Climate Compass Blog

Getting It Right on Fuel Efficiency

This post also appears in the National Journal Energy & Environment Experts blog in response to the question: What should drive fuel efficiency?

At a moment when it appears to many that our government can’t do anything right, the current approach to regulating vehicle fuel economy and greenhouse gas (GHG) emissions is a bright spot.

After decades of failing to tighten corporate average fuel economy (CAFE) standards, and several years when California and other states began to take the matter of setting vehicle GHG standards into their own hands, the federal government finally got its act together. In 2007 Congress enacted the Energy Independence and Security Act of 2007, tightening CAFE. In 2010, NHTSA and the U.S. Environmental Protection Agency (EPA) jointly set GHG and CAFE standards, and California agreed to conform its rules to the federal ones. NHTSA and EPA are hard at work at a second round of standards for light duty vehicles, as well as the first-ever set of similar rules for medium and heavy duty trucks.

We now have the Congress, federal and state regulators, industry and public interest groups aligned on a policy framework that is meeting important national goals of reducing oil dependence and GHG emissions, providing regulatory consistency and certainty to the industry, and creating a climate favorable to investment and innovation.

The auto industry is responding successfully. The plug-in hybrid electric Chevy Volt won the 2011 Motor Trend Car of the Year, 2011 Green Car of the Year, and 2011 North American Car of the Year. It’s also selling well. But PHEVs are just part of the story. The Chevy Cruze and Hyundai Elantra are among the nine vehicles in the U.S. marketplace that get more than 40 miles per gallon. They were also among the 10 top-selling vehicles last month. Higher sales of fuel-efficient vehicles across the board contributed to strong sales and combined profits of nearly $5.9 billion for the three U.S. automakers in the first quarter of this year.

Higher gasoline prices are heightening consumer interest in these vehicles. But we cannot rely on oil prices alone to drive us to the next generation of vehicles. Oil prices are too volatile to motivate the sustained business investment we need. And the price we pay at the pump doesn’t reflect the true cost of oil to our country. Half of the 2010 U.S. trade deficit was from oil – that’s $256.9 billion we sent overseas last year alone. The U.S. EPA estimates that the energy security benefit of reducing oil dependence is on the order of $12 per barrel. And gasoline burning inflicts enormous damage on our air quality and climate. For example, the transportation sector is responsible for more than a quarter of U.S. GHG emissions and is a major contributor to smog.

The beauty of the fuel economy and GHG standards is that they are performance based. They set targets based on important public policy goals – i.e., oil savings and GHG reductions – but leave it to industry to find the best way to meet them. They don’t “pick winners.” They should remain the core of our public policy framework for transportation.

But our current set of vehicles and fuels may not be up to the job of meeting our long-term goals. In order to level the playing field with the incumbent technologies that have benefited from nearly a century of infrastructure development and fuel-vehicle optimization, we need to make some public investment to jumpstart alternative vehicles and fuels. This has to be done carefully. We need a savvy, adaptive strategy that ensures that any subsidies are only temporary, leverages public investment with private dollars, spawns experiments and learns from them, and rewards environmental and efficiency performance.

It is not clear whether hydrogen, natural gas, electricity, or biofuels are the long-term solution to our energy and environmental challenges. But we need to continue to keep the pressure on all of them through performance-based standards, research them all, subsidize limited deployment to see how they perform in the real world, and leave it to industry and consumers to determine their ultimate success in the marketplace.

Judi Greenwald is Vice President for Innovative Solutions

Let's Ride the EV Wave

This post also appeared in the National Journal Energy & Environment Experts blog in response to a question about oil use and the future of electric vehicles.

Whether or not electric vehicles (EVs) take off will ultimately depend on consumer acceptance of new technology. But public policy and technological progress are just as important, as we highlight in our new report on the transportation sector.

Indeed, electric drive vehicles powered by batteries or hydrogen fuel cells could revolutionize transportation in the United States, saving considerable amounts of oil while also reducing the sector’s impact on our global climate. And the EVs on the market now are off to a great start, winning national and international awards.

Nearly all major automakers are planning to introduce these vehicles in the coming years, and I applaud automakers like Ford that have committed to building alternative drivetrains in significant number for the long haul. Companies like Ford understand climate change and the need to reduce our impact on our global environment while not sacrificing our mobility. For EVs to achieve that goal, we need policies like a clean energy standard that aim to decarbonize our electrical grid. I’m sure Ford is also investing in this space because they see a market opportunity.

The private sector has invested billions of dollars in developing, manufacturing, promoting, and distributing EVs in the last decade. From a map on our website, you can see that policymakers across the country are supporting EVs because they want their region to benefit from this burgeoning market.

Policymakers should rely on private capital as much as possible to build out the EV charging infrastructure so we can balance the desire to support alternative vehicles while also tackling our nation’s budget deficit. To that end, we should coordinate policy related to EV purchase and home charging nationwide so private players can enter new markets more easily. The most efficient way to “refuel” these vehicles is not yet clear, and we should use policy to help provide the foundation to let the market work.

