[Senate Hearing 107-1133]
[From the U.S. Government Publishing Office]
S. Hrg. 107-1133
NATIONAL SECURITY, SAFETY, TECHNOLOGY, AND EMPLOYMENT IMPLICATIONS OF
INCREASING THE CAFE STANDARDS
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HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
JANUARY 24, 2002
__________
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
ERNEST F. HOLLINGS, South Carolina, Chairman
DANIEL K. INOUYE, Hawaii JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West TED STEVENS, Alaska
Virginia CONRAD BURNS, Montana
JOHN F. KERRY, Massachusetts TRENT LOTT, Mississippi
JOHN B. BREAUX, Louisiana KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota OLYMPIA J. SNOWE, Maine
RON WYDEN, Oregon SAM BROWNBACK, Kansas
MAX CLELAND, Georgia GORDON SMITH, Oregon
BARBARA BOXER, California PETER G. FITZGERALD, Illinois
JOHN EDWARDS, North Carolina JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri GEORGE ALLEN, Virginia
BILL NELSON, Florida
Kevin D. Kayes, Democratic Staff Director
Moses Boyd, Democratic Chief Counsel
Jeanne Bumpus, Republican Staff Director and General Counsel
C O N T E N T S
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Page
Hearing held on January 24, 2002................................. 1
Statement of Senator Allen....................................... 49
Statement of Senator Dorgan...................................... 3
Statement of Senator Kerry....................................... 1
Statement of Senator McCain...................................... 2
Witnesses
Claybrook, Joan, President of Public Citizen..................... 13
Prepared statement........................................... 15
Dana, Greg, Vice President, Environmental Affairs, Alliance of
Automobile Manufacturers....................................... 83
Prepared statement........................................... 85
Eizenstat, Ambassador Stuart E., Partner, Covington & Burling.... 4
Prepared statement........................................... 8
German, John, Manager, Environment and Energy Analyses, American
Honda Motor Corporation, Inc................................... 72
Prepared statement........................................... 74
Hoerner, J. Andrew, Director, Research Center for a Sustainable
Economy........................................................ 39
Prepared statement........................................... 40
Lund, Adrian K., Chief Operating Officer, Insurance Institute for
Highway Safety................................................. 31
Prepared statement........................................... 34
Ross, Marc, Professor of Physics, University of Michigan......... 68
Prepared statement........................................... 70
Schaeffer, Allen, Executive Director, Diesel Technology Forum.... 63
Prepared statement........................................... 65
NATIONAL SECURITY, SAFETY, TECHNOLOGY, AND EMPLOYMENT IMPLICATIONS OF
INCREASING THE CAFE STANDARDS
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THURSDAY, JANUARY 24, 2002
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 9:55 a.m. in room
SR-253, Russell Senate Office Building, Hon. John F. Kerry,
presiding.
OPENING STATEMENT OF HON. JOHN F. KERRY,
U.S. SENATOR FROM MASSACHUSETTS
Senator Kerry. The hearing will come to order. I would like
to welcome our first panel, Ambassador Eizenstat, Ms.
Claybrook, Mr. Lund and Mr. Hoerner. We have a lot of business
to cover. I appreciate everybody's patience.
We now are convening the full Committee for a hearing on
national security safety technology and employment implications
of increasing the CAFE standards. We have had three prior
hearings. The most recent one was in December, when we heard
from those in the industry and others about their views on
aspects of the CAFE standards, and we reserve this final
hearing to really analyze the feasibilities and the rationale.
Why is this compelling? Is this compelling? Are there reasons
for us to consider this as a matter of policy now? The staff
has done an extraordinary amount of work in the last few
months. We've been talking with literally dozens of different
people who are impacted by or have an impact on this particular
issue, and I think we have come to have a pretty good
understanding of choices not made and choices yet that we face
with respect to it, and we will be making some recommendations
in the next few days.
One of the dynamics in this issue that makes it complicated
is, frankly, the lack of effort in past years by the industry
itself to adopt different practices, so we are confronted with
one of those Hobson's choices where the industry comes in and
says, well, if you force us to do X, Y, or Z, it is going to
have the following impact on us, and of course we are put into
the quandary of having some impact, but as a consequence of
their own lack of having made some wiser choices. Our job is to
make good policy choices for the country and to protect our
citizens and to make some tough judgments about what we think
is feasible, and also to be sensitive. I am not trying to
suggest we should do it without sensitivity to what impacts may
occur, and we are not going to be insensitive. I think we are
going to do this in a thoughtful way, but at the same time
there are some facts that tell different stories. Let me just
point one out to everybody as just sort of framing this
discussion. Here is a graph. You cannot see it--I regret it is
not blown up--but you can see a huge part of the graph here and
four components of it.
This is how new technology has been used from 1988 until
the year 2001. 53 percent of new technology since 1988 has gone
into horsepower, 18 percent has gone into acceleration, 19
percent has gone into weight in one form or another, fuel
economy minus 8 percent, so the industry has been pushing
horsepower and acceleration while the national urgency with
respect to emissions and fuel consumption has been waning, and
I could show you another graph where it has just been going
down. We are at an all-time low since 1970.
That cannot continue, and I made it clear in my comments on
energy on Tuesday that many of us feel we need to do something
on the CAFE standard. We will be meeting as a committee, and I
am not going to suggest it by myself. We are going to meet in
the next days, talk to Senator McCain, to Republican Members of
the Committee and to Democratic members and try to see if we
can find some consensus, and at that point we will have a
markup sometime shortly after we have done the internal work of
the Committee Members themselves, so that is where we are in
the process today.
We really look forward to examining what is feasible, what
can be achieved, what are the realities of the science, what
are the compelling considerations here as a matter of national
policy, and try to sort our way through those as well as we
can.
Let me ask Senator, if anyone else has a statement. Senator
McCain.
STATEMENT OF HON. JOHN McCAIN,
U.S. SENATOR FROM ARIZONA
Senator McCain. I thank you for convening this hearing, Mr.
Chairman, on Corporate Average Fuel Economy (CAFE) standards.
This is an important issue for future generations of the
country, and I hope today's testimony will assist the Committee
as we work together to develop a balanced approach to address
this complex issue.
While I applaud the Administration's recent commitment to
developing hydrogen-powered fuel cell vehicles, and its
``Freedom CAR'' partnership with private industry, I do not
believe it would be sound policy for the Federal Government to
place all of its eggs in the basket of the hydrogen fuel cell
program. As we eagerly anticipate the results of that program,
we must, at the same time, take necessary steps to improve fuel
efficiency without unduly compromising safety.
Last year, the National Academy of Sciences (NAS) report
concluded that the benefits resulting from CAFE clearly warrant
government intervention to ensure fuel economy levels beyond
what may result from market forces alone. The NAS committee
found that CAFE has caused marked improvements in reducing
greenhouse gas emissions, fuel consumption, and dependence on
foreign oil. The NAS warned, however, that CAFE standards have
probably resulted in increased traffic fatalities due to
downsizing and downweighting of vehicles by manufacturers in
their efforts to comply with the standards. As the Commerce
Committee further examines this issue, it is imperative that we
account for any unintended consequences. As the NAS committee
suggests, we can achieve better fuel economy without having to
compromise passenger safety.
The Debate over CAFE is complex, because it requires
striking a careful balance among many factors, and this debate
is long overdue.
I thank you, Mr. Chairman, and look forward to the
testimony.
Senator Kerry. Thank you very much, Senator McCain. Senator
Dorgan.
STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA
Senator Dorgan. Mr. Chairman, let me just briefly make a
couple of comments. I serve on the Energy Committee, as well as
the Commerce Committee. This is an important issue. If you look
at energy demand, a substantial increase in demand over a long
period of time has come from the transportation sector. You
must, it seems to me, with respect to an energy policy, deal
with not only increased production but also conservation,
increased efficiency, and renewable and limitless resources, so
all of this is important.
I would be remiss if I did not say I come from a state that
has more miles of roads per person than anyone else in the
country. We pay nearly the highest amount of money for fuel tax
per person. We drive a substantial number of pickup trucks. It
is a rural state with farmers and so on. We need to have a
thoughtful and balanced approached with respect to these
efficiencies, but I want to make one final point. I have made
it before, but it is worth making again.
My first automobile was a car that I bought for $25 when I
was a teenager. It was 1924 Model T Ford, and I bought it and
restored it at age 14. It was a wonderful experience. I put
gasoline in the 1924 Model T Ford the same way I put gasoline
in my 1997 car. You just take the hose and stick it in the
tank, and you pump gas. Nothing has changed in 77 years.
Nothing.
That is why I believe that the fuel cell and other
approaches also makes sense. If we do not proceed to deal with
technology and begin to wean ourselves from the internal
combustion engine and gasoline in the long term, we are simply
talking about policies that have serious implications for this
country, and so yes, I want to deal with the issue of
efficiency in a thoughtful, careful way, but I also want us to
be understanding that over 75, 80 years ago we should have been
able to develop some new technologies that address some of
these issues as well.
And Mr. Chairman, thank you for holding this hearing. We
will be holding similar inquiries, in the Energy Committee and
talking about these issues as well, but thanks for your
leadership.
Senator Kerry. Thank you very much, Senator. I might just
comment that interestingly, you were talking about things that
have not changed, only 15 percent of the chemical energy in
gasoline is used to propel a typical vehicle. 85 percent is
gone. I mean, that is why the industry respondents themselves
have agreed by 5 to 1 that the internal combustion engine still
has very significant room for increases in overall efficiency,
and there are many technologies--we are going to listen to some
of them this morning--that could enhance that.
We have a very distinguished panel. I welcome you. Thank
you for taking time to be here today. Ambassador, or Deputy
Secretary--I am not sure which title he prefers, but he comes
with an extraordinary background in these issues and I must say
I have personally witnessed his negotiating skills on difficult
issues. I think we have been well-served to have his counsel
involved in Government for a long period of time. He was
President Carter's chief domestic policy advisor at a time when
the energy issue first surfaced.
We welcome Ambassador Eizenstat here. Joan Claybrook, a
long-time involved in these issues, of Public Citizen, Mr.
Adrian Lund, the chief operating officer of the Insurance
Institute for Highway Safety, and Andrew Hoerner, the Center
for Sustainable Economy, director of research.
Thank you all for being here today. We will start off,
Ambassador, with you. Thank you.
STATEMENT OF AMBASSADOR STUART E. EIZENSTAT, PARTNER, COVINGTON
& BURLING
Ambassador Eizenstat. Thank you, Mr. Chairman, Senator
McCain, Senator Dorgan, Senator Breaux. I have been asked to
speak primarily about the national security implications of our
dependence on foreign oil, and before I begin my formal
remarks, Chairman Kerry, let me applaud your alternative energy
plan that was unveiled earlier this week.
The lessons of the impact of our dependence on foreign oil
supplies were first taught to us back in 1973-1974, with the
initial Arab oil embargo, when crude oil prices quadrupled from
1972 to 1974. In large measures spurred by that embargo,
Congress in 1975 passed the Energy Policy and Conservation Act,
which included provisions for establishing CAFE standards. I
was in the middle of that debate as chief domestic policy
advisor to President Carter, and remember very well being part
of the team that developed CAFE standards and a meeting we had
in the Cabinet room with President Carter and the heads of the
three big automobile manufacturers. They said that it was
impossible to reach the standards that we were considering,
starting at 18 miles per gallon in 1978 to 27\1/2\ miles per
gallon in 1985. The technology did not exist. It was simply
impossible and too costly.
And yet, once the CAFE standards were implemented, all
three companies met and, indeed, exceeded those standards, so
as you embark upon this important process, I feel confident
that automobile manufacturers do have the ability to achieve,
and even surpass considerably, the standards that have been
previously set.
In terms of the national security implications, at present
we import about 51 percent of our oil, and that is projected to
increase to 64 percent within 20 years. This places us in a
precarious national security position. Each year, we import 16
percent of our oil from Saudi Arabia and an additional 9
percent from other States in the Persian Gulf. Our dependence
on oil from the Middle East is fraught with insecurity and
danger. These were horrible reminders, of course, on September
11, when terrorist threats both at home and abroad showed
linkages, direct or indirect, with oil-producing States in the
region.
Our reliance on States that are unstable or in some cases
even hostile to the United States presents a very real national
security dilemma. Some countries like Iran and Iraq are
actively hostile. Others, like Saudi Arabia, have been and
remain historically friendly to us, but rest on power bases
that might not have broad public support and that have their
own internal fundamentalist threats.
While we have a national security interest in the stability
of those regions and those regimes, we must remain aware of the
possibility that they could fall into hostile hands. I can
assure you that we had no anticipation that the Shah of Iran
would be toppled so quickly during the Carter years. No one
could have forecast the Iranian revolution. The rise to power
of Ayatollah Khomeini, the first radical fundamentalist,
altered our relationship with Iran and led to one of the most
difficult events of the past 25 years, the Iran hostage crisis.
At the time of that revolution, oil production from Iran
dropped precipitously and oil prices in the U.S. skyrocketed.
The Iranian revolution resulted in the loss of 2 to 2\1/2\
million barrels of oil per day from November 1978 to June 1979,
and during a 1-year period, from the beginning of 1979 to the
beginning of 1980, oil prices rose by 120 percent, delivering a
knock-out blow to the U.S. economy.
Another smaller supply interruption occurred during the
Iran-Iraq war from 1980 to 1988. The impact was certainly more
mild, but still worrisome. Today Iran supports terrorist
organizations like Hezbollah, who seek to destroy the Middle
East peace process, and is also on a crash course to develop
medium-range missiles with potential chemical or nuclear
warheads able to reach Israel in a few years. There is no
reason to think they will stop there, and we must be concerned
by the possibility that they will try to develop long-range
missiles that can hit the United States. Clearly, and obviously
Iraq is not a reliable partner, either.
Our dependence on oil from the Middle East profoundly
influences our economy and our foreign policy. Our decision to
take military action against Iraq after the invasion of Kuwait
was, at a minimum, heavily influenced by our dependence on oil
from the Persian Gulf. It led us to commit more than 500,000
American troops during the gulf war, more than 600 of whom were
killed or wounded. At present, we have 4,500 troops in Saudi
Arabia and 12,500 naval personnel at sea in the Persian Gulf.
The presence of these troops is intended, of course, to protect
the governments in the region, but it also leads to resentment,
resentment that was at the heart of the September 11 attacks.
The U.S. now finds itself torn between its interests in
supporting stable governments in the gulf, and the hostility
and danger present to American troops on foreign soil. I for
one believe it is critical that we remain, and continue to have
a military presence there, but in the end, our dependence on
Persian Gulf oil and Saudi oil, in particular, leaves us
vulnerable to attack at home and abroad.
The lessons of the past 25 years in the gulf are clear.
Regional instability there is real, with tangible effects here
in the United States. If we do not take action at home to
reduce our reliance on oil from abroad, we run the risk of
falling prey to the very same problems we have lived through in
the past. We have remained dependent on a region where, in the
past 2 decades, we have fought 2 wars, and the tide of anti-
Americanism continues to rise. Tension between modern and
radical Islam threatens the ruling elites of the governing
regimes and yet, in spite of all of this, we continue to import
25 percent of our daily supply from the gulf. From a national
security perspective, this makes no sense.
One further point is that the Persian Gulf is not the only
region where our dependence on foreign oil renders us
vulnerable. Nigeria, a major supplier of almost a million
barrels of oil per day, has regional and religious animosities.
The Caspian Sea region is also an area of instability. Getting
Caspian oil to international markets will require overcoming
enormous hurdles, since it must travel by pipeline through some
of the most volatile areas of the world, including Chechnya,
Georgia, Armenia, and Iran.
By raising CAFE standards, you will reduce our
vulnerability to national and regional instability in oil-
producing areas. CAFE standards have already saved 3.9 million
barrels a day, and a rise in minimum CAFE standards over time
to 40 miles per gallon would represent a savings of almost as
much, or more than, the oil we import from Saudi Arabia.
In addition to these national security concerns, a
reduction in our dependence on foreign oil would have a
substantial effect on our foreign trade deficit. Oil is our
biggest natural resource import, and one of the single largest
contributors to our trade deficit. Throughout the 1990's, that
deficit rose each year, and our reliance on foreign oil was a
primary cause of it. Therefore raising CAFE standards, not only
would we be reducing our dependence on volatile areas of the
world, but also reducting the trade deficit.
