200 to €700.

In the United Kingdom, Professor David Begg, chairman of the Commission for Integrated Transport, an independent advisory body to the Government, has said that the current average tax on SUVs of 165 ($421) per year is too low. He recommends raising that three- or fourfold to reduce greenhouse emissions by “giving customers a disincentive for buying such cars.” According to the Wall Street Journal (July 7), “The number of SUVs on UK roads is about 200,000, up 40 per cent from five years ago, Begg said. The government’s got to act for what’s right for society generally, rather than a really small percentage of car owners, he said.”

The authorities in the capital cities of both countries reflect their national governments attitudes. The Paris City Council has proposed banning all SUVs from the city in order to reduce congestion (although such an act would likely prove illegal), while recently re-elected Mayor of London has called people who drive SUVs in London “complete idiots.”

Rhode Island and Hawaii enacted renewable portfolio standards for electric utilities in June. The Maryland legislature also passed a renewable portfolio standard bill by a veto-proof margin.

In a remark sure to anger European Greens, British Prime Minister Tony Blair has said that he is so serious about tackling global warming that nuclear power needs to be considered as an energy source.

In remarks to a committee of the British House of Commons on July 6, he said that American sources were admitting that global warming might be a problem, “Butwhy is nuclear power ruled off the agenda? That’s where they do have the point.” He went on, “It’s not sensible for us to say…we are just shutting the door. You can’t remove it from the agenda if you are serious about climate change.”

Blair pointed out that “whatever the famed British influence” on America, he had proved unable to persuade the U. S. to adopt the Kyoto Protocol and rightly stressed that the Congress is more important on this subject than the President. The friendly nature of his remarks about the United States also hints that suggestions (including some from his own civil servantssee last issue) that he planned to use the issue of global warming to engineer a rift with America next year are exaggerated.

Blair did, however, suggest that India and China, fast becoming major emitters of carbon dioxide, would need to be more involved in finding ways to reduce emissions. Both countries have stated that they will not accept restrictions on their emissions. Indias Congress Party won a surprise victory in their recent election partly on the basis of a promise to bring electric power to the nations millions of poor. There is currently no way for this to occur using renewable energy (Reuters, July 5).

The Competitive Enterprise Institute submitted comments on July 7 to the California Air Resources Board (CARB)s draft proposals to reduce greenhouse gas emissions from new automobiles in the State. Marlo Lewis, senior fellow at CEI, argues first that the proposals are fuel economy regulation by the back door:

“The main greenhouse gas emitted by motor vehicles is carbon dioxide (CO₂), an inescapable byproduct of the combustion of gasoline and other carbonaceous fuels. Because commercially proven technologies to filter out or capture CO₂ emissions from gasoline-powered vehicles do not exist, the most feasible way to implement AB 1493 is via regulations increasing vehicle miles traveled per unit of fuel consumedin other words, via fuel economy regulations.

“However, as CARB is surely aware, the federal Energy Policy Conservation Act of 1975 preempts state action in the field of automobile fuel economy regulation. A law that effectively and significantly requires automakers to increase fuel economy is a fuel economy mandate, however named.”

Lewis also argues that the proposals impose costs without benefits: “The “maximum feasible” greenhouse gas reductions contemplated by AB 1493 are also supposed to be “cost-effective.” However, no regulation devised by CARB can be cost-effective, because no statewide program can effectively address the alleged problem of global warming from anthropogenic greenhouse gases.

“Tom Wigley of the National Center for Atmospheric Research calculated that full implementation of the Kyoto Protocol by all industrialized countries, including the United States, would avert only 7/100ths of a degree C of global warming by 2050too small an amount for scientists reliably to detect. Any greenhouse gas reductions from a single sector within a single State would have even less effect on atmospheric CO₂ concentrations and, hence, on global climate change. Therefore, a CARB-administered AB 1493 program can have no discernible benefit to people or the planet. Yet the program will have measurable costs: up to $1,047 in additional expense for category 1 passenger car/light duty trucks and $1,210 for category 2 light duty trucks, according to CARB [page iii]. A program with substantial consumer costs and no detectable benefits is not cost-effective.”