Another element that is critical to the success of these vehicles is its most expensive component – the battery. Not only do we need aggressive R&D to develop batteries with much higher energy density, we also need to figure out what to do with these batteries at the vehicle’s end-of-life. About 80 percent of the battery’s capacity is still usable at this point, resulting in the largest untapped resource in this space today.

If we achieve the right mix of policy, technological progress, and consumer acceptance, there’s little reason to doubt that alternative vehicles will have a significant impact on the car market in this decade. It appears that it will be tough to kill the electric car this time.

Eileen Claussen is President

About Those "Missing" Cost-Benefit Analyses ...

While Environmental Protection Agency (EPA) regulations on greenhouse gases (GHGs) and other air pollutants are on firm political and legal footing, attacks on them continue. Claims have been made that the costs of regulation are extreme or, contradictorily, that the government has not conducted any cost analysis of these regulations.

On the side that the costs are too high, one figure bandied about recently is that all government regulations are costing the economy $1.75 trillion annually, and $280 billion of that stems from compliance with existing environmental regulations. Those figures came from a study by two Lafayette College professors done for the Small Business Administration (SBA). Yet, as widely reported, the Congressional Research Service, and even the professors themselves have disputed the methodology of the study and its use in the current frenzy of political shots at environmental regulations. In a Congressional Research Service (CRS) report, the methodology of the SBA report was faulted for, among other things, allowing for double counting of costs. The Lafayette College study simply adds together other previous studies on individual regulations, regardless of the approaches and methodologies of those calculations. The CRS report quotes the Office of Management and Budget (OMB) as having written that such a methodology is an “inherently flawed approach.”

More distressingly for those who care about making informed decisions about the economic impacts of regulation, that large figure is not balanced against any benefits those regulations might have. According to the CRS report, the authors of the Lafayette College stated that they were never asked to include benefits in their analysis. The authors were quoted as saying the report was “not meant to be a decision-making tool for lawmakers or federal regulatory agencies to use in choosing the ‘right’ level of regulation. In no place in any of the reports do we imply that our reports should be used for this purpose. (How could we recommend this use when we make no attempt to estimate the benefits?)” On the contrary, as we have explained before, the benefits of Clean Air Act regulations have far outstripped the costs in major studies.

As for those who say no economic analyses were ever done of these regulations, all federally promulgated regulations undergo a cost-benefit analysis before implementation. This requirement stretches back many presidential administrations, with each administration offering adjustments to the process. The basis for current analysis is found in Executive Order 12866, signed in 1993 by President Clinton, which provided a significant overhaul to the review process and, among other things, requires

Each agency [to] assess both the costs and the benefits of the intended
regulation and, recognizing that some costs and benefits are difficult to
quantify, propose or adopt a regulation only upon a reasoned determination
that the benefits of the intended regulation justify its costs.

President Obama reaffirmed the inclusion of cost-benefit analysis in the regulatory process in Executive Order 13563 at the beginning of 2011.

Turning specifically to the GHG regulations implemented by the Administration, where regulatory requirements have been imposed the analyses required by OMB have been conducted and are readily available. Some critics have complained that there was not a cost-benefit analysis done of the EPA’s 2009 Endangerment Finding for GHGs. Such claims miss the fact that the Endangerment Finding was a scientific ruling that GHGs cause climate change, posing a threat to public health and welfare, and motor vehicles emit GHGs contributing to those risks. Since there were no regulatory requirements to reduce GHG emissions in this rulemaking, a cost-benefit analysis was inappropriate.

When it comes to actually reducing GHGs from emitting sources, such analyses would be appropriate, and federal agencies are required to include them as part of the rulemaking process. EPA has done so. The first rule on GHGs , the light-duty vehicle GHG emission standards promulgated jointly with Department of Transportation’s Corporate Average Fuel Efficiency standards, was issued with a Regulatory Impact Assessment that offered almost five hundred pages of detailed qualitative and quantitative analysis of the costs and benefits of the rules. The findings were that the GHG standard for light duty vehicles has an estimated cost of $52 billion and benefits of $240 billion: benefits outweighing costs by better than 4 to 1.

Upon the implementation of the light duty vehicle standards, the New Source Review program for stationary sources of GHGs was automatically triggered – without any regulatory action taken by EPA – therefore no separate cost-benefit analysis was legally required of this step. However, when EPA went through the regulatory process to create the tailoring rule to lower the compliance requirements for stationary sources, it was required to undertake an analysis. The Regulatory Impact Assessment of EPA’s tailoring rule is available on its website and includes an in-depth qualitative and quantitative analysis of the reduced permitting costs from the tailoring rule regulation now in effect for stationary sources. As EPA continues its rulemaking for New Source Performance Standards for utilities and refineries, fully documented regulatory impact analyses will be conducted and made available for comment with the proposed rule.

Thus, despite the claims to the contrary, EPA has in the past and will continue in the future to analyze the costs and benefits of GHG regulations. It is also clear that, to date, GHG regulations imposed by the EPA under the Clean Air Act have vastly greater benefits than costs.

Michael Tubman is the Congressional Affairs Fellow

Moving Our Cars Off Oil

This post first appeared in Txchnologist.