As chief U.S. negotiator for the Kyoto Protocol on global
warming, I have a particular interest in the environmental
effects of our oil dependence. Senator Kerry was in Kyoto
during our negotiations. To the extent that we want to reduce
the threat of greenhouse gases our reduction of oil consumption
is essential. Transportation is responsible for one third of
the release of greenhouse gases into the earth's atmosphere, so
by raising CAFE standards, we will not only reduce our
dependence therefor on volatile markets, but we will be taking
steps to reduce our role in the decay of the environment.
With respect to the dependence of consumers on automobiles
and costs, I do not believe there is an either-or proposition
between conservation and production. We need conservation, we
need to increase domestic production, and we need increased
research and development on new technologies. I recently test-
drove the new Toyota Prius hybrid that gets 52 miles a gallon,
and I know that Senator Kerry's alternative energy plan would
provide tax incentives for such cars.
I believe that there is a positive impact, in terms of
making our industry more competitive, to increasing CAFE
standards. For example, Japanese auto makers today are
developing technologies at a faster rate than our American
counterparts. The Germans are revealing a diesel-powered car
that will soon get 35 to 40 miles per gallon. Simply put, U.S.
auto makers must be able to compete with their foreign
counterparts. Having a fleet that is more fuel-efficient will
allow our auto makers to do it.
As you consider the specific numerical targets and
timetables, it is important to take into account the findings
of the recent National Academy of Sciences report, particularly
with regard to the long lead times required for technology
changes to be implemented. The report concludes that the
widespread penetration of already existing technologies will
themselves require 4 to 8 years, and thus, while you should
move aggressively in the pursuit of new CAFE standards, it is
important to maintain the long-term vision that new technology
demands.
Just last week, the Bush administration announced it would
not take advantage of congressional action that opened the door
to higher fuel efficiency requirements for 2004 model year
pickup trucks, minivans, and sport utilities. This is
regrettable. I hope the administration will push to review the
standards so that, at a minimum, higher requirements can be
implemented by the 2005 model year.
With relation to the cost to consumers, I believe these
costs will be more than offset by fuel savings. Indeed, it has
been estimated that with higher fuel efficiency standards in
place, consumers buying cars in 2012 would save a net of $2,200
over the lifetime of their cars.
Let me conclude by reiterating the lessons of the past. In
the seventies and eighties, Japanese auto makers gained a
foothold in the U.S. by providing higher fuel efficiency cars.
The U.S. auto industry continues to suffer from the failure to
recognize the trend before it happens. Cars of the future will
have higher, much more fuel-efficient systems. You should not
wait until the next run-up in oil prices or until Japanese
manufacturers have arrived even more fully before we act.
Closing the loophole under which SUV's and minivans are
allowed to meet lower standards than other passenger cars
would, by early in the decade, save roughly a million barrels
of oil a day, and according to a recent study by the National
Academy of Sciences, the distinction between cars for person
use and trucks for work and cargo has been stretched well
beyond its original purpose. We can improve the efficiency of
SUV's and minivans with available technology at no cost to
consumers over the life of the car.
Last, in considering how to close the SUV loophole, the
committee should balance its interests in raising the SUV
standard itself against the additional flexibility that the
automobile industry would be given if SUV and passenger vehicle
standards were to be merged into a single category. I would
favor the approach, providing maximum flexibility to the
industry. As one who helped champion the creation of tradable
emissions credits in the Kyoto Protocol for CO2
emissions, I would hope the Committee would also consider the
National Academy of Sciences' recommendation and idea of
creating tradable fuel economy credits. This can lead to higher
standards with more flexibility and less cost to the industry.
To sum up, the national security costs of our petroleum
dependence have never been more clear.
Thank you, Mr. Chairman.
[The prepared statement of Ambassador Eizenstat follows:]
Prepared Statement of Ambassador Stuart E. Eizenstat, Partner,
Covington & Burling \1\
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\1\ Stuart E. Eizenstat heads the International Trade and Finance
Group at Covington & Burling. This testimony reflects his personal
views and not those of Covington & Burling or any of its clients. From
1977 to 1981 he served as President Jimmy Carter's Chief Domestic
Policy Adviser and Executive Director of the White House Domestic
Policy Staff. He has also served as Deputy Secretary of the Treasury,
Ambassador to the European Union, Under Secretary of State for
Economic, Business and Agricultural Affairs and Under Secretary of
Commerce for International Trade. He has had a prominent role in the
development of key international initiatives, including the negotiation
of the Kyoto Protocol on global warming.
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Chairman Hollings, Chairman Kerry, Senator McCain, and Members of
the Committee, good morning. I have been asked to speak today on the
national security implications of America's dependence on foreign oil.
I am honored that you have asked me to address this issue. The
questions that you will be asking this morning and again next Tuesday
will have repercussions long beyond our lifetimes. These issues will
impact generations to come, in terms of the effects on our national
security, our standard of living and our commitment to the environment.
Thus, this Committee is engaged in a critical task as it considers what
would be the appropriate levels for increased Corporate Average Fuel
Economy (``CAFE'') standards.
Before I begin my formal remarks, I would like to applaud Senator
Kerry for the alternative energy plan that he unveiled earlier this
week. I believe that his proposal strikes a healthy balance between the
conservation and production concerns that are at the heart of the
energy debate.
The lessons of the impact of our dependence on foreign oil supplies
were first taught to us back in 1973 and 1974, when the initial Arab
oil embargo (the ``Arab Embargo'') on the United States occurred. At
that time, the Federal Government imposed domestic price and allocation
controls on petroleum. The results of this policy, as many of you will
remember, were widespread gasoline shortages and long gas lines, as
well as rapid price increases. The economy as a whole suffered greatly
as a result.
In 1975, in large measure spurred by the Arab Embargo, Congress
passed the Energy Policy and Conservation Act (``EPCA''). The EPCA
included provisions that established the CAFE standards for new
passenger cars. Given the oil crisis at that time, it appeared that the
CAFE standards would be quickly implemented.
However, in spite of the obvious merits of the standards, the
American automobile manufacturers were opposed to the regulations. I
remember their opposition well. In my role as Domestic Policy Advisor
to President Carter, I was part of the team that developed the first
CAFE standards. Those standards set the necessary fuel economy levels
for the period from 1977 to 1985, starting at 18 miles per gallon
(``MPG'') in 1977 and rising to 27.5 MPG in 1985. I specifically
remember a meeting in the Cabinet office with President Carter and the
heads of the big three automobile manufacturers--Ford, General Motors
and Chrysler--in which all three strongly opposed the imposition of
fuel economy standards. They claimed that their companies lacked the
technology to reach the standards that the Administration had in mind.
And yet, once the CAFE standards were implemented, all three companies
met and exceeded the standards.
I can imagine the pressure that you are under from those same
companies and others as you consider raising the standards. But as you
embark on this process, I strongly urge you to recall our experiences
in developing the first set of CAFE standards. You should feel
confident that the automobile manufacturers do have the ability to
achieve and in fact surpass whatever standards you set.
National Security Implications of Reliance on Oil Imports. At
present, the United States imports more than 51 percent of its oil.
That number is projected to increase to 64 percent by 2020. Such heavy
reliance on foreign oil places the United States in a precarious
position. Already, oil has played a central role in one recent
conflict--the Gulf War--and, over the past quarter century, it has been
an influential ingredient of American foreign policy more broadly.
Each year, the United States imports 16 percent of its oil from
Saudi Arabia and an additional 9 percent from other States in the
Persian Gulf. As you all know, this is a consistently volatile region,
and our dependence on oil from the Middle East is fraught with
insecurity and danger. As we were so horribly reminded on September
11th, terrorist threats both at home and abroad have links, whether
direct or indirect, with the oil-producing States in the Gulf region.
Our reliance on States that unstable or even hostile to the United
States, presents a very real national security dilemma, a dilemma that
must be addressed immediately. Some States, like Iran and Iraq are
actively hostile to the United States. Others, like Saudi Arabia, have
historically been friendly to us, but they are often autocratic
regimes, which rest on power bases that may not have broad public
support, and that have their own internal fundamentalist threats. While
we have a national security interest in the stability of these regimes,
we must remain aware of the possibility that they will fall into
hostile hands. I certainly can say that, given my experience with Iran
during the Carter Administration, no one would have forecast that the
Iranian Revolution would topple the Shah of Iran, given the military
support he appeared to have.
Potential threats in Iran, Iraq, and elsewhere in the region
constantly jeopardize the stability of the Persian Gulf. In 1972 the
price of crude oil was about $3.00 per barrel and, by the end of 1974,
the price of oil had quadrupled to $12.00. The price rise was almost
exclusively the result of the embargo by Arab oil-producing states in
response to Western support of Israel in the Yom Kippur War. The Yom
Kippur War started with an attack on Israel by Syria and Egypt on
October 5, 1973. The United States and many countries in the western
world showed strong support for Israel. As a result of this support,
Arab exporting nations imposed an embargo on any nations supporting
Israel in the war. Arab nations curtailed production by 5 million
barrels per day. Approximately 1 million barrels per day were recovered
by increased production by other countries. The net loss of 4 million
barrels per day extended through March of 1974 and represented 7
percent of the free-world production.
Our national security concerns are not restricted to regional
action. Since the 1970s, Iran and Iraq have been involved in a number
of cataclysmic events that have shaped not only their countries, but
ours, as well. Indeed, our reliance on oil from Iran left us vulnerable
to that nation's problems at the end of the 1970s. I was serving in the
Carter White House at that time and lived through the implications of
the Iranian revolution on our economy and, more broadly, our society.
The rise to power of Ayatollah Khomeini altered our relationship
with Iran and led to one of the most difficult events of the last 25
years, the Iranian hostage crisis. At the time of the Iranian
Revolution, oil production from Iran dropped precipitously and oil
prices in the United States skyrocketed. The Iranian revolution
resulted in the loss of 2 to 2.5 million barrels of oil per day between
November of 1978 and June of 1979. Moreover, after the United States
Embassy in Tehran was occupied in November 1979, President Carter
halted all oil imports from Iran. During the one year period from the
beginning of 1979 until the beginning of 1980, oil prices rose by 120
percent. That increase was a knockout blow to the U.S. economy,
aggravating inflationary pressures and increasing unemployment at the
same time. In fact, from 1978 to 1981, crude oil prices rose by two and
a half times, from $14 per barrel to $35 per barrel.
Another, smaller supply interruption occurred during the Iran-Iraq
War from 1980 to 1988. During the Iran-Iraq War, Iraq's crude oil
production fell 2.7 millions of barrels per day, and Iran's production
dropped by 600,000 barrels per day. The impact of this event was much
milder, but still worrisome.
Iran presents a great policy dilemma for the United States, with
its Janus-like policy towards us, with one part of the government
advocating improved relations with the United States, while the other
and more dominant faction supports positions that are inimical to
America. In Iran, we are presented with a reformist president, Mohammad
Khatami, who is supported by the majority of the people and appears to
be sympathetic to some improved relations with the United States.
However, he clearly does not have control of the security and defense
apparatus in Iran, as well as other sectors of the Iranian government,
which support terrorist organizations like Hezbollah, seek to destroy
the Middle East Peace Process and are on a crash-course to develop
medium-range missiles with potential chemical or nuclear warheads that
will be able to reach Israel in a few years. There is no reason to
think that the Iranians will stop there, and we must be concerned by
the possibility that they will try to develop long-range missiles that
can hit the United States. And, clearly, Iraq is not a reliable partner
either. At present, we do not import any oil from Iran and, in 2001, we
imported approximately 600,000 barrels per day from Iraq. To place
these numbers in perspective, Iranian oil production capacity is
estimated to amount to 3.9 million barrels per day and Iraqi production
capacity is estimated to be 2.8 million barrels per day. In light of
our relations with Iran and Iraq, we find ourselves largely dependent
on others in the region for our oil.
Our dependence on oil from the Middle East profoundly influences
our economy and our foreign policy. In fact, our decision to take
military action against Iraq after the invasion of Kuwait was, at a
minimum, heavily influenced by our dependence on oil from the Persian
Gulf. The threat--not only to Kuwait but to others in the Gulf region--
posed by Saddam Hussein's expansionist pretensions led us to commit
more that 500,000 American servicemen and women during the Gulf War.
More than 600 of our troops were killed or wounded in battle. Many more
continue to suffer from a variety of illnesses since their return home.
At present, we have more than 4,500 troops stationed in Saudi
Arabia, and more than 12,500 Navy personnel at sea in the Persian Gulf.
The presence of these troops is intended to protect the governments in
the region, but it also leads to resentment in the region, resentment
that was at the heart of the September 11th attacks. The United States
now finds itself torn between its interest in supporting stable
governments in the Persian Gulf and the hostility and danger attendant
to the presence of American troops on foreign soil. In the end, our
dependence on Persian Gulf oil in general and Saudi oil in particular
leaves us vulnerable to attack, both abroad and at home.
It is also worth mentioning that unconfirmed reports in The
Washington Post suggest that Saudi Arabia may ask the United States to
withdraw its military personnel. Nevertheless, our troops remain
deployed there, in large measure to protect the Saudi Government and
its primary asset: oil. Moreover, I would note that, while at one level
the withdrawal of our troops from Saudi Arabia will reduce the threat
posed to our servicemen and women, it also threatens to make Saudi
Arabia more unstable.
The lesson of the past 25 years in the Persian Gulf is clear:
regional instability there has real, tangible effects here, in the
United States. If we do not take action at home to reduce our reliance
on oil from abroad, we run the risk of falling prey to the very same
problems we have lived through in the past. Indeed, we have seen fit to
fight a war in effect to protect our oil interests. And, in placing the
lives of American servicemen and women in harm's way in the Gulf War,
we have signaled the dangers of our reliance on oil from that region.
Nonetheless, we remain dependent on a region where, in the past
decade, we have fought two wars, where the tide of anti-Americanism
continues to rise, and where the tension between modern and radical
Islam threatens the ruling elites of the governing regimes. In spite of
all of these risks--each in itself sufficient to threaten our oil
supply from the region--we continue to import 25 percent of our daily
supply of oil from the Persian Gulf. Strictly from a national security
perspective, this policy does not make sense.
One further point bears mention: I do not mean to single out the
Persian Gulf region as the only area where dependence on foreign oil
renders the United States vulnerable. Obviously, that region has been,
over the past quarter century, the primary source of national security
concern with regard to foreign oil production. But other areas engender
similar concerns. Nigeria, which boasts Africa's largest population and
a wealth of religious and regional animosities, supplies the United
States with 900,000 barrels of oil per day. The Caspian Sea region
remains a relatively small producer, but its potential reserves make it
one of the most anticipated oil resources worldwide. Indeed, the
Caspian Sea region is generally considered to represent one of the
largest untapped oil resources in the world. And yet, the region
itself--and the surrounding areas that would be essential for
extraction of the oil--like the Persian Gulf, has an uncertain future.
The Caspian Sea is located in northwest Asia, landlocked between
Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan. Since the
breakup of the Soviet Union in 1991, the Caspian Sea--as well as the
region surrounding it--has became the focus of much international
attention due to its huge oil and gas reserves. The Caspian Sea, which
is 700 miles long, contains six separate hydrocarbon basins, and most
of the oil and gas reserves in the Caspian region have not been
developed yet. Ongoing legal wrangling over rights to the oil continues
to stunt the development of the reserves.
To give some sense of the potential importance of the Caspian oil
fields, I would note that, in May 2001, oil industry officials reported
sizable oil deposits in an area known as East Kashagan, in the Caspian
Sea off the Kazakhstan coast. Initial estimates indicate that that
field alone could contain as much as 50 billion barrels, and at least
20 billion barrels, of crude oil. By comparison, the United States has
known reserves of 21 billion barrels.
Aside from ongoing issues over who retains the rights in the
Caspian, U.S. national security is threatened by instability in the
areas surrounding the Caspian. Getting the Caspian oil to international
markets will require overcoming enormous obstacles since it must travel
by pipeline through one of the most politically volatile areas of the
world. Because the Caspian Sea is landlocked, oil and natural gas must
be transported by pipeline to a terminal on the open sea, where it
would be pumped into tankers and shipped to customers. Long distances
over often inhospitable mountain and desert terrain, prone to
earthquakes, and vulnerable to attack, would make pipeline construction
and operation extremely difficult. Proposed pipelines might run through
Chechnya, Georgia, Armenia and Iran, among other hot spots. Recent
instability in those areas is only one concern. We must also consider
the potential for upheaval after the pipeline has been constructed. As
our reliance on particular oil deposits grows, our vulnerability to
such upheaval grows apace.
