“I'll help our auto companies retool, so that the fuel-efficient cars of the future are built right here in America. And I'll make it easier for the American people to afford these new cars.”Now, the big question is if President Obama can deliver on these promises. And if the key points in his plan will go far enough to achieve the ambitious triple goals of revitalizing domestic auto manufacturing, freeing the US of dependence on foreign oil, and reducing greenhouse gas emissions from our cars and trucks.
The following proposals are part of President-elect Obama's 10-year, $150 billion energy package:
- $4 billion in tax credits to American automakers to retool plants to meet higher fuel efficiency standards.
Caveat: President Bush already signed a $25 billion loan package for Detroit to retool.
- A $7,000 tax credit for consumers who buy early model plug-in vehicles.
Caveat: A $7,500 tax credit for plug-in vehicles is already included in the $700 billion bailout package for the financial sector.
- A goal of putting 1 million plug-in hybrids on American roads by 2015.
Caveat: The first plug-in hybrids will not be launched until late 2010, so ramping up to meet these goals will be extremely challenging.
- A requirement that all new vehicles made in the US would be flex-fuel capable by the end of their first term in office.
Caveat: Unfortunately, very few of today’s flex-fuel cars actually run on ethanol, because the economics and environmental consequences of corn ethanol are prohibitive, and the technology for producing cellulosic ethanol is still in development.
Things have grown even more dire for the auto industry since that time—so Obama may need to go beyond specific technology goals—a certain number of plug-in hybrids by a certain time—to more fundamental shifts in strategy. He could start with one or both of these steps:
Break the California versus EPA Log JamThe Obama administration should accept California’s application for a waiver allowing the state to regulate greenhouse gas emissions from vehicles. Bush’s Energy Bill, now the law of the land, mandates an average fuel efficiency of 35 miles per gallon by 2020, with a phased-in approach beginning in 2011. The California standards would force automakers to cut greenhouse gas emissions by 30 percent—roughly equivalent to 43 miles per gallon—by 2016, with cutbacks to begin in 2009. The decision affects 16 states other than California—thus impacting about half the new car market in the United States.
With the single act of accepting the California waiver, global automakers would accelerate efforts to build more efficient vehicles using all kinds of fuel-saving strategies, from downsizing, increased aerodynamics, hybridization, and plug-in technology.
Create a Gas Price FloorAll of Obama’s efforts to have Detroit produce hybrid and plug-in vehicles will be undermined—if not entirely swept away—by low gas prices. The Obama Administration should ensure a price floor—say $2.50 or $3.00—for a gallon of gas. And raise that floor steadily over time. High gas prices earlier in 2008 produced a real shift in sentiment—among automakers and consumers—toward higher mpg vehicles. Ensuring a minimum level of prices at the pumps would make sure that this momentum is not lost.