Reducing Transportation's Role in Climate Change




August 23, 2005

Thank you very much.  I am delighted to have this opportunity to be in California.   I come to you, of course, from Washington, D.C., which really is a ghost town this month.  The President is at his ranch and Congress is out of session, and the biggest news from the capital last week was that the White House had named a woman as executive chef.  Yes, things are slow. 

Of course there is no word yet on whether the Democrats will try to subpoena all the recipes this person put together back in cooking school.  Reading the New York Times report on the appointment of the new chef, you could tell how she won the heart of the President.  Following the announcement, the Times said, the new chef immediately left on vacation and was unavailable for comment.

But Washington has not been quiet all summer.  Before they left town, of course, our nation’s leaders decided to address the energy challenges facing our nation by extending daylight savings time for another month.  When Congress resumes work in the fall, they intend to establish a national bedtime.  Anyone caught with his or her lights on after the appointed hour will be detained as an energy combatant. 

In any case, it is great to be in California, and to have an opportunity to talk about real solutions to some of the problems facing our country.  But I have to begin by mentioning an ad I saw recently for the Chevrolet Tahoe.  The Tahoe, as you know, is the top-selling large SUV in the country and has a fuel economy rating of 16 miles per gallon in the city, 20 on the open road. 

Despite this, the Tahoe now is advertised as having – and I quote – "the best fuel economy in its class."  I am not kidding.  This is the equivalent of Arnold Schwarzenegger saying he is the best governor in the country who holds the title of Mr. Universe.  Once you define your class in narrow terms like this, you can be the best in anything.  Think about baseball . . . you can have the highest batting average in West Coast Thursday night road games, for example, or the most home runs against pitchers who are vegetarians.  In all of these cases, the competition isn't, well, that competitive.

But GM’s advertising gambit for the Tahoe may actually be a positive sign; because it reflects an acknowledgement that fuel economy is now a factor in Americans’ decisions about the cars we buy.  Gas prices have been rising. The Middle East continues to be politically volatile, threatening supplies. And climate change finally seems to be appearing on the political radar. Even our reluctant President is talking about the need for action. 

Before the recent rise in fuel prices, when consumers were asked about key things they considered when buying a new vehicle, gas mileage was twenty-fifth on the list.  I repeat: twenty-fifth.  Now, however, it seems that gas guzzling is not as socially acceptable as it was in the past.  For anyone who picks up the morning paper or watches the evening news, low mileage is becoming increasingly hard to justify on a financial or environmental basis.  And now we see this reflected in the consumer surveys: a 2004 J.D. Power survey found that poor gas mileage was the number-five reason why consumers rejected specific models of cars and trucks.  Among the other top five reasons were that the total price was too high, the consumer didn’t like the exterior design and styling of the vehicle, and there just wasn’t enough of that new car smell.  (Okay, I am kidding about that last one.)

Seriously, all of us know very well that Americans love their automobiles.  And the reason we are here at this conference is because this love affair is causing problems for the climate.  But it is not just the environment that is at risk.  Our national security is, too.  James Woolsey, the former CIA director, drives a Prius.  And the reason he drives a Prius is not because he loses sleep at night thinking about climate change.  Yes, he believes in the science and certainty of climate change, but what he really loses sleep over is the idea that our dependence on oil poses a grave risk to our economy and our security. 

Woolsey put it in a this way in a recent paper he coauthored with former Secretary of State George Schultz – and I quote:

“Four years ago, on the eve of 9/11, the need to reduce radically our reliance on oil was not clear to many and, in any case, the path of doing so seemed a long and difficult one.  Today, both assumptions are being undermined by the risks of the post-9/11 world and by technological progress in fuel efficiency and alternative fuels.”

Of course, James Woolsey and George Schultz are not alone in noting the alignment between America’s national security and environmental interests.  New York Times columnist Thomas Friedman has written often about the emergence of a movement he calls the “geo-greens” — people who are worried about our dependence on Middle Eastern oil for both environmental and security reasons. 

Here is how Friedman explains it:

“Geo-greens seek to combine into a single political movement environmentalists who want to reduce fossil fuels that cause climate change, evangelicals who want to protect God’s green earth and all his creations, and geo-strategists who want to reduce our dependence on crude oil because it fuels some of the worst regimes in the world.”