By raising the CAFE standards, you will reduce our vulnerability to
national and regional instability in oil-producing areas. According to
the Union of Concerned Scientists, CAFE has already saved 60 billions
of gasoline (3.9 million barrels per day). A rise in the minimum CAFE
standards to 40 MPG would save 125 billion gallons of gasoline by 2012.
This represents approximately 1.9 million barrels per day, or more than
the total amount of oil we import from Saudi Arabia. And, at the end of
the day, by reducing our consumption of foreign oil, we will shield
ourselves from many of the threats posed by our current level of
dependency.
Impact of Oil Dependence on the U.S. Trade Deficit. In addition to
the national security concerns that I have just discussed, a reduction
on our dependence on foreign oil would have a substantial effect on our
foreign trade deficit. Oil is the United States' biggest natural
resource import and one of the single largest contributors to our trade
deficit. According to the Department of Energy, in 2001, the United
States imported an estimated $110 billion in petroleum products. At the
same time, our trade deficit last year was an estimated $350 billion.
One year earlier, in 2000, our trade deficit reached an all-time high
of $375 billion. Indeed, throughout the 1990s, our trade deficit rose
each year, and our reliance on foreign oil was a primary cause of the
rising deficit.
By way of example, I would point out that, in November 2001, our
monthly trade deficit was $1.4 billion lower than our trade deficit one
month earlier. The largest single contributor to that drop was a 17
percent reduction in oil imports. Even with that reduction, oil
represented more than six percent of U.S. total imports in the month of
November.
The volatility of the world oil market leaves the U.S. economy
vulnerable to price fluctuations. For example, world oil prices tripled
between January 1999 and September 2000 due to strong demand, OPEC
production cutbacks, and other factors, including weather and low oil
stock levels. Our reliance on foreign oil challenged our economy and
increased our trade deficit. Thus, by raising CAFE standards and
reducing domestic oil consumption, not only would we be reducing our
dependence on volatile areas of the world, but we also would be
contributing to the reduction of our trade deficit.
Impact of Oil Dependence on Global Warming and Pollution. As the
Chief U.S. Negotiator for the United States for the Kyoto Protocol on
Global Warming, I have a particular interest in the environmental
effects of our oil dependence. Therefore, I must also mention, at least
briefly, the impact of our oil dependence on the environment. To the
extent that we want to reduce the threat of greenhouse gases, a
reduction in oil consumption is essential. Transportation is
responsible for one-third of the release of greenhouse gases into the
earth's atmosphere. And, although the United States accounts for three
percent of the world's population, we are responsible for over 20
percent of greenhouse gases worldwide. Thus, by raising the CAFE
standards, we will not only reduce our dependence on volatile foreign
markets but we will be taking steps to reduce America's role in the
decay of the environment. As I mentioned at the outset, our
responsibility to tackle these difficult issues goes far beyond our own
generation. The CAFE standards represent just one of the means by which
we can take action.
Impact of Oil Dependence on the American Automobile Industry and on
Consumers. I am not one who believes in an either/or proposition
between conservation and production. I believe that we need
conservation, increased domestic production, and increased research and
development on new technologies. On this point, I should mention that I
recently test drove the new Toyota Prius hybrid that gets 52 miles per
gallon of gas in the city. The engine is part fuel cell and part
internal combustion engine. I found the car to be very impressive. I
know, Senator Kerry, that your alternative energy plan would provide
tax incentives to speed production of hybrid-fuel engines. I firmly
agree with this proposal. U.S. automakers must jump on the hybrid-fuel
train before it has left the station. Already Japanese automakers have
begun developing the technology at a faster rate than their American
counterparts. In addition, the Germans have revealed a diesel-powered
car that will get 35-40 miles per gallon. Simply put, U.S. automakers
must be able to compete with their foreign counterparts. Having a fleet
that is more fuel efficient will allow our automakers to do just that.
Just last week, the Bush Administration announced that it will not
take advantage of congressional action that opened the door to higher
fuel efficiency requirements for 2004-model-year pick-up trucks,
minivans and sport-utility vehicles. This is regrettable. Although the
National Highway Traffic and Safety Administrator announced that he
will continue to consider higher fuel efficiency standards, he added
that an April 1, 2002 deadline does not provide sufficient time to
review the issue. I would hope that the Administration will push to
review the standards so that, at a minimum, higher requirements can be
implemented for 2005-model-year vehicles. The NHTSA's recent action
also places an additional burden on you to move expeditiously in
setting higher CAFE standards, so that they can be implemented as soon
as possible.
In the meantime, President Bush's proposed energy plan would
include controversial drilling in the Arctic National Wildlife Refuge
(``ANWR'') in Alaska. While the President's proposal would not provide
for drilling of the entire region, it is noteworthy that, even if
drilling took place in the entire ANWR reserve, according to the
Department of Energy, there is a 95 percent probability that at least
5.7 billion barrels of oil are technically recoverable. At the other
end, there is only a 5 percent probability that there are more than 16
billion barrels of oil that are recoverable. The mean estimate is that
10.3 billion barrels of oil are recoverable. To place those numbers in
perspective, the United States consumes about 19.4 million barrels of
oil per day, meaning that the ANWR reserves would only be able to
supply full consumption for less than a year-and-a-half. Of course, the
reserves would not be used to supply full consumption, but the fact is
that ANWR would only add 0.3 percent to the world oil supply. Thus, the
Administration's Plan with regard to ANWR simply does not itself
relieve our dependence on foreign oil supplies.
With relation to the costs to consumers that would come from rising
car prices to accommodate new technology, I believe that those costs
will be more than offset by fuel savings. Indeed, it has been estimated
that, with higher fuel efficiency standards in place, consumers buying
cars in 2012 would save a net of $2,200 over the lifetime of their car.
I would reiterate that we must learn the lessons of the past. In
the 1970s and 80s, Japanese automakers succeeded in gaining a foothold
in the U.S. auto market by providing a benefit to consumers that
American auto manufacturers had simply overlooked. Starting in the
1970s, while American automakers stood on the sidelines, Japanese
manufacturers introduced smaller, more economical vehicles to the U.S.
market. By the time American manufacturers entered that market, the
Japanese makers had already cornered it. The U.S. auto industry
continues to suffer from the failure of American manufacturers to
recognize the trend in the market before it happened. Cars that require
less gas are the wave of the future. We must ride that wave. We should
not wait until the next run-up in oil prices or until Japanese
manufacturers have arrived before we take action. There is no lack of
technology to meet higher standards. The issue is whether the will to
implement change exists.
Simple steps to improve automotive fuel efficiency would pay
enormous dividends. Closing the loophole under which SUVs are allowed
to meet lower standards than other passenger cars would, by early in
the next decade, save roughly one million barrels of oil per day,
helping to provide clean air and protecting Americans from disruptions
in oil supply. According to a recent study by the National Academy of
Sciences, this advance could be accomplished with available technology
and at no cost to consumers over the life of a car.
Conclusion. To sum up: America's reliance on foreign oil imports
presents an ongoing threat to the stability of our economy and
continues to exert undue influence our foreign policy. The national
security costs of our petroleum dependence have never been more clear.
As you probably know, I am by no means an advocate of protectionist
trade policies. What I do advocate, however, is a reduced dependence on
foreign oil, both for its effects on our economy and on our national
security. By raising the CAFE standards, you will reduce our dependence
on foreign oil. The benefits of a reduced dependence will be felt not
only by us but also by future generations. I urge you to fight the
resistance of the automobile industry and others who fear the potential
short-term costs of increased fuel efficiency. The benefits of fuel
economy are simply too great to ignore. Enactment of the Kerry energy
proposal would be a good step forward and would be in the interests of
our national security, our trade deficit, and the environment.
Thank you very much. It is a pleasure to be here and to contribute
to the Committee's work. I would be happy to answer your questions.
Senator Kerry. Thank you very much, Mr. Ambassador, for
that important testimony.
Ms. Claybrook.
STATEMENT OF JOAN CLAYBROOK,
PRESIDENT OF PUBLIC CITIZEN
Ms. Claybrook. Thank you, Mr. Chairman. I am Joan
Claybrook, president of Public Citizen, a national consumer
organization, and the former administrator of the National
Highway Traffic Safety Administration. I issued the first fuel
economy standards in 1977.
As reported by Keith Bradsher in the New York Times, Ford
Motor Company admitted in its corporate citizenship report in
May of 2000 that SUVs, which generate much of the company's
profit, ``contributed more than cars to global warming, emitted
more smog-causing pollution, and endangered other motorists,
and that the company faced an awkward situation, because its
most profitable products do not meet its goals for social
responsibility.'' However, Bradsher reported that Ford still
has no plans to halt or reduce production of their massive SUV,
the Ford Excursion, which gets 10 miles per gallon in the city,
13 on the highway, and weighs as much as two Jeep Grand
Cherokees.
Congress must require manufacturers to change the fuel
economy performance of their vehicles because in the 17 years
that have passed since 1985 they have failed to do so on their
own--in fact, they have gone backward--and if they do not,
America will continue to suffer the consequences of short-term
industry thinking and long-term damage to this country.
Americans support, with their pocketbook if necessary,
strong fuel economy standards, according to a Harris poll and
other polls that have been done, as a way of reducing our
economic dependence on the vagaries of foreign oil and
protecting our environment by cutting emissions of greenhouse
gases. Congress must now limit U.S. oil consumption. Raising
fuel economy standards is the most reasonable and the most
cost-effective way to accomplish this goal.
The CAFE standard that was devised by the Congress in 1975
has been a smashing success, but it is now outdated due to
inactivity at the congressional and NHTSA level, and
improvements are needed. NHTSA is charged by statute with
administering both the highway safety and the fuel economy
program and, in view of this dual mission, I would like to help
debunk the industry canard that fuel economy and safety are a
tradeoff. That has never been the position of the agency among
its technical staff, at least, and it is incorrect.
The argument has been made by the auto industry so many
times it is now a cliche, but fortunately, it is not true.
First, historically, weight reductions in the smallest vehicles
did not occur with the 1978-1985 CAFE standards and it is not
likely to happen in the future, and the reason why not is that
it is not cost-effective for the industry. When they remove
weight, they take it out of the behemoths, they do not take it
out of the little guys, because that is what is worthwhile in
terms of saving fuel and the investments they have to make.
In 1974, Ford claimed that fuel economy standards, ``would
require a Ford product line consisting of either all sub-Pinto-
sized vehicles or some mix of vehicles ranging from a
subcompact to a Maverick.'' That prediction was wrong, and
their predictions today about safety and fuel economy, are
wrong as well.
In fact, what happens is that after the CAFE standards were
issued, the lightest vehicles, those under 2,500 pounds, were
pretty much eliminated, and they comprise a smaller percentage
of the fleet than they did earlier.
The original passage of CAFE standards did not result in
the lighter cars becoming lighter or less safe. For example,
the Honda Civic gained 800 pounds, and went from failing the
NHTSA crash test to receiving five stars, so it shows that
through technology these companies were able to improve their
vehicles and also achieve their fuel efficiency.
In addition, the Department of Energy study of the original
CAFE standards shows that 85 percent of the gains in fuel
economy came from technological advances, not weight changes,
so most of it is through technology, and to the extent that
weight is taken out, it is taken out of the big vehicles, and
what does that do? It makes the fleet more compatible, and so
these big vehicles are less likely to do damage to the smaller
cars because it is a more compatible fleet, and that is
actually what happened for a short period of time, until the
auto industry started taking advantage of the light truck
loophole which allowed SUVs to become very prominent in our
fleet.
Some of the analyses that have been done on the results of
the CAFE standards have been done based on averages, for
example, Charles Kahane at the NHTSA did an analysis that
looked at taking 100 pounds out of vehicles across the fleet.
When you do that, and it is inherently in the auto industry's
argument, you ignore the fact that it is the bigger cars or the
bigger vehicles that lose weight and go on a diet, and not the
small ones.
In addition, of course, Dr. Kahane's study is only based on
1993 data and before, and ignores many of the important
improvements in standards, some of which have been mandated by
this committee, including side impact protection and head
injury protection, as well as dual airbags.
If you hold crashworthiness improvements constant, then you
undermine, of course, the safety improvements that are
available to be done, and there are two major ones that are
really important for this Committee to consider. Kahane's study
focused on the fact that from small vehicle crashes in roll-
overs there would be an increase in deaths, but roll-overs are
one of the most achievable types of crashes in which you can
improve safety, and I believe that the Committee in your
legislation should require two important changes in safety to
accompany your fuel economy requirements, and they are (1) a
roll-over crash worthiness standard. That would mean stronger
roofs, padding, pre-tensioned belts that hold you in your
seats, the seat structure, and side-impact head airbags.
Virtually you could have survival of a majority of roll-over
crashes if this was done.
The second is an anti aggressive standard, so that these
larger vehicles cannot roll over the smaller vehicles. There
are always going to be smaller vehicles, because the
manufacturers are going to make smaller, cheaper vehicles for
some portion of the population that cannot afford the unimogs
and the other huge Excursions which are their cash cows.
The NHTSA in 1974 began building something called a
research safety vehicle. It was a car about the size of a
Pinto, weighed 2,500 pounds, and when you crash-tested it in a
frontal crash there was no injury virtually at 50-mile-an-hour
crash test and side and roll-over at 40 miles an hour. I would
like your indulgence, when I finish in just a second, to show a
1-minute clip of what this vehicle looked like and what it was
able to do.
The recommendations that we have for improvement in fuel
economy are the following, very quickly. One is to close the
light truck loophole so that all vehicles are measured under
the same standard, second to set an appropriate goal for
improvement of 40 miles per gallon beginning in 2005 for 10
years, third is to adjust the gas guzzler tax to cover trucks
and cars, and have it apply when it is 5 miles per gallon or
more below the average, fleet-wide, for that year.
We must require truth in testing, because there is a big
differential between testing and actual highway use, get rid of
bogus credits like the dual fuel vehicles, tighten the
requirement for credits on carry-back and get rid of them, and
eliminate the preemption clause, in current CAFE law, to allow
states to have a feedbate program.
And finally, and very importantly, the reason that Mr.
Eizenstat said that the NHTSA did not increase the fuel economy
standard, there is a very good reason why it did not. It does
not have any money and any staff working on this because of the
prohibition in the appropriations bills for the last 6 years;
zero, it has zero. NHTSA has no capacity, and I would urge that
in the supplemental appropriations bill that is coming up, that
you put $5 million and 10 staff positions at least, which is
very modest in the scheme of this government, so that they can
get started on evaluating fuel economy and have the capacity to
issue those standards.
I would now like to show the clip. It is a 1-minute clip of
the research safety vehicle. It is 1977 technology that crashes
safe at 50 miles an hour, and it would get 50 miles per gallon.
[A videotape was shown.]
Ms. Claybrook. Do not call the 800 number today because
this was made in the Carter administration. That number is no
longer available, and neither is the car, but it is the model
of what can be achieved by this industry.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Claybrook follows:]
Prepared Statement of Joan Claybrook, President of Public Citizen
Thank you, Mr. Chairman and Members of the Senate Committee on
Commerce, Science and Transportation, for the opportunity to testify
before you today on the safety implications of raising fuel economy
standards for the United States vehicle fleet. My name is Joan
Claybrook and I am the President of Public Citizen, a national non-
profit public interest organization with 150,000 members nationwide
that represents consumer interests through lobbying, litigation,
regulatory oversight, research and public education. Public Citizen has
a long and successful history of working to improve consumer health and
safety. I am also the former Administrator of the National Highway
Traffic Safety Administration, where I issued the first U.S. fuel
economy standards in 1977.
I. Introduction
Increasing consumption of fuel and industry manipulation of the CAFE
system threaten our safety, security, and the environment
The Corporate Average Fuel Economy (CAFE) system that was
instituted in 1975 is sorely in need of a Congressional upgrade. CAFE,
which was crafted in view of the vehicles and technology available at
the time, was a smashing success, raising average fuel economy
performance for the entire fleet in the U.S. 82 percent between 1978
and 1985. \1\ Its primary feature is a 27.5 miles per gallon (mpg)
standard for passenger automobiles, set by statute. There is no minimum
standard for light trucks, but the National Highway Traffic Safety
Administration (NHTSA) is instructed by law to set a standard every
year according to what is ``maximally feasible.''