Finally, CEI points to the cost imposed by the proposals on the consumer: “To help policymakers design “climate friendly” transportation systems, the Pew Center on Global Climate Change recently published a report, by David L. Greene of Oak Ridge National Laboratory and Andreas Schafer of MIT, entitled Reducing Greenhouse Gas Emissions from U.S. Transportation. The Pew report openly calls for fuel economy measures to reduce greenhouse gas reductions. However, the authors reveal that fuel economy mandates tend to impair consumer welfare.

“Citing the NRC fuel economy report and other relevant literature, Greene and Schafer estimate that the “present value of fuel savings for a typical passenger carincreases to $1,000 at $34 mpg and $2,000 at 44 mpg” over a “14-year vehicle life cycle.” However, fuel economy improvements also increase the sticker price of new cars, so much so that the “net value to the consumer (fuel savings minus vehicle price increase) is relatively modest, increasing to a maximum of about $200 at 33 mpg and decreasing to zero at 39 mpg.” But, that modest gain occurs only over the cars full 14-year life cycle. Most people sell or trade in their cars before 14 years. The survey literature suggests that most consumers will not invest in higher fuel economy unless they expect a payback in 2.8 years. Thus, for most consumers “no net savings are available from increasing fuel economy.” Indeed, Figure B on page 15 of the Pew report indicates that, as fuel economy increases to 37 mpg, the typical consumer loses $500 in net value.”

Lewis concludes by urging CARB to “brief Governor Schwarzenegger and the California legislature on the practical and legal impossibility of carrying out its mandate.”

The attempt by Senators Joe Lieberman (D-Conn.) and John McCain (R-Az.) to get another floor vote on their proposal to cap greenhouse gas emissions has been delayed yet again. McCain said that they intended to offer part of their energy rationing proposal as an amendment to the class action liability reform legislation before the Senate this week. However, Senate Majority Leader Bill Frist (R-Tenn.) warned that he was determined to keep non-germane amendments from encumbering the bill and then on July 7 filed a cloture petition to end debate and bring the measure to a vote.

If cloture fails, then the Senate will drop consideration of the bill and move on to other bills that are less suitable vehicles for the Lieberman-McCain amendment. If cloture is invoked, then the rule will not allow the amendment. It is quite possible that no vote will occur before the August recess and the Senate may be too busy with appropriations bills in the fall to have time to consider it.

S. 139, the so-called Climate Stewardship Act, would cap greenhouse gas emissions at 2000 levels by 2010 and at 1990 levels by 2016. The amendment would likely include only the first phase of reductions. A similar amendment was defeated on October 30, 2003 by a 55 to 43 vote.

Greenwire reported on July 7 that, “In pursuing the vote, McCain is following the same strategy he used to ultimately secure passage of campaign finance legislation after a bruising struggle that lasted nearly a decade. The goal, he said, is to keep the issue alive and make sure we get everyone on record.” McCain added, “It’s an old strategy of mine: Force votes on the issues. Ultimately, we will win.”

However, currently it appears that the measure would be lucky to get 43 votes in a second vote. Senator Ben Nelson (D-NE) missed the first vote, but has announced that he will vote no. Senator John Edwards (D-N.C.) missed the first vote and is likely to miss a second now that he is campaigning for vice president. The presumptive Democratic presidential nominee, Senator John Kerry (D-Mass.), voted yes last fall, but is likely to miss a second vote as well. That puts the status quo at 56 to 42.

Several environmental groups are conducting major grassroots lobbying efforts to pressure several Senators to change their votes. Environmental Defense has a special fundraising appeal on its web site to “keep the heat on” called the 51 Club, which has raised $752,644 as of July 7. Targeted Senators include Mike DeWine (R-Ohio), Mary Landrieu (D-La.), Blanche Lincoln (D-Ark.), David Pryor (D-Ark.), and Ben Nelson.