Those of us who have been talking for all these years about the importance of addressing climate change should welcome the opportunity to broaden the case for action on this issue.  And, we should work together with all of the allies we can find – on all sides of the political spectrum – to develop a plan for protecting our economy, our security and our environment in the decades ahead.

But I am not here to talk about why we need to act.  I would guess that virtually everyone in this room acknowledges that reducing our dependence on oil and addressing climate change are two reasons why we must act.  So what I want to do is issue a challenge to the American automobile industry.  It is a challenge that will require the industry to apply all of its considerable ingenuity and technical skill.  It won’t be easy, but I think it can be achieved.  

And the challenge is this: the auto industry should set a goal to reduce vehicle carbon dioxide emissions from business-as-usual levels by 50 percent by 2050.  I call it the “Fifty by Fifty” challenge. 

Now, I admit this sounds like a lot. Actually, it is a lot. But people and governments around the world, including right here in the United States, now accept that it is going to take bold steps to address the problem of climate change.  It is going to take a new industrial revolution. And industry, of course, will need to take the lead in making that revolution happen. 

A recent study from the U.S. Department of Energy, along with Advanced Resources International and Energetics, looked at a scenario where we achieve significant increases in automobile efficiency over the next 50 years; substantial penetration of zero-carbon vehicles; and a complementary decrease in the number of vehicle miles traveled.  And the result, according to the study, would be a reduction in business-as-usual emissions of 57 percent.  So 50 percent,  should be eminently achievable.   

The U.S. auto industry historically has responded slowly to uncomfortable challenges – to the crusade for clean air, to fleet fuel efficiency standards, to the vehicle quality and reliability challenges from foreign manufacturers in the second half of the 20th century.  And now the buildup of atmospheric CO2 poses another challenge.  It is not a stretch to say that the industry’s response to the environmental and national security problems created by our continuing (and growing) reliance on oil will determine its future.  To meet the “Fifty by Fifty Challenge,” automakers must begin increasing the efficiency of the vehicles they produce right now, while at the same time accelerating the development of zero-carbon autos.  The goal should be to develop the capability to have one in four new vehicles sold produce zero emissions by 2050. 

The auto industry has some of the finest engineers and marketing people in the world. I’m optimistic that when they focus their considerable talents on the most important problem of our time, we will all reap the benefits.

But, of course, industry cannot do this entirely on its own.  Government should provide the impetus for action through a clear statement of intent to address the problem, coupled with tough but achievable standards.  Many nations, including those of the European Union, together with Japan, Canada and even China, are acknowledging this. They are setting the bar high for themselves.  A recent Pew Center report found that the European Union and Japan have the most stringent emissions standards in the world.  Even the new standards proposed here in California would be less stringent than what is required right now in the European Union. When standards are measured in terms of the fleet-average fuel efficiency rate required of automakers, the U.S. standards were lower not only than the EU’s and Japan’s but also Australia’s, Canada’s and even China’s.  We can do better than that – and we must. 

One problem with creating a buzz about climate change has been that many of the problems it creates are viewed as occurring somewhere in the distant future. President Bush tacitly acknowledged this bias when he placed the issue among the nation’s “long-term priorities.”

But the reality is that the impacts of climate change are not “out there” – they are being felt right now around the world. We have now crossed a horizon where these problems can be viewed as becoming increasingly urgent and alarming not in 50 or 100 years but in that span of the automotive business cycle – over, say, a 20-year planning period. The famed “Snows of Kilimanjaro,” for instance, are expected to be gone completely in 20 years.  And I believe U.S. automakers may suffer a similar fate if they do not face up to this challenge right now. 

So that’s the challenge.  The real question is:  how do we get there?  What should the policy agenda be?  

I know you will be exploring these issues in more detail over the next three days.  My job (I think) is merely to get you thinking about some of these things in broader terms – as much as you want to think about these things at all after drinks and a delicious dinner.   (When I first saw the schedule for this evening, I thought I could call my remarks, “Toward a Policy Agenda for Climate Change – But First Toward Bed.”)  So, I will try to get us where we need to go as efficiently as possible.

My own agenda tonight is to provide context for your conversations between now and Friday.  And I want to do this by touching on four key points. 