CAFE currently saves us 118 million gallons of gasoline every day
and 913 million barrels of oil each year, or about the total imported
annually from the Persian Gulf. \2\ It was a major factor in breaking
the stranglehold of the Organization of the Petroleum Exporting
Countries (OPEC) on oil prices and cutting rampant U.S. inflation in
the early 1980s. Since 1985, no major congressional initiative or
agency action has been taken to update CAFE standards to reflect
current technology, shifting vehicle use, or the need to address global
warming and foreign oil dependency. As SUVs have come to dominate our
highways, the American public has recognized that the program is
outdated.
One obvious deficiency with the current CAFE system is that it
holds so-called ``light trucks''--such as minivans, pickups, and SUVs--
to a lower fuel economy standard than passenger cars. This distinction
may have been valid in 1975, as light trucks were a small portion of
the vehicle fleet and were generally used for farming and commercial
purposes. However, automakers have since turned this into a loophole in
CAFE, shifting their marketing and production of passenger vehicles to
push light trucks. At present, nearly 50 percent of personal vehicles
sold qualify as light trucks under the present system. \3\ The
bifurcation of the standard has created huge problems with vehicle
compatibility, resulting in countless lost lives and injuries as not-
so-light trucks crash with smaller vehicles. This is also a problem
that Congress must address.
The problem of global warming is a key reason to improve fuel
economy. Human emissions of carbon dioxide through power plants and
motor vehicles are the primary sources of this problem, with U.S. motor
vehicles generating 5 percent of total global carbon dioxide emissions.
\4\ The American public recognizes that the future of the earth is at
stake when we discuss solutions to this problem, and wants Congress to
act to preserve the delicate balance of life on earth for our
grandchildren and beyond.
A consensus for change
Americans do want Congress to require improvements in fuel economy,
and consumers are willing to pay for such improvements. A poll
conducted in July 2001 for Public Citizen by Lou Harris asked Americans
whether they would be willing to pay 3 percent (or about $900 on a
$30,000-vehicle) more for their sport utility vehicles in order to
solve emissions problems stemming from their use, and 63 percent of
respondents answered yes. \5\ In a separate Gallup poll a decade ago,
61 percent of Americans favored increasing the fuel efficiency
requirements to 40 miles per gallon (mpg), even if it increased the
price of cars. \6\ Other Gallup polls conducted over the years support
this result. Ninety-three percent of Americans believe the United
States should require cars to get better gas mileage to reduce our
dependence on foreign oil, \7\ and 61 percent believe that greater
conservation of energy supplies is an important piece of the solution
to our energy problems. \8\ In the face of such strong and consistent
public opinion over the years favoring significant improvements in fuel
economy, it would be irresponsible for Congress not to act.
The automakers will not solve the problem on their own. Recent
statements, such as the promise by Ford to improve the fuel economy of
its SUVs by 25 percent, or the copycat claims made by Daimler-Chrysler
and General Motors, should not be interpreted as an industry solution.
Despite long being in the best position to improve the efficiency of
the vehicle fleet, automakers have long taken the opposite tack.
Manufacturers chose to spend dollars and earn profits in the SUV market
segment, which lowers safety for all Americans and reduces overall fuel
economy, and to advertise these vehicles' powerful engines and speed,
making their claims of social consciousness not credible.
The problems with SUVs are no secret to their manufacturers. As
reported by Keith Bradsher of The New York Times, Ford Motor Company
admitted in its ``corporate citizenship'' report in May 2000 that
sports utility vehicles, which generate much of the company's profits,
``contributed more than cars to global warming, emitted more smog-
causing pollution and endangered other motorists'' and that the company
faced an `'awkward situation'' because ``its most profitable products
do not meet its goals for social responsibility.'' \9\ However, Ford
still has no plans to halt or reduce production of its massive SUV, the
Ford Excursion, which gets just 10 mpg in the city and 13 mpg on the
highway and weighs as much as two Jeep Grand Cherokees. Congress must
set fuel economy goals to be achieved and require manufacturers to
change the fuel economy performance of vehicles, or America will
continue to suffer the consequences of short-term industry thinking and
actions.
Missed opportunities
Twelve years ago, Senator Richard Bryan of Nevada introduced
legislation, the Motor Vehicle Fuel Efficiency Act of 1990, that would
have raised average fuel economy for the overall vehicle fleet by 40
percent. That legislation accrued 57 votes, not quite enough to defeat
a filibuster, and its failure has resulted in a downward trend in fleet
fuel economy performance. Had the bill passed, Americans would have
saved billions of dollars and today we would have a safer, more
environmentally sustainable and less costly vehicle fleet. Congress
should seize the opportunity for action now, and enact strong fuel
economy standards.
II. What Should Be Done on Fuel Economy
Close the ``light truck loophole'': Count all passenger
vehicles under a single fuel economy standard. Phase light
trucks into the CAFE program over time, by requiring that
manufacturers include an increasing percentage of their
manufactured vehicles when calculating their fleet average for
passenger cars. Increase the maximum weight covered under the
standard to 10,000 lbs.
Set realistic but appropriate goals for improvement: Raise
total fleet fuel economy to 40 mpg over ten years beginning
with model year 2005, and setting targets to be met every other
year thereafter.
Tax the major offenders: Adjust the Gas Guzzler tax with
each increase in CAFE so that it affects all vehicles sold with
fuel economies 5 mpg or more below that model year's fleet-wide
CAFE standard.
Require truth in testing: Require the Environmental
Protection Agency (EPA) to adjust its testing procedures in
order to narrow the gap between real-world fuel economy
performance and tested performance to below a 10 percent margin
of error within 5 years of initiation of new CAFE standards and
below a 5 percent margin of error by completion of the CAFE
program in 2015. Testing accuracy has eroded from 3 percent at
the program's inception to 17 percent today.
Get rid of bogus credits: Eliminate the dual-fuel credit
program, which extends CAFE credits for the production of dual-
fuel vehicles, even though gasoline is almost always used to
power these vehicles.
Tighten enforcement: Eliminate the ``carryback'' provisions
in the CAFE credit system, which encourages manipulation and
missed targets by manufacturers.
Allow states to reward leaders: Clarify the preemption
clause in current CAFE law to allow states to enact ``feebate''
programs, which reward manufacturers and consumers for fuel
economy performance exceeding federal standards.
Allocate meaningful funding for NHTSA research: Congress
should immediately appropriate a $5 million supplemental
appropriation for NHTSA and 10 staff positions for research,
evaluation and rulemaking for fuel economy standards on cars
and light trucks, in order to allow the agency to prepared for
the issuance of new standards. In its rulemaking, NHTSA made it
clear that it did not have the staff or funds to issue new
light truck standards, as required by law, this spring.
Solve safety problems by addressing safety: Require NHTSA to
set new safety standards in the areas of rollover
crashworthiness protection and limits on aggressivity. On
rollover, Congress should require:
A dynamic roof crush standard;
Roof energy absorbing protection to reduce injuries from
contact with the roof;
Safety belt pretensioners that are triggered in a rollover
crash;
Improved seat structure to keep occupants in position
during a roll;
Side impact head protection air bags that are triggered in
a rollover crash.
On vehicle aggressivity, Congress should require a crash safety
standard to reduce the damage caused by light truck-type vehicles in
crashes with smaller vehicles by 30 percent compared with model year
2000 vehicles.
III. The Real Safety Problem
A. The Myth of the Safety Tradeoff
Industry's claims that fuel economy measures reduce safety are wrong
The auto industry has argued, time and again, that raising fuel
economy standards will adversely impact safety by causing the increased
production of smaller vehicles or by reducing vehicle weight. In fact,
there is no evidence that establishes a clear correlation between
vehicle weight and increased fatalities--some heavier cars are far more
dangerous to both their occupants, and to others on the highway, than
are lighter ones. Across many measures of crashworthiness, the newest
fuel guzzlers--the SUVs--are the worst performers. What matters most
for safety are the crashworthiness protections and the compatibility
that is designed and built into vehicles, and these must be enhanced as
critical parts of any comprehensive highway safety and fuel economy
program.
The use of the time-worn safety canard by industry is a cynical
attempt to frighten consumers and Congress in an attempt to deflect new
requirements, and appears most appallingly hypocritical when we
consider that industry has acted to obstruct safety improvements
whenever possible. Industry deploys a misleading safety ``red herring''
only because it hopes that it will offer a modicum of political cover
for its unwillingness to act responsibly.
Public Citizen has a long record of working for safer cars--most
often in opposition to the powerful efforts of the auto industry to
squelch or resist them--the analysis we present today shows that
raising fuel economy standards, if accompanied by appropriate and
reasonable safety measures, will not hurt highway safety and in fact
will even save lives by creating a more compatible vehicle fleet. It is
important to note that NHTSA administers both the safety and fuel
economy programs, so it can coordinate this work, as I did as NHTSA
Administrator in the 1970s.
The following points will, I believe, put the industry's
hypocritical arguments to rest at last.
Historically, the auto industry and the National Academy of Sciences
(NAS) are wrong that CAFE standards reduced vehicle weight and
endangered motorists
``[CAFE standards] would require a Ford product line consisting
of either all sub-Pinto sized vehicles or some mix of vehicles
ranging from a sub-sub-compact to perhaps a Maverick.''--Ford
Motor Company, 1974 \10\
Some members of the panel that published the July 2001 NAS report
on fuel economy contend that raising CAFE standards would increase the
occupant fatalities in crashes due to a connection between vehicle
weight and fatality crash rates. As a strong NAS panel dissent by David
Greene and Maryann Keller and other critics have pointed out, this
conclusion is problematic because the panel was:
Using outmoded data on crashworthiness: The data used by NAS
is from 1993 and before, and therefore fails to account for
recent advances in occupant protection from new government
standards, such as dynamic side impact protections, dual air
bags, and head injury protections. In holding crashworthiness
constant, the panel overlooked crucial, compensating safety
improvements that are possible in the areas of rollover and
aggressivity, thus overstating the negative safety effects.
This oversight is particularly troubling given the high
survivability of rollover crashes and the panel's reliance on
data from the study for NHTSA by Kahane. Kahan hypothesized
that the largest increase in fatalities by CAFE would come from
deaths in small vehicle rollover crashes, deaths which would be
avoidable with proper crash protections;
Perpetuating cause-correlation confusion in vehicle size and
weight as factors: The changes in fuel economy standards will
not result in a fleetwide, uniform reduction of vehicle
weights; postulating that a possible weight-fatality
correlation is not the same as demonstrating that improving the
average fuel economy of vehicles will actually cause increased
fatalities. In fact, history shows that weight reductions will
occur only in the largest vehicles, where it is most cost-
effective. Also, there was no attempt by the majority panel to
account for confounding factors such as vehicle size and driver
characteristics;
Overlooking harm from the light truck loophole: The panel
ignored some implications of the main study by Kahane that it
prominently cited, which suggested that proportional changes in
both cars and trucks causing the down-weighting of the entire
vehicle fleet would have zero safety impact, because relative
weight, rather than absolute weight, is the crucial factor.
Kahane's figures actually bear this out, although in drawing
his conclusions Kahane changed the weight of cars while keeping
weights for light trucks and other vehicles unaltered, and vice
versa, producing confused results;
Understating the risks of incompatibility: The panel
overlooked the results from several studies which suggest that
disparities among vehicle weight are the cause of devastating
crashes, thus suggesting that instead of causing harm, any
convergence effect on vehicle weights from CAFE standards would
actually yield safety benefits.
In fact, the link between CAFE standards and reductions in vehicle
weight at the low end of the vehicle weight range simply does not
exist: while the heaviest vehicles were put on a diet and lost a
thousand pounds, the lightest vehicles today are considerably heavier
than their pre-CAFE counterparts. As was pointed out in the December 6,
2001, testimony of Clarence Ditlow of the Center for Auto Safety, the
original passage of CAFE standards did not result in light cars
becoming lighter or less safe. In fact, the Honda Civic gained 800
pounds and went from failing NHTSA crash tests to receiving the best
possible rating for crashworthiness--5 stars. Moreover, the Ford Pinto
and Chevrolet Chevette, notably unsafe vehicles, were replaced by the
safer models of the Ford Escort and Chevrolet Nova. \11\
Looking at the CAFE-weight relationship more broadly, as fleet fuel
economy increased over time, vehicle weights did not move in any one
direction. In 1975, cars weighing less than 2,500 pounds made up 10.8
percent of the new-car fleet, but only 2.6 percent in 2000. By
contrast, cars in the over 4,500 pound weight class made up 50 percent
of the new-car fleet in 1975 but only 0.9 percent in 2000. These data
show that CAFE standards did not cause a uniform reduction in vehicle
weight at the light vehicle level (although CAFE may have caused a
reduction in average weight, as more cars were built in the 2,500-4,500
pound category). \12\ Because automakers could get proportionally more
fuel savings from reducing the weight of the heaviest class of cars,
those were the first targets for fuel economy improvements, and
production numbers for cars in the lightest class actually decreased.
Any improvement in the CAFE standards made today will likely have a
similarly small impact on the weight or production levels of the
smallest cars. It is not cost-effective to reduce their weights by very
much, given the limited fuel economy improvement from doing so and the
relatively higher cost of vehicle redesign.
Major improvements in fuel economy are possible using currently
available technology without any reduction in safety protection
A Department of Energy (DOE) study found that 85 percent of the
fuel economy gains made following the 1975 CAFE law were from
improvements in vehicle technology rather than weight reduction. \13\
The evidence strongly suggests that similar technological leaps are
currently available or just around the corner, and that the recent
stagnation and even backsliding in overall fuel economy is a trend that
must be stopped.
The Union of Concerned Scientists (UCS) pointed out in a report
released in 2001 that today's vehicles could become more fuel efficient
at a price that would easily be made up in savings on fuel costs, and
the necessary changes would have no negative impact on safety.
Technologies currently used in portions of today's fleet, if adopted
fleetwide, could make vehicles more streamlined, less fuel intensive,
and more efficient. A partial list of these technologies includes the
following:
Aerodynamic improvements--reducing vehicle drag by reducing
their profiles;
Rolling resistance improvements--changing tread designs and
rubber quality on tires;
Safety enhancing mass reduction--increasing the use of
plastics, aluminum and high strength steel;
Accessory load reduction--using more energy efficient
electric accessories that draw less power from the battery;
Variable valve control engines--used in Honda VTEC engine,
allowing valves to be adjusted for better engine performance;
Stoichiometric burn gasoline direct injection engines--
introducing fuel directly to the engine cylinder;
Integrated starter generators--allowing engines to turn off
rather than idling when the car is not in use;
5- and 6- speed automatic transmissions--increasing
opportunities for engines to run at their efficiency ``sweet
spot;''
5-speed motorized gearshift transmissions--mimics the
performance of a manual with the ease of an automatic;
Optimized shift schedules--using electronics and sensors to
improve automatic transmission performance;
Continuously variable transmissions--providing complete
control over the relationship between engine speed and vehicle
speed. \14\
The UCS has not limited their research to the hypothetical realm.
With technologies currently used in mass production by at least one
company, and basing their design on the current Ford Explorer, the UCS
designed a new vehicle that increased the real world fuel economy of
the Explorer by 50 percent while improving zero to sixty performance by
1.7 seconds and saving 4 percent ($1,577 in gasoline costs) over the
lifetime cost of the unimproved vehicle (See Table 1). Adding
technologies currently entering the market to their design, they were
able to improve fuel economy by 75 percent, creating a vehicle that
would test at 34.1 mpg and save 6 percent ($2,163) over the lifetime
cost. \15\
Table 1: Union of Concerned Scientists' Greener SUV
----------------------------------------------------------------------------------------------------------------
UCS Exemplar
Ford Explorer UCS Exemplar Plus
----------------------------------------------------------------------------------------------------------------
Curb Weight (lbs)............................................ 4146 3525 3525
0-60 Performance (secs)...................................... 12.4 10.7 12.2
Fuel Economy (mpg)........................................... 19.3 28.4 34.1
Vehicle Price................................................ $28,830 $29,545 $29,765
Lifetime Fuel Costs.......................................... $7,253 $4,961 $4,155
----------------------------------------------------------------------------------------------------------------
Total Cost................................................... $36,083 $34,506 $33,920
----------------------------------------------------------------------------------------------------------------
Ford's Explorer currently fails to meet the very modest 20.7 mpg
CAFE standard for light trucks, getting just 19 mpg. With the
improvements implemented by the UCS using currently available
technology, the same vehicle surpassed the current 27 mpg CAFE standard
for passenger cars. Given the challenge of a higher CAFE standard to
meet, auto manufacturers, with their considerably larger resources,
could certainly far surpass the 34.1 mpg performance achieved by UCS
within a ten year time-frame.