It is too early to pick the ultimate car of the future. Plug-in electric, hydrogen fuel cell, and biofuel vehicles are currently in contention, but it is quite possible that no single alternative will dominate the future the way that gasoline-powered cars own our roads today. The competition will be fierce because these new technologies will not only be competing against each other, but also against the ever-improving internal combustion engine. By 2035, it’s quite possible a new gasoline-powered car will get 50 mpg and a hybrid-electric car (like the Toyota Prius) will achieve 75 mpg.

Whatever technologies win out, it is clear the societal costs of oil are too high. The price at the pump fails to include all the national security and environmental costs of exploration, extraction, distribution, and consumption of oil. Since oil appears cheaper to the consumer than its true cost to society, we end up consuming more than we should. We send hundreds of billions of dollars out of our economy each year – $330 billion in 2010 alone – to oil producers with monopoly power instead of investing the money here at home.

Maryland an Early Mover on Climate Adaptation

The State of Maryland released a new report earlier this year recommending a course of action to adapt to our changing climate. This report is the latest in a series that began in 2007 when Governor Martin O’Malley issued an executive order to establish the Maryland Commission on Climate Change. The commission was charged with addressing the causes of climate change and adapting to the most likely impacts. In 2008, the Maryland Climate Action Plan was released, addressing impacts, mitigation, and economic concerns. 


Among the impacts highlighted in the Climate Action Plan was sea level rise, projected to be more than a foot by mid-century and as much as 3 feet by 2100. If the highest rates are realized, most tidal wetlands would be lost and about 200 square miles of land would be inundated. The bay would also suffer additional stresses as restoration goals become more difficult to achieve. Aquatic species composition will change and increased nutrient runoff into the bay will make water quality goals much harder to meet. Impacts are projected to occur inland as well with heat waves greatly increasing the risk of illness and death. The average year will have 24 days above 100°F by the end of the century. Ground level ozone, formed under prolonged, high temperatures will increase, resulting in more respiratory illnesses, especially among vulnerable populations.


The Action Plan addressed the adaptation needs of coastal regions but only highlighted the need to pursue the development of adaptive strategies for other affected sectors. In response, work began on a report specifically for adaptation in these other sectors. Earlier this year, the culmination of this effort was released as the Comprehensive Strategy for Reducing Maryland’s Vulnerability to Climate Change, Phase II: Building societal, economic and ecological resilience. The report provides the basis for guiding and prioritizing state-level activities with respect to both the climate science and adaptation policy within short to medium-term timeframes.
 

Key Recommendations

  • Human Health: Conduct vulnerability assessments to gain a better understanding of risks and inform preventative responses by assessing potential health threats and the sufficiency of Maryland’s response capacity. The impacts to food safety and availability must also be evaluated.
  • Agriculture: Increase crop diversity, protect against incoming pests and disease, and intensify water management through research, funding and incentives. Enhance existing Best Management Practices (BMPs) and land conservation targets including revising targets for agricultural land preservation. BMPs that are geared toward protecting water quality in the Chesapeake Bay are likely to be significantly shifted as changes in seasonality and precipitation occur.
  • Forests and Terrestrial Ecosystems: Expand land protection and restoration and revise targeting priorities. This includes integrating climate data and models into existing resource assessments and spatial planning frameworks as well as developing adaptation guidance for local government planning. Management practices to reduce existing forest stressors should also be adjusted. High elevation forest species such as the red spruce or Eastern hemlock will likely disappear from Maryland as will the Baltimore Checkerspot butterfly and ecosystem management plans must reflect these future changes.
  • Bay and Aquatic Ecosystems: Restore critical bay and aquatic habitats to enhance resilience. It is recommended that the state be proactive in the design and construction of habitat restoration projects due to their importance in enhancing the resilience of aquatic ecosystems. Dam removal projects on Octoraro Creek in Cecil County and Raven Rock Creek in Washington County have resulted in reduced stream temperatures and moderated stream flow, boosting connectivity between habitats and resilience of fish and other transient species.
  • Water Resources: Ensure long-term safe and adequate water supply for humans and ecosystems. Reduce the impacts of flooding and stormwater by removing high-hazard water supplies and preventing inundation and overflow of on-site disposal systems. On-site disposal systems already lead to raw sewage leakage in Maryland are likely to worsen with increases in extreme precipitation. These failing septic systems must be improved or replaced.
  • Population Growth and Infrastructure: Plan for precipitation-related weather extremes and increase resilience to rising temperatures by identifying investment needs to prepare for weather emergencies and improving stormwater management strategies. Urban tree canopy should also be increased to provide urban heat reduction, stormwater reduction, and air filtration.
     

Not every state has an adaptation plan, and Maryland is one of only two states (Virginia) in the Mid-Atlantic region to have completed one or made progress. However, both North Carolina and South Carolina have Climate Action Plans that call for an adaptation report and more states are moving towards producing adaptation plans. Maryland is at risk from a variety of ill-effects due to climate change and the identification and implementation of key adaptation measures will ensure the state minimizes the impacts and costs of climate change in the long run. Other states would do well to take heed, and move to minimize their costs as well.


Dan Huber is Science & Policy Fellow