  • The first is that transportation, as I have already said, is a fundamental part of the climate change problem – and must therefore be a fundamental part of the solution as well.  If we don’t meet the transportation challenge, we won’t stand a chance of meeting the overall challenge of addressing climate change.
  • Second, I want to emphasize the need for both short-term and long-term solutions —this is not an either/or proposition.  We clearly need both.
  • Third, I want to talk about the role of public policy in creating a favorable climate for technology development and deployment.
  • And, last but not least, I want to talk a little more about the role of industry – and specifically the automobile and fuel companies – in forging solutions. One of the hit movies of the summer is “Batman Begins.” The caped crusader, happily for our metaphor, drives a car, the Batmobile, in which he rushes around saving the world. I hope tonight we can launch the world premiere of a new superhero, the automobile industry, dressed in its Day-Glo superhero Spandex costume, rushing in at the propitious moment to save the world from global warming.

As I mentioned at the start of my remarks, the reason we are all gathered here this week is because, well, people love their cars and trucks – and cars and trucks, in turn, are an important source of greenhouse gas emissions.

Here in California, where the notion of the “freeway” came to life, your state is home to 26 million registered vehicles. Nationally, Americans own more than 225 million passenger cars, trucks and motorcycles.  According to the American Automobile Association, we will drive more than 3 trillion road miles this year.  By my calculations, this is the equivalent of more than 500 trips to Pluto and back every year. That’s Pluto, the planet at the edge of the solar system, not Pluto the character at Disneyland.

Over it’s manufacturing and operating lifetime, a single typical American-made vehicle – say, a Ford Taurus -- is responsible for 61.9 tons of CO2 entering the atmosphere. The vast majority of this -- 55.1 tons -- is from fuel burned over the road life of the car.  So reducing emissions from auto manufacturing operations, while not unimportant, is not the answer to this problem. 
The operation of passenger cars and pickups in the United States contributes about 19 percent of U.S. CO2 emissions. In California, where you do more driving and have more efficient electricity generation than national averages, this percentage is much higher — transportation is responsible for over 40 percent of California’s GHG emissions.

Nationwide, transportation activities are responsible for more than 1.8 billion metric tons of CO2 entering the atmosphere each year.  These emissions consist primarily of carbon dioxide from fuel combustion, but they also include nitrous oxide and other greenhouse gases.  Our transportation sector alone emits more carbon dioxide than all sources in every other country except China.

Think about that for a minute – if our transportation sector were a country in and of itself, it would be third in carbon emissions after the United States and China – and China, I remind you, has four times our population. 

Despite all the talk about hybrids and Americans’ increasing attention to fuel economy, transportation-related energy use and emissions both are rising in this country.  Among the reasons: we’re driving greater distances; and the fuel economy of today’s cars and trucks actually has been starting to decline.  For every Prius that Toyota sold in 2004 in the United States, it sold two full-size Tundra pick-up trucks, which consume nearly three times as much gas to go the same distance as the Prius.  

Most of you have probably seen the recently released EPA report on automobile fuel efficiency.  It shows that the average 2004 model car or truck got 20.8 miles per gallon.  That is 6 percent less than the average new vehicle sold in the late 1980s.  Something is clearly wrong with this picture if we are to be on a path to dealing with our national security and the need to address climate change.  

The key to a solution lies, I believe, in establishing a framework for action for the next 50 years.  At the Pew Center, we have been working on such a framework -- we call it the 10-50 solution. 

By 10-50, we mean that America needs be thinking ahead 50 years, envisioning what our society and economy will have to look like at that time in order to achieve the goal of significantly reducing our emissions of greenhouse gases.  That’s the “50” part. The “10” means that we need to identify policies and strategies that we can pursue in the next ten years that set a course for the decades after to achieve our long-range goal. The 10-50 solution therefore looks at both the short term and the long term – and it helps us figure out those short-term steps that will get us to a long-term vision of a low-carbon economy, including a low-carbon transportation sector.

The 10-50 approach takes a long-term view because the problem of climate change, as I have said, calls on us to create a new industrial revolution.  This is a revolution that is going to have to reach across every major energy-producing and energy-consuming sector of our economy.  It is going to take time to develop and deploy the full complement of technologies that are needed to wean our economy from an over-reliance on fossil fuels.

At the same time, the 10-50 approach enables us to identify the practical steps we can take right now and in the decades to come to achieve steady progress.  It forces us to ask important questions about the mix of policies needed to unleash the power of the marketplace as a positive force for change.