As a final point, it is clear both historically and legally that
the Motor Vehicle Information and Cost Savings Act, like the National
Traffic and Motor Vehicle Safety Act, is technology-forcing. It
requires the Secretary of DOT to set the ``maximum feasible'' standard
while considering, among other factors, the energy needs of the nation.
\16\ Any sensitive consideration of our energy needs would lead one to
conclude that reducing our dependency on foreign oil is a high national
priority.
B. The Real Story on Safety
Vehicle size and design, not weight, are the critical factors for
safety
None of the research that attempts to establish the industry
argument has thus far sufficiently isolated the confounded effects of
vehicle size and vehicle weight in terms of safety implications for
occupants or other motorists. Even the landmark study by Charles Kahane
for NHTSA did not isolate the different implications of shifts in
vehicle size and weight, \17\ a problem which the recent NAS study
literally glosses over in their attribution of overblown fatality
figures to CAFE.
However, vehicle size, design and relative crashworthiness are the
crucial factors in safety outcomes, for several reasons. While
increases in weight irrefutably export an externality of threat to
other motorists, increases in size and improvements in design and
crashworthiness have the potential to save lives, both as net impacts
and for the drivers of larger vehicles. Vehicle size, as distinct from
weight, is pertinent to safety, and confounds the analysis of fuel
economy effects for several reasons. Larger vehicles provide additional
room for occupants' torsos and limbs to avoid contact with the area of
crash impact, and there is space to design the vehicle frames of large
vehicles to better absorb crash forces, so that occupants' bodies do
not.
The real solution to CAFE may be to emphasize the use of innovative
and lightweight crash materials, such as those employed in the Research
Safety Vehicle designed by Don Friedman of Minicars for NHTSA in the
1970s. For another example, while the UCS in the above experiment
involving the retrofitted Explorer did remove weight from the vehicle
to improve fuel economy, the size of the vehicle and all of its safety
features were left intact.
Honda has emphasized this point in a letter sent December 19, 2001,
to the Committee, which I urge Members to closely read. In the letter,
Honda demonstrates that many of its most fuel efficient vehicles are
extremely good performers on safety as well, thereby answering the
misleading arguments put forward by Ford at a prior hearing December 6.
C. The SUV Safety Myth
Many factors affect safety, creating hazards for drivers of SUVs
The prevailing concept of the connection between light trucks and
safety is wrong. Light trucks are more dangerous to other drivers than
their passenger car counterparts, but are not necessarily any more safe
for their own occupants. The Chevrolet Blazer, for example, has a per
million vehicle year driver death rate that is more than three times
higher than the Honda Civic's death rate. \18\ The chart of driver
death rates compiled by the Insurance Institute for Highway Safety is
proof that crashworthiness and crash survival vary widely within
vehicle classes. Other research by David Greene, a dissenter on the NAS
panel, has pointed out that there is no correlation between vehicle
weight for passenger cars, for example, and a car's crashworthiness
crash test ratings in the New Car Assessment Program administered by
NHTSA. \19\
Another insight from Greene is that SUVs and heavier vehicles may
face particular safety obstacles, including longer braking distances on
both wet and dry pavement. \20\ Ford has admitted that many drivers of
SUVs alarm company engineers by failing to adjust their driving habits
to the different handling characteristics of SUVs, including a
propensity to rollover in emergency maneuvers. Ford has thus begun
contracting with a national driving school to teach special safety
skills to drivers of their SUVs. \21\ Because Ford's own marketing data
show that drivers behind the wheel of an SUV operate under a false
impression of enhanced safety and drive more aggressively than they
otherwise would, accounting for such differences in the safety data
used to study the implications of fuel economy is crucial. The NAS
majority and Kahane were unable to do so.
SUVs have a high propensity to roll over and poor crashworthiness for
rollovers
The 2001 Blazer received only one star on NHTSA's rollover
resistance rating system, while the 2001 Toyota Corrola, a small car,
received a high score of four stars, and the midsized Chrysler Sebring
received five stars. \22\ Based on these ratings, the Blazer is four
times or more as likely to roll over in an emergency maneuver than is
the Sebring. Sixty percent of deaths in light trucks (vans, pick-ups
and sports utility vehicles) occur in rollover crashes. \23\ The good
news is that rollover crashes are among the most survivable type of
crash.
The Ford Explorer is a case in point for lessons in the importance
of crashworthiness. \24\ Post-hoc accounting showed that while tread
separations for the Firestone tire used on Explorers were
extraordinarily common, most of the fatalities which occurred following
a tread separation were directly attributable to a rollover of the
vehicle. Subsequent tests of the Explorer's rollover crashworthiness
undertaken in preparation for litigation by safety expert and engineer
Don Friedman show that the Explorer was equipped with an extremely
flimsy roof which is incapable of bearing up under the weight of the
rolling vehicle after the windshield is broken. Because a vehicle's
windshield typically shatters after one roll, the Explorer's occupants
were basically left unprotected from roof crush injuries, which are
often devastating or fatal.
To address this safety problem, then, improvements are needed not
only to the vehicle's tire and rollover propensity, but also to its
roof strength and rollover crashworthiness in general. The point is
that the human suffering caused by a failure to design a safe vehicle
was entirely unnecessary given the survivability of rollover crashes.
The high cost to Ford's economic well-being and reputation for safety
that were caused by over 200 fatalities and 700 serious injuries
appears particularly unfortunate when we consider that most of them
could have been avoided by a safer design.
The NAS majority reached its conclusion by holding vehicle
fatalities constant, ignoring the lifesaving possibility contained in
measures such as rollover protections. But the main data relied on by
the NAS, the 1997 Kahane study, found that single vehicle rollover
crashes involving the greater number of small cars predicted to enter
the highway under CAFE were the swing factor in producing net increases
in fatalities. As we argue below, however, to fix this problem we
should, as a policy matter, address rollover crashworthiness first,
last and foremost. In so doing, we can wipe out the auto industry
argument that fuel economy threatens safety.
D. Solving the Rollover Problem
The need for rollover crashworthiness standards
The auto industry should begin their campaign for safety by
addressing vehicle rollover. Rollovers now kill more than 10,000 people
each year, a sum that is fully one-third of all vehicle deaths, yet the
causes of death in such a crash are largely preventable. The forces
exerted in a rollover crash are small, less than 10 mph in many cases.
Like professional race car drivers that survive such crashes, if
vehicle occupants are sufficiently protected from the hazards of a
rollover crash they can escape death or serious injury.
The auto industry has been so laggard over the years, causing
thousands of needless deaths and injuries, that federal motor vehicle
crashworthiness standards are needed. One of the primary elements of
protecting occupants in a rollover crash is a roof that is resistant to
crushing as the vehicle rolls. Currently, roof crush standards do not
adequately measure the way a roof is likely to respond in a real world
rollover crash because:
The test used by NHTSA is static rather than dynamic;
The force measured for passage is less than that actually
experienced in a rollover; and
The windshield, which breaks on the first roll in an actual
crash, is left in place for the test and supplies about one-
third of the measured strength of the roof in the test NHTSA
uses.
With protections, rollovers are highly survivable crashes with low
gravitational forces. The following measures will provide basic
occupant protection:
A dynamic roof crush standard, which measures roof crush
without the windshield in place;
Safety belt pretensioners which trigger in a rollover crash;
Improved seat structure to keep occupants in position during
a roll, including seat belt anchors on the seat structure;
Side impact head protection air bags which are triggered in
a rollover crash and reduce the ejection of occupants;
Roof injury protection to protect occupants in the event of
contact with the roof structure; and
Improved door locks and hinges to keep doors from becoming
ejection portals in a rollover.
E. Improving Compatibility and Reducing Fatalities from Aggressive
Vehicles
Fixing CAFE to reduce fatalities
The current structure of CAFE contributes to highway deaths not
because vehicles are too light, but because of the dual standard
created for cars and light trucks, including SUVs. The current system
of CAFE standards pretends that there are two vehicle fleets: cars,
which must meet a statutorily required 27.5 mpg standard, and ``light
trucks'' and their progeny which meet the 20.7 mpg standard set by
NHTSA. The safety consequences of the bifurcation of the standard have
been disastrous as manufacturers have marketed heavier and heavier SUVs
as family vehicles.
The erosion of CAFE will continue as manufacturers keep ramping up
SUV size to produce truly massive passenger vehicles in the absence of
new fuel economy standards. For just the latest example, in February
2001, DaimlerChrysler announced that the company would be marketing a
new mega-vehicle, named the ``Unimog,'' that will be 20 feet long and
nearly two feet wider than a typical car, weigh 12,500 lbs., and get 10
mpg on diesel fuel. \25\
Light trucks, particularly SUVs, are very dangerous for other drivers
on the highway
Study after study shows that heavier vehicles, and especially SUVs,
are a threat to other drivers in vehicles they hit, especially in their
heaviest and most aggressive versions. A 1998 report by Hans Joksch for
the Department of Transportation (DOT) showed: (1) that the risks
imposed by heavier cars on lighter car occupants outweigh the safety
benefits to the heavier car occupant across the entire vehicle fleet on
the highway and (2) that greater variability in the distribution of
weights increases fatalities. \26\ A paper by Alexandra Kuchar of the
DOT's Volpe Institute concluded that shifting the fleet from cars to
light trucks--at each increment of the shift--increases serious
injuries and fatalities, partly because of the greater stiffness of
light trucks. \27\
Despite the perception that light trucks are safer for the
occupant, total highway safety is made worse by the presence and weight
of these vehicles. Over 11,000 light truck-type vehicle occupants were
killed in crashes in 1999, and crashes involving light trucks killed
another 4,896 people, for a ratio of .44 non-truck occupant fatalities
for every 1 occupant fatality. This should be contrasted with passenger
cars, which killed just .08 non-occupants in crashes for each passenger
car occupant killed. \28\ The NAS report last year concluded that a
reduction in the mass of the light truck fleet would result in a net
reduction in the number of fatalities on our highways, because the
reduced-mass light trucks would kill fewer of the occupants of the
vehicles into which they crash. \29\
All the research points to conclusions that are precisely the
opposite of the myths promoted by manufacturers about CAFE and safety.
As David Greene has argued, the risk to other drivers posed by SUVs and
other larger vehicles is a way of ``exporting'' risk as a market
externality that should be corrected by government action. Given the
high societal costs of automobile crashes, the increased fatalities and
injuries that result are costs that all of us bear. Closing the light
truck loophole and new requirements under CAFE would likely have the
happy consequence, as did those passed in 1975, of increasing the
number of mid-sized vehicles in the fleet and bringing about greater
convergence in vehicle weight across the fleet.
F. The Need for Aggressivity Standards
Sports utility vehicles now constitute 50 percent of new vehicle
sales, yet SUVs are almost three times as likely as cars to kill the
other driver in a collision. The scope of the problem is well-known.
Even some manufacturers, such as Toyota, Nissan and Renault, have
called for regulations to make all passenger vehicles more compatible
in crashes. \30\ In a corporate report, Ford has admitted that SUVs are
an anti-social vehicle type, and this is certainly the case from a
vehicle dynamics standpoint.
Light trucks tend to have higher bumpers and structures, which can
override the body of a smaller car and fail to engage the crash
protections built into both vehicles. Light trucks are also typically
built with stiffer frames that fail to absorb crash forces, causing
damage to other vehicles as well as their own occupants. Finally, most
light trucks are substantially heavier than passenger cars, thus
exerting more mass in a crash with a lighter vehicle.
NHTSA has begun studying the problem of vehicle aggressivity, and
their results have suggested some major areas for improvement. Vehicle
aggressivity, as presently understood, relates generally to three
factors: vehicle weight, structural stiffness of the vehicle, and
height of center of force. This last factor shows the importance of
vehicle design factors--the height of a vehicle's ``center of force''
reflects the design distribution of its mass and is a primary indicator
of the amount of damage that will be inflicted on another vehicle
during a collision. \31\
All things being equal, a heavy vehicle will be more aggressive
than a lighter one. When weight is controlled for, however, other
factors relating to vehicle design become important. Small pick-ups and
mid-sized cars have approximately the same curb weight (3,000 lbs.),
yet a NHTSA study found that small pick-ups caused roughly 50 percent
more fatalities to occupants of other vehicles than did mid-sized cars
on a per-vehicle basis. \32\
NHTSA should be directed to issue an aggressivity reduction
standard as a top priority given the rapidly increasing population of
light trucks mixing with cars on our highways. \33\ By raising CAFE
standards, Congress would encourage automakers to take weight out of
the aggressive vehicles at the high end of the fleet weight range--
saving both fuel and human life. By requiring NHTSA to issue standards
that reduce the likelihood of struck driver death in an accident,
Congress can dramatically reduce the harm caused by our largest
vehicles.
G. Believe What Industry Does, Not What It Says
The industry's solicitude for safety in the context of the fuel economy
debate is disingenuous and should not mislead Congress or the
public
The concern for safety expressed by automakers in the fuel economy
debate is a red herring. Historically, the auto industry has protested
one safety requirement after another for 35 years, using Congress, the
courts and its administrative access to avoid costs associated with
vehicle redesign while the safety of the public suffers. Among many
other battles over safety measures, the industry:
Fought efforts to place seat belts and shoulder harnesses in
all vehicles;
Remained silent in the debate over raising the speed limit--
increased speeds in states which raised their speed limits
cause over 500 deaths per year; \34\
Fought mandatory air bags on cost grounds;
Fought side impact and fuel system standards;
Currently is battling to prevent effective dynamic rollover
tests and an improved roof crush standard;
And now are also fighting new requirements for a dashboard
tire pressure monitoring system on cost grounds, which saves
fuel economy and improves safety.
In addition, it is well documented that the industry resisted any
attempt by NHTSA to publish rollover resistance ratings for years,
until the Ford/Firestone disaster forced them to back away from their
public opposition to ratings. \35\ The cumulative death toll from these
delays and the continuing battles far exceeds even the industry's
claims about the so-called risks resulting from fuel economy standards.
As another one example of industry relentlessness in pursuit of
profit, I cite the epic struggle over air bags. With the exception of
General Motors in the early 1970's under its president Ed Cole and
Mercedes in the 1980's, the manufacturers generally opposed a federal
standard requiring air bags from 1969 until it finally took effect in
1988. In 1983, the Supreme Court ruled that the Reagan administration
had improperly revoked the rule. Justice White, writing for the Court,
stated that the industry had waged ``war'' on air bag regulation and
that NHTSA's regulatory actions under the Safety Act could be
``technology forcing:''
The automobile industry has opted for the passive belt over the
airbag, but surely it is not enough that the regulated industry
has eschewed a given safety device. For nearly a decade, the
automobile industry waged the regulatory equivalent of war
against the airbag and lost--the inflatable restraint was
proven sufficiently effective. Now the automobile industry has
decided to employ a seatbelt system which will not meet the
safety objectives of Standard 208. This hardly constitutes
cause to revoke the standard itself. Indeed, the Motor Vehicle
Safety Act was necessary because the industry was not
sufficiently responsive to safety concerns. The Act intended
that safety standards not depend on current technology and
could be ``technology-forcing'' in the sense of inducing the
development of superior safety design. \36\
Industry advertising sells speed and demonstrates a lack of concern for
safety
Fuel economy levels, like our larger economy, are in recession.
Despite their potential for tremendous impact on our environment and
safety, more fuel efficient vehicles may never come to market unless
Congress acts. Why? Because automakers have chosen to focus on the
production of generation after generation of larger and powerful,
faster vehicles, despite their knowledge that these are just the
vehicle features which increase fatalities.
Recent motor vehicle television ads have begun to once again
resemble the ``speed ads'' of the early 1990s, which persisted until
safety advocates shamed the auto industry into a temporary ceasefire.
The Insurance Institute for Highway Safety has pointed out the
marketing strategy that accompanies this approach, citing commercials
that ``either ignore safety or undermine it by obscuring the fact that
driving fast or aggressively increases motorists' crash risk.'' \37\
While automakers build ever faster and more powerful vehicles, they
waste the opportunity and resources to make passenger vehicles that are
safe and socially responsible.
IV. Fixing the CAFE System Will Save Both Lives and Fuel
A. The existing structure of the CAFE system should be used to produce
more fuel economy gains
Despite the manufacturers' outcry about technological limitations
when CAFE was initially introduced as part of the Energy Policy and
Conservation Act in 1975, fuel economy performance rose substantially
in the seven years after the legislation took effect. Manufacturers
retooled their engines and drivetrains, adjusted the mixture of their
fleets, took advantage of unused technological advances, and resized or
eliminated their most fuel-thirsty vehicles to produce cars that were
more socially responsible. This period of change, and the exciting
directions in which it took the auto industry, were summed up in a 1977
speech made by Robert B. Alexander, then Vice President of the Car
Product Development Group at Ford. His response to the challenges of
posed by the new fuel economy standards and emissions standards of that
period was to declare the era ``the age of the engineer--and I, for
one, couldn't be happier.'' \38\
Even some in the auto industry agree that the CAFE system has been
effective in meeting its goals. In his testimony of December 6, 2001,
Bernard Robertson, Senior Vice President of Engineering Technologies
and Regulatory Affairs for DaimlerChrysler stated that ``the industry
achieved significant gains during the past twenty-five years'' and said
that alternatives to the CAFE system are ``either politically
unacceptable or have significant `unknowns' or problems.'' Jaime
Auffenberg, chairman of the American International Auto Dealers
Association recently said that ``we are going to have to find ways to
improve fuel efficiency . . . I think there's opportunity to improve
CAFE numbers, and we need to be responsible and address them.'' \39\
While some in the industry may quibble about the specifics of the CAFE
system, none of them has advocated a viable replacement.
Because of CAFE requirements, the United States has saved 3 billion
barrels of oil a day and saved consumers more than $20 billion each
year. At the same time, we have avoided sending billions of dollars
overseas to pay for oil, and prevented the release of tons of
greenhouse carbon dioxide into the atmosphere. The program, however,
has stagnated and must be updated to account for technological changes,
energy concerns and environmental imperatives. While Public Citizen
does not recommend significant changes in the overall structure of the
system, a few critical modifications must be made.
B. Close the light truck loophole
As currently structured, the CAFE system has separate targets for
cars and light trucks. The standard for cars, set by statute, is 27.5
mpg. The standard for light trucks, which NHTSA is responsible for
adjusting each year to account for improvements in what is the maximum
feasible, is set at 20.7 mpg and has not been adjusted for 7 years.
Since 1994, appropriations riders have prevented NHTSA from expending
any funds to adjust of the standard, a provision secured by the auto
industry that has detrimentally affected safety, gasoline expenditures,
and our environment.
As a result, NHTSA has had no money for staff research on CAFE.
Moreover, the Gas Guzzler tax, which penalizes manufacturers for
selling vehicles that fall extremely far below the CAFE standard,
shockingly only applies to cars as it is currently drafted, and
provides a weak penalty that today is out-of-date. One CAFE standard
and one Gas Guzzler tax system should be applied to all light duty
passenger vehicles in a manufacturer's fleet.
In 1975, when the distinction between light trucks and passenger
cars was adopted and favored by the auto industry, light trucks
accounted for just 20 percent of the vehicle fleet, and were largely
used for off-road and commercial purposes. \40\ Light trucks were also
not redesigned as frequently and often used older technologies. Thus,
Congress felt it could not anticipate the minimum mpg numbers for these
vehicles and asked NHTSA to set the standard by regulation.
However, a separate standard makes no sense in a world where SUVs
carry millions of Americans back and forth to work each day. SUVs and
other light trucks are simply not used as Congress anticipated in 1975,
and there is no basis for maintaining their status as a special part of
the vehicle fleet. Moreover, many manufacturers have introduced
crossover models built on a car chassis but have a truck body or other
features, and are therefore counted under the truck CAFE standard. One
particularly egregious example of this is Chrysler's PT Cruiser, which
is counted as a truck for CAFE purposes simply because the back seats
are removable and it has a hatchback trunk. The PT Cruiser cannot be
used off-road due to its low (6.5") ground clearance, has a towing
capacity of only 1,000 lbs., and lacks 4-wheel drive. Yet the current
CAFE system counts it as a light truck, raising Chrysler's overall
truck fleet fuel economy average and enabling the production of other
extremely inefficient vehicles. The ability of manufacturers to play
this game of ``light truck'' qualification makes the higher CAFE
standard for cars far less meaningful.
In addition, the safety implications of the two fleet split are
obvious to anyone who has ever stared up at the massive grill, high
bumper, and heavy, stiff body of one of the largest SUVs. Two standards
means two fleets--one of which is hazardous to the other. By closing
the ``light truck loophole,'' which has become big enough to drive the
19-foot Ford Excursion through, Congress would force manufacturers to
reduce the size and aggressivity of their largest vehicles, rendering
them less of a hazard to other drivers and improving fleetwide fuel
economy.
NHTSA just issued its rulemaking on the light truck standard
(Docket No. NHTSA-2001-11048) for 2004 and announced their plans to
leave the 20.7 mpg standard unchanged. The agency explains in its
rulemaking that the Congressional appropriations riders which froze
adjustment of this standard from 1995 to 2001 left NHTSA unable ``to
lay the factual or analytical foundation necessary to develop a
proposed standard other than the one at 20.7 mpg.'' \41\ This
embarrassing situation must be corrected by the same Congress that
imposed it on NHTSA every year since 1994.
Closing the light-truck loophole will require a phase-in of some
sort, so as not to cause undue disruption in the auto industry by
allowing adequate planning lead time for design adjustments.
Manufacturers should be required to count an additional 20 percent of
their vehicles under a combined standard every two years, until all of
their vehicle fleet is counted under a single standard after 10 years.
C. Other Important Changes to CAFE Are Justified and Necessary
Fleet fuel economy should be raised to 40 mpg over ten years, starting
in model year (MY) 2005
At the same time as light trucks are being phased into the vehicle
fleet, Congress should set targets to increase overall fleet fuel
economy. Model year 2001 total fleet fuel economy is just 24.5 mpg, a
6.5 percent decline from the high of 26.2 mpg achieved in 1987.
Manufacturers were able to improve fleet fuel economy by 80 percent
from 1978 to 1987, and they have had 15 years to develop new
technologies that could achieve a similar improvement given enough lead
time and appropriate penalties for failing to comply with the standard.
While manufacturers may argue that the opportunities for technological
improvement are exhausted, the work of the UCS explained above and the
emergence of the hybrid engine prove these arguments wrong.
The NAS report did not advocate any fleetwide fuel economy number
as the appropriate one, but its Path 2 and 3 calculations and
assumptions suggest that a fleetwide fuel economy of 37 mpg by 2015 is
achievable using only conventional gas engines. \42\ Their original
report estimated much higher achievable mileages, but they revised
these estimates downward after receiving pressure from the auto
industry in two waves, once before the official publication of the
report, and in another round after the auto industry privately appealed
to the NAS and a subsequent public hearing. \43\ The NAS also failed to
account in their estimates for the potential of hybrid engines to raise
fleetwide fuel economy.
Moreover, the NAS analysis did not project what was possible over
the long run or cost-effective from an environmental or societal
viewpoint, and instead focused only on what was next-dollar
``efficient'' in narrow, consumer-defined economic terms. Many vehicles
that were considerably more fuel efficient than those considered
optimal by the NAS panel would still be cheaper, over the life of the
vehicle, than the vehicles in today's fleet they would replace. \44\
Phasing in a new fleet fuel economy of 40 mpg would save an estimated 2
million barrels a day by 2012, or more oil than we currently import
from both Saudi Arabia and Kuwait. America would take a giant step
toward untying our hands on foreign policy and enriching our
environmental future by implementing this standard.
Testing procedures must be made more accurate
When CAFE was first implemented in 1978, the testing procedures
used by the Environmental Protection Agency (EPA) predicted real world
fuel economy performance within a margin of 3 percent. Currently, the
tests predict performance within a 17 percent margin of error. \45\
This is unacceptable. The overstated values that emerge from these
tests are used to calculate a manufacturer's fleetwide fuel economy to
determine whether or not they are meeting the CAFE target. Congress
should require the EPA to issue a rulemaking that adjusts its testing
procedures in order to narrow the gap between real-world fuel economy
performance and tested performance to below a 10 percent margin of
error within 5 years after the initiation of new CAFE standards, and
below a 5 percent margin of error after 10 years. Adjusting these
procedures would improve real world fuel economy, because companies
would be performing to the standard, rather than to 83 percent of the
requirement. It would also give Americans an accurate yardstick by
which to judge our progress against our fuel reduction goals.
End the dual-fuel credit program
The duel fuel credit program is an embarrassing waste of taxpayer
dollars and is a prime example of corporate welfare. It should be
eliminated. Under this program, manufacturers are rewarded for not
limited to, ethanol and other alcohol-based fuels), though only 1
percent of the miles driven in these vehicles are ever powered by such
a fuel. \46\ Consequently, manufacturers are able to build vehicles
that emit more carbon dioxide than they otherwise would, simply by
making cheap modifications to their engines that subsequently go
unutilized. The result: U.S. gasoline consumption increased by 473
million gallons in 2000 because of this program. \47\ The cost of
building an infrastructure to support alternative fuels would far
outstrip the tiny benefits in emissions reduction we could achieve
through its use.
Tellingly, H.R. 4, introduced by Billy Tauzin (R-LA), which extends
the dual-fuel credit program, also extends by four years the deadline
by which the Secretary of Transportation must report on the
effectiveness of the program. \48\ No manufacturer even attempted to
offer a reasonable defense of this program in their testimony of
December 6th, 2001, suggesting that even its beneficiaries understand
they are getting something for nothing. The NAS condemned the program
as having had ``a negative effect on fuel economy.'' \49\
Eliminate the carryback provision in the CAFE credits system
Today, if a manufacturer fails to meet its CAFE requirement, it can
submit a plan for improving vehicle fleet efficiency in three future
years and then earn credits in those years that will negate the earlier
year's delinquency. This loophole, the so-called ``carryback''
provision, invites abuse and dishonesty by the manufacturers by
effectively delaying the deadline by which they must meet their fuel
economy targets. Consequently, domestic manufacturers never pay any
fines, and it is difficult to tell from year to year which companies
are actually in compliance. In fact, no member of the Big Three
domestic manufacturer group has ever paid a fine under the CAFE system,
though foreign manufacturers have paid fines of as much as $26 million.
\50\
In order to simplify this system, Congress should amend 49 U.S.C.
32903(a)(1) to eliminate the carryback provisions. Retaining the
``carryforward'' provisions at 49 U.S.C. 32903(a)(2) is desirable.
These provisions allow manufacturers to apply credits earned in the
present year to any of the three following years, rewarding them for
exceeding their mandated CAFE performance.
The preemption provision in the CAFE regulations should be clarified so
it does not preclude state-run ``feebate'' programs
There is some evidence, as expressed in the NAS report, that a
feebate program, wherein manufacturers (and consumers) are rewarded for
selling cars that are more fuel efficient than CAFE requires, would
produce benefits beyond a straightforward CAFE system. While Public
Citizen does not advocate implementing this program on a national level
due to the large number of unknowns involved, we believe there is
enough potential merit in such a system that states should be allowed
to experiment with it. Currently, the preemption clause at 49 U.S.C.
32919 rules out this possibility, thereby preventing useful
experimentation. Congress should pass language that specifically
excludes these programs from preemption, so long as the program only
rewards manufacturers for selling vehicles with tested fuel economies
at or above the applicable CAFE standard in the year they are
manufactured.
V. Reaping the Benefits of Solid Energy, Safety and Environmental
Planning
Improving fuel economy benefits the American economy in both the short
and long run
Automobile manufacturers have argued that improving fuel economy
will cripple their ability to do business by preventing them from
giving the customer what she wants. They argue, further, that because
the automobile industry is so critical to the health of the American
economy it would be destructive to the economy as a whole if Congress
were to prescribe new fuel economy standards. Their conclusion
shortchanges their own talented engineers and runs contrary to economic
history.
Reducing dependence on oil will protect our economic stability and
growth
Unstable oil and gas prices destabilize the American economy. Each
of the three major oil price spikes of the last 30 years (1973-74,
1979-80, and 1990-91) was followed by an economic recession in the
United States. Because so much of our oil must be imported, we are at
the mercy of OPEC and foreign governments should they choose to act to
rapidly raise oil prices as they did two years ago. Our economy, as it
is currently structured, requires the importation of over $100 billion
dollars of crude oil and petroleum products each year, which accounts
for 29 percent of our trade deficit and totals $378 for every man,
woman, and child in the U.S. \51\ American spending on gasoline
consumption--$186 billion dollars in 2000--renders consumers vulnerable
to sudden price spikes over which they have no control. \52\
The economic cost of U.S. oil dependence over the past 30 years has
been estimated at $7 trillion dollars of present value \53\--an amount
approximately equal to the combined 2000 Gross Domestic Product (GDP)
of France, the United Kingdom, Germany and India. \54\ If we were to
reduce our use of oil substantially, this wealth would remain within
the United States and we would have greater control over economic
growth.
Economic health and environmental health are closely linked
The long-run economic health of the United States depends on the
stability of our climate. Our contributions to global warming through
vehicle use are substantial. Vehicle carbon dioxide emissions account
for nearly a quarter of total U.S. emissions, and are a whopping 5
percent of the global total. The catastrophic environmental effects of
continued warming have been well documented--I will cite just a few. If
our carbon dioxide use continues unabated, we can expect:
Epidemics of tropical diseases like malaria and encephalitis
in the United States;
Extreme heat waves that will kill hundreds and devastate
agriculture;
Uncontrolled flooding of our coastal cities;
Extreme weather patterns, resulting in massive property
damage and insurance costs. \55\
We must treat global warming as a threat to our long-term security
and wealth. The actions we can take now to reduce emissions will have
positive impacts for generations to come.
Weak fuel economy standards hamper U.S. competitiveness
While some foreign auto manufacturers invested considerable money
and human capital and built safe, affordable, fuel-efficient vehicles
of all sizes, domestic auto manufacturers secured appropriations riders
barring increases in fuel economy for the last seven years. By stifling
fuel economy improvements, U.S. manufacturers looked to Congress to
protect them from competing, rather than using their resources to build
socially responsible vehicles.
Each year that goes by without an increase in CAFE standards
represents another year of backsliding by the Big Three. As just one
manifestation of this trend, Honda and Toyota released vehicles powered
by hybrid engines in the United States in 1999 and 2000 respectively,
while Detroit (led by Ford) will not release its first hybrid vehicle
until 2003. \56\ If U.S. auto companies are to remain competitive, they
must have the blinders of environmental and economic reality removed
and join the rest of the globe in producing fuel efficient and safe
vehicles.
Beware the auto industry tactic of promoting future ``SuperCars'' to
avoid new CAFE standards now
The Bush Administration recently announced that it plans to abandon
the Clinton-initiated Partnership for a New Generation of Vehicles
(PNGV) program, on which $1.5 billion was spent over 8 years. This
program was the excuse for failing to increase fuel economy in the
early Clinton years. Now, in league with the auto industry, President
Bush is vowing to commit large sums of federal money, spaced out over a
decade, to research fuel-cell powered automobiles, for another long-
term project that will, it is hoped by industry, supplant feasible fuel
economy standards today.
Fuel cell cars would theoretically produce no carbon dioxide
emissions from the exhaust system of the car (though manufacturing
their fuel would still require upstream emissions). \57\ While fuel
cells hold tremendous potential for improving the environmental impact
of America's vehicle fleet, the timing and political impact of this
recent announcement should be understood as yet another industry delay
tactic.