So let’s look first at short-term technologies that can reduce greenhouse gas emissions right now.  And the technology that appears to hold the most promise is, of course, the hybrid gas-electric engine.  Clean-diesel engines also hold significant promise. German clean-diesel technology vehicles emit 30 percent less CO2 per mile.   But with the diesel engine, we still have work to do on particulate emissions; I know that the technology is improving all the time, so diesels should probably be part of the mix going forward.  Diesel hybrid technology could potentially contribute up to 30 percent toward reaching our goal of 50% reduction from business as usual by 2050. 

Biofuel blends also can help in the near term. And what all of these near-term technologies have in common is that they will not require significant changes in our elaborate infrastructure for producing, distributing and retailing conventional petroleum fuels.  Nor will they require appreciable changes in the most popular and important features of today’s vehicles, reliability, safety, convenience, and 27 cupholders.

Of course, the simplest and cheapest way to reduce CO2 emissions is to drive lighter cars, but getting Detroit to put today’s vehicles on the equivalent of the South Beach Diet has been a challenge.   The recently released EPA report I cited shows that the average new vehicle weight of automobiles in America has risen to about 4,000 pounds today, from about 3,200 in the early 1980s.

And there are other things that can be done without a whole lot of trouble to increase fuel efficiency – technologies and vehicle designs that can, for example, reduce aerodynamic drag and reduce rolling resistance.  Again, all of these are eminently doable solutions, and all of them can happen now or relatively soon. 

And what about the longer-term technologies?  Here, of course, I am talking about hydrogen fuel cells, biofuels, and all-electric cars and trucks.  And there are others.  What these technologies have in common, in addition to their potential contribution to reducing long-term emissions, is that none are ready for mainstream use. Fuel cells, advanced energy storage and many other “break-through” technologies will take decades to figure out.  The sooner we get started, the sooner they can deliver on their enormous promise of significant, long-term reductions in emissions.

It is important to note here, too, some of the synergies between the technologies that will help us achieve short-term vs. long-term progress. For example, as we continue working on hybrid technologies, we are getting a significantly better handle on the electric systems that will be the driving force of hydrogen-powered and all-electric cars.

It is also important to note the importance of not putting all of our eggs into one basket.  We need to be pushing ahead on all of these technologies simultaneously in case some of them don’t pan out. It is important – no, vital – that we vigorously pursue every lead we have.

Which brings me to the next part of my remarks:  what are the policies that can get us to take the short-term actions that will make a difference, and also invest significantly in the longer-term technologies that we will need if we are to meet the challenge.    I believe that the single most important thing that the government can do to set the stage for real progress in reducing transportation-related emissions is to adopt standards.  As is often the case on these issues, the United States has a lot to learn from California. Not only has your Governor embraced an ambitious target for reducing overall emissions, but policymakers here also are seeking to take the concrete step of placing direct limits on greenhouse gas emissions from cars.  Whether or not this effort will move forward is now up to the courts.  However, if it does move forward, several other states have already signaled a willingness to follow California’s lead.

But state standards, while a big step in the right direction, are not enough.  We do need national standards.  In the best of all possible worlds, we would convert our current fuel economy standards to a set of tradable standards based on greenhouse gas emissions – and to make those standards stringent enough that they spur action, but not so stringent that they cause major disruptions in the auto industry.   At the very least, we need once and for all to reform the CAFE program – for example, by establishing tougher standards with longer lead times, and by making the program more rational and more effective.  Giving SUVs and other light trucks a pass on meeting tough but achievable efficiency standards is insanity when you consider the environmental and national security challenges we face today.

But despite their importance, standards are not the only answer.  In the same way that we are going to have to apply a diverse mix of technologies to the challenge of reducing emissions, we also are going to have to apply a diverse mix of policies. 

In the short-term, the government can do much more to step up consumer incentives for buying hybrids and clean-diesel vehicles. Hybrid vehicles are selling. But despite their popularity, they will not represent more than a small fraction of U.S. vehicle sales without government help.  We need more tax incentives for getting more highly efficient, light-duty vehicles on the road.  Especially intriguing is the notion of a so-called “feebate” system that charges fees on the purchase of inefficient vehicles and rebates toward the purchase of efficient ones.  How better to convey the notion that consumer choices make a difference?  Along those lines, government also can do a lot more to make certain consumers have good and reliable information about the impacts of their choices – for example, by mandating that new and used cars have uniform stickers showing their greenhouse gas emissions.

We also can remove incentives in the law for purchasing inefficient vehicles such as SUVs.  It is frankly hard to believe these incentives exist, given the energy and climate challenges we face. Until recently, for instance, business purchasers of SUVs heavier than 6,000 pounds – which included 38 styles of passenger vehicles like the Lincoln Navigator and the legendary Hummer – could write off $25,000 from income on the purchase.  It’s a big tax loophole – so big you could drive a Hummer through it, especially if you compare that to the paltry $3,000 incentive to buy a fuel-efficient hybrid.  

And, last but not least, government can and should take steps to boost public-sector procurement of climate-friendly vehicles.  The goal is to create and expand the market - and government can help do that with its own purchases. 

And then there are the long-term policies.  If you look across the list of long-term technologies that could help to solve this problem, you see that every one of them faces substantial barriers that the private sector plainly will not be able to resolve on its own.  Take hydrogen as an example.  It is essential that we find environmentally friendly ways of producing hydrogen, because if we merely use fossil fuels to do it without capturing and sequestering the carbon dioxide, the climate problem does not improve; it actually gets worse.  And the development of a hydrogen infrastructure clearly is something that industry and individual companies cannot and will not do without some level of government involvement and incentives.  With hydrogen as with other long-term technologies, government needs to work with industry to come up with demonstrations that will show what's feasible and practical - and how to do it right. 

So the bottom line is: reducing the transportation sector’s emissions will require both private sector commitment and government leadership.  Private business cannot shoulder this alone.  Government must play a role.  Only government can create and implement a national program of standards with trading.  Only government can offer incentives to increase the deployment of low-GHG-emitting vehicles.  Only government can boost RD&D on low-carbon fuels and energy storage options, and incorporate climate change and system efficiency considerations in federal infrastructure and transportation funding.

Why is this a government responsibility?  Because responding effectively to climate change is in the public interest.   This is a problem that poses a very real threat to our economy and our quality of life.  And it is incumbent on government to create the conditions necessary for solutions to flourish -- to create, if you will, the climate for innovation.

And this is not an issue that we should be addressing exclusively on a domestic basis.  There are real advantages to working with other nations to reduce transportation-related greenhouse gas emissions.  One proposal that emerged from a series of recent dialogues that the Pew Center organized on this issue is to create harmonized cross-border standards for fuel economy or vehicle emissions.  These standards could be tradable, and they could be either uniform across all countries, and they could be differentiated to allow a longer phase-in period to reflect different circumstances in different countries.

In sum, there are countless ways to reduce emissions from the vital and growing transportation sector.  Our challenge is to adopt policies that will ensure that those reductions happen sooner rather than later – before the damage is done and the costs become prohibitive.

Which brings me to my fourth and final point: the need for industry to don its fearsome cape, step into its gas-electric fuel efficient hybrid Batmobile, subdue the villains and save the world.  Good things are happening:

  • Toyota has led the way in making the hybrid an important and growing segment of the automobile market.
  • Ford last month brought a hybrid compact SUV, the Mercury Mariner, to market a year earlier than originally planned.  
  • Both Toyota and Ford recently called publicly on the Bush Administration and other G8 governments to adopt a cap and trade or other market based system to help shape consumer choice.

These are important developments.  But they are not enough.  The transportation sector is a rare case where a limited number of American companies – I can count them on one hand – literally have a chance to change the world. 

We have a unique opportunity to bring the key players together around a relatively small table and achieve something historic.  Coming to agreement on a set of principles, a set of concrete actions, and, yes, a set of ambitious but achievable standards really should be possible. 

If we are serious about reducing emissions from this sector, and we must be, we need to challenge ourselves to work together and come up with a plan that gets us where we need to go.   That is what the “Fifty by Fifty Challenge” is about – getting a commitment to reduce vehicle carbon dioxide emissions from business-as-usual levels by 50 percent by 2050. 

It is time.  Given the transportation industry’s starring role in the problems I have talked about, it must now play a starring role in solutions.  Not merely a supporting role, not a walk-on role, but a starring role.

All of us appreciate the role of the automobile companies and the other players in the transportation sector in getting us from place to place.  But now this sector has to take us to a different destination, a new place where this country can meet its transportation needs without putting our national security and our climate at risk.  It might take us 50 years, but I believe we can arrive at that destination.  It’s where we need to go.  Ladies and Gentlemen, start your engines . . . the race to the future is on.  Thank you very much.