Although the PNGV program was flawed, there is little evidence that
these flaws are being corrected in the proposed design for the proposed
Bush administration fuel cell program, so this new program may also
have limited impact on advances in the vehicle fleet. Similar risks
attend this new program as plagued the old: the PNGV program was overly
controlled by the auto industry itself; it shut innovative suppliers
out of the process; it focused on long-term goals rather than
achievable improvements; it relied on competitors sharing research with
one another, inherently limiting its usefulness; and it failed to set
any mid-point goals so that the program could be evaluated. It is not
coincidental that President Bush is scuttling the program just two
years before its only goal (an 80-mpg passenger vehicle) was to have
been achieved.
The recently announced program to fund fuel cell research is based
on the same premises as the PNGV program. The proposed program will do
nothing to improve fuel economy in the short run, and may do very
little to improve it in the long run. Mass production of fuel cell
powered vehicles is many years away. \58\ There are a number of
technical hurdles that must be cleared before fuel cells are powerful,
safe, and compact enough to be used in passenger vehicles. There is
also a strong possibility that this program will be dominated by the
manufacturers and their interests in the way that the PNGV program was,
and therefore fail to make much material progress. Most importantly,
without a federal mandate for the auto industry to improve fuel
economy, there is no guarantee that manufacturers will implement any of
the developed technology. This program is clearly not a substitute for
raising CAFE requirements, although its long-term research potential is
certainly important.
In many ways, the car of the future was built in 1978
If automakers truly cared about producing socially responsible
vehicles they need look no further than the Research Safety Vehicle
(RSV), designed and assembled between 1975 and 1978, for ideas on how
to improve both safety and fuel economy. The RSV was built in the late
1970s under a NHTSA contract with Don Friedman, a former GM engineer
who won a competition for the contract against much larger companies.
The finished vehicle weighed 2,450 lbs., got 32 miles to the gallon in
1978, and safely protected its occupant in crash tests. \59\ The
vehicle was able to protect its occupants in a full frontal barrier
impact at 50 miles per hour (mph), and in side impact and rollover
crashes at 40 mph, without significant risk of occupant injury. Current
statements from Friedman indicate that, if equipped with the hybrid
engine technology currently being used in the Honda Insight, this
vehicle would achieve a fuel economy today of between 50 and 60 mpg.
VI. Conclusion: Upgrading Fuel Economy is A Win-Win for Congress,
Public Safety and the Economy
At this moment, Congress has an historic opportunity to require a
more socially responsible vehicle. Public opinion strongly supports
higher fuel efficiency, and our environment, national, and economic
security demand it. Improvements in fuel economy, vehicle rollover
crashworthiness, and reductions in vehicle aggressivity will save both
gas and human life. Congress should jump at this win-win opportunity
with a definitive schedule for the phase-in of vehicle fuel economy
standards up to 40 mpg for a combined fleet of cars and trucks.
Thank you so much for the opportunity to speak with you today. I
look forward answering any questions you may have.
ENDNOTES
\1\ Ann Mesnikoff, Testimony before the Senate Committee on
Commerce, Science, and Transportation, December 6, 2002,
Washington, DC.
\2\ National Environmental Trust, America, Oil, and National
Security, (Washington, DC 2001) 40.
\3\ Earle Eldridge, ``Trucks likely edged cars in 2001 sales,''
USA Today, January 2, 2002.
\4\ Mesnikoff.
\5\ Lou Harris, Conducted by Peter Harris Research Group, July
2001.
\6\ Gallup Poll, for CNN/USA Today, September 11-15, 1992.
\7\ Gallup Poll, Conducted for Chicago Council on Foreign
Relations, October 23-November 15, 1990.
\8\ Gallup Poll, May 7-9, 2001 (61 percent result achieved by
adding the percentages of those who responded ``More
conservation'' (47 percent) and those who responded ``Both/
Equally'' (14 percent), referring to both ``More conservation''
and ``More production'').
\9\ Keith Bradsher, ``Ford is Conceding SUV Drawbacks,'' The
New York Times, May 12, 2000.
\10\ Sen. John Kerry, Congressional Record, Sept. 25, 1990, at
S13696 (citing Ford).
\11\ Clarence Ditlow, Testimony before the Senate Committee on
Commerce, Science, and Transportation, December 6, 2002,
Washington, DC.
\12\ Union of Concerned Scientists, Drilling in Detroit,
(Cambridge, MA:UCS Publications June 2001) 51, 53.
\13\ Mesnikoff.
\14\ Union of Concerned Scientists, Drilling in Detroit 18,
Appendix B.
\15\ Union of Concerned Scientists, ``Greener SUVs: A Blueprint
for Cleaner, More Efficient Light Trucks,'' Summary available
on the World Wide Web at
http://www.ucsusa.org/vehicles/greener.SUVs.html
\16\ See Motor Vehicle Information and Cost Savings Act, Sec.
502 (3)(A).
\17\ Charles J. Kahane, ``Relationships Between Vehicle Size
and Fatality Risk in Model Year 1985-1993 Passenger Cars and
Light Trucks,'' (1997).
\18\ Insurance Institute for Highway Safety, ``Driver Death
Rates,'' Status Report Vol. 35, No. 7 (August 19, 2000) 4-5.
\19\ Greene, David L., ``Fuel Economy, Weight and Safety: Its
What You Think You Know That Just Isn't So,'' for Oak Ridge
National Laboratory, presentation at the Automotive Composites
Conference, Society of Plastics Engineers, Sept. 19, 2001.
\20\ Id.
\21\ Keith Bradsher, ``Ford Wants to Send Drivers of Sport
Utility Vehicles Back To School,'' New York Times, July 4,
2001.
\22\ National Highway Traffic Safety Administration Crash
Testing Website: http://www.nhtsa.dot.gov/cars/testing/NCAP
\23\ According to 1999 DOT statistics, 19.7 percent of all
fatal crashes had a rollover.
\24\ Keith Bradsher, ``Risky Decision: A Special Report. Study
of Ford Explorer's Design Reveals a Series of Compromises,''
The New York Times, December 7, 2000.
\25\ Keith Bradsher, ``For the Megagrowth Family, Daimler to
Offer a Bigger-Than-SUV,'' Feb. 21, 2001.
\26\ Hans Joksch, Vehicle Aggressivity: Fleet Characterization
Using Traffic Collision Data (Ann Arbor. MI: University of
Michigan Transportation Research Institute, February 1998).
\27\ Alexandra Kuchar, A Systems Modeling Methodology for
Estimation of Harm in the Automotive Crash Environment
(Cambridge, MA: Volpe National Transportation Systems Center,
2001) 10.
\28\ National Highway Traffic Safety Administration, Traffic
Safety Facts 1999 (Washington DC: Government Printing Office
2000) 107-108.
\29\ National Research Council, Effectiveness and Impact of
Corporate Average Fuel Economy (CAFE) Standards, (Washington,
DC: National Academy Press, 2001) 2-24.
\30\ Keith Bradsher, ``Carmakers to Alter SUVs to Reduce Risk
to Other Autos,'' The New York Times, March 21, 2001.
\31\ See, e.g., Keith Bradsher, ``High Fatality Rate Found in
Cars That Crash with Explorers,'' The New York Times, Feb. 14,
2001 (documenting that Explorers, due to their force
distribution, killed 10 car drivers for every 1,000 crashes
between Explorers and cars, in comparison with other midsize
SUVs that kill five to seven drivers per 1,000 crashes, and
with cars, which inflict six-tenth of a death per 1,000 crashes
with other cars); Keith Bradsher, ``Study Says Height Makes
SUVs Dangerous in Collisions,'' The New York Times, May 16,
2001 (documenting new, but insufficient, aggressivity
modifications in some newer SUVs).
\32\ William Hollowell and Hampton Gabler, ``NHTSA's Vehicle
Aggressivity and Compatibility Research Program,'' Paper No.
96-S4-0-01.
\33\ This body of research exists: NHTSA has collected vehicle
aggressivity information as crash test profiles on its crash
barriers as part of its testing for the New Car Assessment
Program.
\34\ Insurance Institute for Highway Safety, ``Limits up,
speeds up, deaths up'' Status Report Vol. 32, No. 8 (October
11, 1997) 1.
\35\ Keith Bradsher, ``Auto Industry May Ease Safety-Ratings
Stance,'' New York Times, Sept. 19, 2000.
\36\ See Motor Vehicle Manufacturers Association of U.S., Inc.
v. State Farm Mutual Auto Insurance Company, 463 U.S. 29, 49,
103 S.Ct. 2856, 2870 (1983) [emphasis added].
\37\ Insurance Institute for Highway Safety, ``Car Ads,''
Status Report Vol. 35, No. 8 (September 30, 2000) 2.
\38\ Robert B. Alexander, speech before the Management Briefing
Seminars sponsored by the Michigan Chamber of Commerce and the
University of Michigan (Traverse City, MI) August 4, 1977.
\39\ ``AIADA will focus on funding,'' Automotive News, 21
January 2002, 32i.
\40\ Congressional Budget Office, ``President Carter's Energy
Proposals: A Perspective,'' Staff Working Paper (Washington,
DC: Government Printing Office June 1977) 55.
\41\ National Highway Traffic Safety Administration, Notice of
Proposed Rulemaking, ``Light Truck Average Fuel Economy
Standard, Model Year 2004,'' http://www.nhtsa.dot.gov/cars/
rules/rulings/Cafe/LightTruck/NPRM.html
\42\ National Research Council, 3-24.
\43\ Compare Bradsher, Keith, ``A Panel Backed by Bush Urges
Higher Fuel Efficiency For Cars,'' The New York Times, July 17,
2001 with Bradsher, Keith, ``Panel Tones Down Report on Fuel
Economy Increases,'' The New York Times, July 27, 2001;
Bradsher, Keith, ``Report on Fuel Economy is Less Optimistic in
Final Form,'' The New York Times, July 31, 2001; and Jeffrey
Ball, ``Estimates Are Cut for SUV, Truck Fuel Efficiency,''
Wall Street Journal, January 17, 2002. My letter protesting the
NAS revisions of their report in response to this industry
pressure is attached to this testimony.
\44\ David Friedman, Union of Concerned Scientists Testimony
before the Senate Committee on Commerce, Science, and
Transportation, December 6, 2002, Washington, DC. Vehicles
where an additional dollar spent on the sticker price did not
result in an additional dollar of gasoline savings were
excluded from consideration by the NAS. The UCS rejects this
approach in favor of one which includes all vehicles that are
cheaper over their lifetimes than the vehicles they replace.
\45\ Friedman 8.
\46\ Ethanol is sold in only 108 of the nation's 178,000
service stations. Keith Bradsher, ``With Loophole, Carmakers
Post Mileage Gain,'' The New York Times, June 2, 2000.
\47\ Keith Bradsher, ``Ethanol Plan Fails to Reduce Use of
Gasoline,'' New York Times, June 21, 2001, A1.
\48\ HR 4, ``Securing America's Future Energy Act of 2001,''
Section 203.
\49\ National Research Council, 6-2.
\50\ National Highway Traffic Safety Administration, ``Summary
of CAFE Fines Collected,'' Jan. 18, 2002.
\51\ Natural Resources Defense Council and Union of Concerned
Scientists, Dangerous Addiction (New York, NY 2002) 10.
\52\ Union of Concerned Scientists, Drilling in Detroit, Table
1.
\53\ David Greene and Nataliya Tishchishyna, ``Costs of Oil
Dependence: A 2000 Update,'' (Oak Ridge, TN: Oak Ridge national
Laboratory May 2000) 21.
\54\ CIA World Factbook: http://www.cia.gov/cia/publications/
factbook.
\55\ Sierra Club, ``Global Warming Impacts,'' http://
www.sierraclub.org/globalwarming/health/disease.asp
\56\ Frank Swoboda and Dina ElBoghdady, ``U.S. Backs Fuel-Cell
Cars,'' Washington Post, 10 January 2002, E1.
\57\ Id.
\58\ Union of Concerned Scientists, Dangerous Addiction, 26.
\59\ Minicars Inc, Research Safety Vehicle promotional material
(Santa Barbara, CA 1978).
Senator Kerry. Who did that car?
Ms. Claybrook. The Department of Transportation. We did it
with a gentleman named Donald Friedman, who is a former General
Motors engineer, at a small company named Minicars. There was a
big competition for doing this in 1974, and he won the
competition and produced it in 1977, and that was one of the
models on which we based the 1977 fuel economy standards.
Senator Kerry. Did they attach a retail consumer available
price to it?
Ms. Claybrook. We did. We had it evaluated by Budd Company,
and it was about the same price as a car of that era like a
Pinto, for example. It was in mass production.
Senator Kerry. Mr. Lund, why don't we go to you.
STATEMENT OF ADRIAN K. LUND, CHIEF OPERATING OFFICER, INSURANCE
INSTITUTE FOR HIGHWAY SAFETY
Mr. Lund. Thank you, Senator. As chief operating officer of
the Insurance Institute for Highway Safety, I welcome this
opportunity to discuss the important relationship between
vehicle fuel economy and safety.
Ms. Shelly Martin, the Institute of Government Affairs'
representative, will assist me with my presentation. Also, note
that my oral remarks are abbreviated from the text provided
separately to the Committee, finally, note also that I am a
member of the National Academy of Sciences Committee that
reviewed CAFE this past year, and though I am not speaking as a
representative of that committee today, I have borrowed
liberally from our report.
The institute is concerned that mandatory increases in fuel
economy under current CAFE structure could increase the risk of
serious injury in crashes. We are concerned because reductions
in vehicle size and weight are obvious means to improve fuel
economy, but at the same time, smaller, lighter vehicles do not
protect occupants as well in crashes.
Future improvements in safety technology, driven by safety
standards and consumer testing, may hide or offset the safety
cost of future downweighting, but those lighter vehicles would
afford less protection than heavier vehicles with the same
technology. This concern does not mean that enhanced fuel
economy and safety are inherently incompatible. Some
downweighting of the heaviest vehicles in the fleet could
reduce injury risk when all road users are considered, and
there is developing fuel efficiency technology that for a price
could increase fuel economy without downweighting of vehicles.
However, the evidence is clear that any regulatory action
that increases the sale of smaller, lightweight cars, or light-
duty trucks, for that matter, will increase injury risk in
crashes. Moreover, CAFE as currently structured provides an
incentive for the sale of the smallest, lightest vehicles,
thus, an alternative structure, perhaps one that indexes fuel
economy to vehicle weight, is necessary to avoid negative
consequences.
The institute's concern about a potential increase in small
car sales is illustrated in Figure 1 here. We see that the risk
of occupant crash fatality per vehicle on the road increases as
vehicle weight decreases, going from right to left across this
figure. For example, the risk of fatal injury per registered
vehicle is about twice as high for the lightest car as compared
with the heaviest ones.
Now, the protective factor of vehicle weight is not the
full story. Vehicle weight can also increase the risk of injury
to other road users. Figure 2, for example, shows that as the
weight of the vehicles increases, the fatality risk increases
in other vehicles that collide with them. These two effects of
weight; greater protection for the vehicle's own occupants plus
increased risk to other road users, are combined in Figure 3,
which shows the total number of crash tests involving these
vehicles, including pedestrians and cyclists. We see increasing
vehicle weight to about 3,500 or 4,000 pounds reduces total
fatality risk.
However, beyond 4,000 pounds, increasing vehicle weight
results in a net increase in fatalities as the risk to other
road users more than offsets the increased occupant protection
of the additional weight. Note that any decrease in weight
below 4,000 pounds results in an increase in fatality risk,
whether we are talking about cars, or SUV's, or pick-ups, but
above 4,000 pounds, decreases in vehicle weight can reduce
total fatality risks.
To put this another way, Figure 3 illustrates that some
vehicle downweighting could occur without a net safety cost to
society as a whole, if it involved only the heaviest vehicles.
There are other ways to increase fuel economy without negative
safety consequences. For example, there is developing
technology that could increase fuel efficiency and achieve
large increases in fuel economy without reducing vehicle weight
or altering current vehicle performance. However, this brings
us to the problem of the current CAFE structure. Nothing about
it encourages manufacturers to achieve fuel economy by reducing
the weight of only their largest vehicles, or by installing
expensive developing technology.
Senator Kerry, you mentioned all of the fuel efficiency
technology that has gone into horsepower vehicle weight,
instead of fuel economy. However, CAFE is structured so an
increase in the sales of small, lightweight, and fuel-
economical vehicles is an obvious way to offset the low fuel
economy of large, heavy vehicles.
Figure 4 illustrates this by showing the distribution of
1999 model cars by weight and fuel consumption in gallons per
100 miles traveled. Figure 4 also shows the mandated CAFE
standard, but as the horizontal line at 3.64 gallons per 100
miles. As car weight increases, fuel consumption also
increases, and many heavier cars consume more than the CAFE
target. This is allowable with corporate averaging, because any
manufacturer with a heavy model that consumes fuel much above
the required level, like vehicle A here, can still satisfy CAFE
by also producing lightweight and fuel-economical models like
vehicle B, because usually there is much more profit to be made
from larger, feature-laden vehicles. Lowering the allowable
fuel consumption further may not result in downweighting or
improved fuel economy of the heavier vehicle A, but rather, in
increased sales of the less profitable and less safe vehicle B.
CAFE need not be structured this way. The standard could
promote fuel economy and safety if the fuel economy
requirements were indexed to vehicle weight. Figure 5 shows the
fuel economy of all passenger vehicles in 1999, and a single
alternative CAFE requirement is plotted for light cars and
trucks, the solid line that increases until about 4,000 pounds
and then flattens out. The idea is that allowable fuel
consumption would decrease for vehicles lighter than 4,000
pounds, so their higher fuel economy would no longer provide an
offset for lower fuel economy of heavier vehicles. Thus, there
is no incentive to down-weight lighter vehicles.
Ending the sliding fuel economy requirement at around 4,000
pounds further enhances the potential safety benefits by
holding all vehicles above this weight to a common value. There
would be an incentive for manufacturers to reduce the weights,
and therefore the aggressivness of the heaviest vehicles. The
better fuel economy of lighter vehicles could not be used to
offset that high fuel consumption. NHTSA, we believe, should
investigate this enhanced CAFE structure and, if its promise is
confirmed, it should be seriously considered as an alternative
to the current structure.
In summary, improved fuel economy and safety are not
inherently incompatible, but there is a problem. The current
CAFE structure allows, and market economics encourage, the sale
of small, lightweight, and less protective vehicles in order to
offset the fuel consumption of large, heavy, and profitable
ones. Simply ratcheting up current CAFE requirements for cars
or light duty trucks will increase motor vehicle fatality risk
by increasing the sales of lightweight cars and trucks.
Based on the best evidence available, the NAS CAFE
Committee concluded that the vehicle weight reductions that
occurred between 1976 and 1993, at least partially in response
to the initial fuel economy standards resulted in about 2,000
additional fatalities in 1993. Congress should be guided by
this history. World events and environmental concerns may well
require improved fuel economy as part of our U.S. response. If
so, I urge Congress to direct NHTSA to consider new CAFE
structuring that could improve both fuel economy and safety. We
must ensure that the fuel economy improvements that might save
lives in the far future do not result in avoidable crash
fatalities in the very near future.
Thank you.
[The prepared statement of Mr. Lund follows:]
Prepared Statement of Adrian K. Lund, Chief Operating Officer,
Insurance Institute for Highway Safety
The Insurance Institute for Highway Safety is a nonprofit research
and communications organization that identifies ways to reduce motor
vehicle crashes and crash losses. I am the Institute's chief operating
officer, and I am here to discuss the important relationships between
vehicle fuel economy and safety. The Institute is particularly
concerned that mandatory increases in fuel economy could increase the
risk of serious injury in crashes or, at the very least, reduce the
societal benefits of future vehicle safety improvements.
This concern is based on the inherent physical relationships
between vehicle mass, fuel consumption, and safety. Larger, heavier
vehicles consume more fuel to travel the same distance as smaller,
lighter cars. At the same time the larger, heavier vehicles protect
their occupants better in the event of a crash. This is true in both
single- and multiple-vehicle crashes. Reductions in vehicle size and
weight can improve fuel economy but only at the cost of reduced
occupant protection. Simultaneous improvements in safety technology to
protect occupants can hide or offset the safety costs of downweighting,
but the basic fact remains that, for a given level of safety
technology, heavier vehicles afford greater protection than lighter
vehicles. No safety technology can be added to lighter vehicles that
will offset their inherent disadvantages in protecting occupants in
crashes. The protective effects of mass are independent of, and
additive to, other safety factors.
This relationship is described in much greater detail in the recent
report by the National Academy of Sciences (NAS) Committee to Review
the Effectiveness and Impact of Corporate Average Fuel Economy (CAFE)
Standards, July 31, 2001. I was a member of that committee, and the
Institute largely agrees with the report's majority position on safety,
so I will not repeat the details. I will instead focus on the primary
implications of the report:
Any regulatory action that increases the sale of small,
lightweight vehicles, whether cars or light-duty trucks, will
increase injury risk in crashes.
This inherent relationship does not preclude the improvement
of fuel economy without adverse safety consequences.
As currently structured, CAFE standards provide an incentive
for the sale of the smallest, lightest vehicles.
Alternative CAFE structures that index fuel economy
requirements to vehicle weight can mitigate or even reverse the
negative safety implications of increased fuel economy
requirements.
Before elaborating on these points, we first need to review the
relationship between vehicle mass and motor vehicle crash injury risk.
In Figure 1, we see the risk of occupant crash fatality per vehicle on
the road for 1990-96 model cars, sport utility vehicles (SUVs), and
pickups during 1991-97, the most recent year for which the Institute
has conducted these analyses. (Note: In contrast to the National
Highway Traffic Safety Administration (NHTSA), the Institute classifies
minivans, which typically are built on modified car platforms, as cars
rather than trucks.) For each of these vehicle types, the risk of
occupant death increases as vehicle weight decreases. The risk of fatal
injury per registered vehicle is about twice as high for the lightest
cars com-pared with the heaviest ones. Similar relationships occur for
SUVs and pickups, although the typical SUV or pickup has a higher
fatality risk than the typical car of similar weight. This is largely
due to the increased risk of single-vehicle crashes, particularly
rollover crashes, among light-duty trucks. So what we see from this
figure is the basic protective effect of vehicle size and weight. We
also see a diminishing protective effect as vehicle weight approaches
3,500 to 4,000 pounds.
This protective effect of vehicle weight is not the full story.
Many crashes involve more than one vehicle, and in multiple-vehicle
crashes vehicle weight can increase the risk of injury in other
vehicles at the same time it limits the risk to its own occupants.
Figure 2 shows the number of occupant fatalities that occurred in other
vehicles that collided with 1990-96 models during 1991-97, per
registered 1990-96 vehicle. What we see from this figure is that the
risk of fatality in other vehicles increases with increasing vehicle
weight.
From a societal perspective, the effect of vehicle weight includes
both of these effects--the protective benefits for a vehicle's own
occupants plus the increased risk to other road users. In Figure 3, the
total number of crash deaths involving 1990-96 models during 1991-97 is
shown by vehicle weight. These fatality counts include pedestrians and
cyclists but exclude deaths in crashes involving three or more
vehicles, which are relatively few and in which the implications of
vehicle weight would be difficult to isolate. This figure illustrates
that, from a societal view, increasing vehicle weight to about 3,500 or
4,000 pounds reduces total fatality risk. Beyond about 4,000 pounds,
increasing vehicle weight results in a net increase in fatalities, as
the risk to other road users more than offsets the increased occupant
protection afforded by the additional weight.
To put this another way, Figure 3 illustrates that reducing the
weight of midsize cars or small SUVs will increase the total fatality
risk. However, reducing the weight of the heaviest SUVs and pickups
could result in a net societal safety benefit. So some vehicle
downweighting need not result in a net safety cost if it involves the
heaviest vehicles.
Besides downweighting the heaviest vehicles, there are other ways
to increase fuel economy without negative safety consequences. The NAS
committee's report notes the existence of technology that could
increase fuel efficiency and achieve large increases in fuel economy
with-out reducing vehicle weights or altering current vehicle
performance. However, nothing about the current CAFE structure
encourages manufacturers to achieve fuel economy by reducing the weight
of their largest vehicles or by installing expensive technology. In
fact, CAFE is structured so that increasing the production of small,
lightweight, and fuel economical--but less safe--vehicles can offset
the production of large, heavy vehicles, which offer manufacturers much
greater opportunity for profit.
Figure 4 illustrates this. It shows the distribution of 1999 model
cars by weight and fuel economy (in gallons per 100 miles traveled). It
also shows the mandated CAFE standard of 27.5 miles per gallon (the
horizontal line at 3.64 gallons per 100 miles). For a manufacturer,
CAFE is computed by taking the difference between each vehicle's fuel
economy and the required level and aver-aging across the various
vehicles. Note that any manufacturer with a heavy model that consumes
fuel much above the required level (vehicle A in Figure 4, for example)
can satisfy CAFE by also producing small, lightweight, and fuel
economical models (like vehicle B). Because there usually is much more
profit to be made from larger, heavier, feature-laden vehicles, this
aspect of CAFE can be detrimental to safety by providing an incentive
to develop and sell small, less protective vehicles. The danger is
twofold--the number of small, lightweight vehicles on the road
increases and, because those vehicles permit manufacturers to increase
production of large, heavy vehicles, the overall incompatibility of the
passenger vehicle fleet increases. Essentially, the sale of the
lightweight vehicles permits the sale of the heavy vehicles that pose
the greatest danger to the occupants in the lightweight vehicles.
As the NAS committee reported, CAFE need not be structured in this
manner. The standards could promote fuel economy and safety, if the
fuel economy requirements were indexed to vehicle weight. Figure 5,
which appears in the NAS report labeled ``Enhanced CAFE Targets,''
shows the fuel economy of all passenger vehicles in 1999, and a single
CAFE requirement is plotted for cars and light trucks. The idea is that
fuel economy requirements would increase as vehicles become lighter.
Thus, there would be no incentive to downweight the lightest vehicles
because their fuel economy requirements would simply increase.
Increased sales of such light-weight vehicles could not be used to
offset the fuel requirements of heavier vehicles.
To further enhance the safety effect of modifying the current CAFE
structure, the NAS committee considered that the sliding fuel economy
requirement could end at around 4,000 pounds. Above this, the societal
consequence of increasing vehicle weight appears to be negative as
vehicle aggressivity effects outweigh occupant protection effects. By
holding all vehicles above this weight to a common value (shown here as
the current fuel economy level for light trucks), there would be an
incentive for manufacturers to reduce the weights, and therefore the
aggressivity, of the heaviest vehicles. The Institute believes strongly
that NHTSA should investigate this enhanced CAFE structure and, if its
initial promise is confirmed, it should be seriously considered as an
alternative to the current CAFE structure.
The Institute is concerned that current efforts to increase the
fuel economy of the U.S. vehicle fleet could result in more deaths and
injuries in crashes. However, the Institute does not view improved fuel
economy and safety as inherently incompatible goals. The chief problem
is that the current CAFE structure encourages the sale of small,
lightweight, and less protective vehicles in order to permit the sale
of large, heavy vehicles. Although the heavy vehicles are more
protective of their occupants, the additional protective effect of
weight diminishes at greater weights while the aggressive effect
increases. Thus, simply ratcheting up current CAFE requirements for
cars or light-duty trucks would be expected to increase motor vehicle
fatality risk by increasing the sales of lightweight cars and trucks.
The NAS committee identified a number of vehicle and engine
technologies that could increase fuel economy without downweighting or
losing vehicle performance characteristics. But these technologies come
at a cost, and nothing in the current CAFE structure encourages
manufacturers to adopt fuel efficiency strategies as opposed to the
potentially cheaper and less safe strategy of downweighting. In
contrast, incentives do exist to add weight-increasing features to
large, profitable vehicles while subtracting features and weight from
small, cheap vehicles. The risk is compounded by the likelihood that
younger, riskier drivers who cannot afford the protection of the
heavier vehicles will drive the small, cheap vehicles.
Congress should be guided by history as it considers this issue.
The first fuel economy standards were imposed in the 1970s after the
oil crisis. In response, new technologies were introduced, but a large
proportion of the resulting improvements in fuel economy came from
vehicle weight reductions. Cars in 1993 were, on average, 700 pounds
lighter and light-duty trucks were 300 pounds lighter than in 1976.
NHTSA has estimated that in 1993 each 100-pound decrease in car weight
was associated with a 1.13 percent increase in fatality risk in
crashes. This suggests, as the NAS report concludes, that if car
drivers in 1993 had chosen vehicles as heavy as those in 1976, there
would have been fewer sales of the lightest vehicles and more sales of
the heavier ones. This would have meant 2,100 fewer fatalities in
crashes. The NHTSA analysis also indicates that, because light-duty
trucks were 300 pounds lighter in 1993, there were 100 fewer fatalities
in truck crashes. This effect of truck weight reduction occurs because
light-duty trucks, on average, are heavier than most other passenger
vehicles and the aggressive effect of additional mass outweighs the
protective effect.
Simply ratcheting up fuel economy requirements within the current
CAFE structure could cause a repeat of this negative effect. Although
the technology exists to improve fuel economy without downweighting the
smallest, lightest vehicles, economic forces may argue against the
adoption of such technology. Certainly, the current CAFE structure does
nothing to prevent the increased sale of small, lightweight, and less
safe cars and light trucks. The Institute understands that Congress may
decide that current world events as well as environmental concerns
require im-proved fuel economy as part of the U.S. response. However,
we urge Congress to direct NHTSA to consider new CAFE structuring that
could improve both fuel economy and safety. Such consideration is
necessary to ensure that the fuel economy improvements that might save
lives in the distant future do not result in vehicle downsizing and
downweighting that surely will result in needless fatalities in the
near future.
Senator Kerry. Thank you very much, Mr. Lund. Mr. Hoerner.
STATEMENT OF J. ANDREW HOERNER, DIRECTOR, RESEARCH CENTER FOR A
SUSTAINABLE ECONOMY
Mr. Hoerner. Good morning, Mr. Chairman and Members of the
Committee. I want to thank the Committee for inviting me to
testify this morning on the economics of increasing CAFE
standards. I am Andrew Hoerner, director of research for the
Center for a Sustainable Economy. The center is a nonprofit
research institute.
My testimony today focuses on the consequences of increased
CAFE standards on employment. It is based on a series of
economic simulations we did jointly with the Economic Policy
Institute. Our findings are rooted in one simple observation,
every dollar of the cost of producing a car is paid to
somebody. The reason cars are more expensive when you increase
efficiency standards is because you are using more labor or
more expensive materials, or both. We find that higher CAFE
standards, which increase the price of automobiles, would also
increase employment in the U.S. auto industry.
My testimony will be based on a reference scenario in which
the car and light truck fleets are combined, and the combined
CAFE is increased from its current level of 24 miles per gallon
to 50 miles per gallon over 20 years. This is a realistic
scenario, in that the rate of improvement in CAFE is roughly 80
percent of the rate that was maintained in the previous period
of CAFE increases. Our costs and technology assumptions are
taken from estimates by the U.S. Department of Energy National
Labs.
In our scenario the average cost of passenger cars and
light trucks increases relative to the baseline approximately 1
percent per year, starting in year five. These cost estimates
were then used to estimate employment, trade, and other
economic consequences, using a University of Maryland
macroeconomic model, the lift model.
How would such standards affect employment in the auto
industry? Employment is the product of two factors, first, the
number of domestically produced automobiles and, second, the
number of workers needed to produce each car. We estimate that
the increase in the cost of vehicles caused by a higher CAFE
standard would decrease the output of the U.S. auto industry by
an average of 1.4 percent in the first decade and 5.5 percent
in the second decade. The bulk of this decrease, more than 90
percent in both decades, is due to increased imports of foreign
cars. On the other hand, we estimate increased labor
requirements per vehicle to average 2.2 percent in the first
decade and 6.1 percent in the second decade.
The combined effect of the decrease in output and the
increase in labor requirements per car is a small net
employment increase averaging about 0.8 percent in the first
decade and 0.6 percent in the second decade. These job gains
could be more than tripled if policies could be devised to
avoid the loss of market share to imports.
One approach to reducing the negative impact of increased
CAFE standards on market share is to provide production tax
credits for U.S. producers of superefficient vehicles. If
properly designed, production tax credits could offer several
benefits. They would provide incentives to accelerate the
introduction of new technologies, they would increase the stock
of vehicles exceeding the CAFE standard, thus providing slack
to reduce the cost of CAFE for other new vehicles, and they
would mitigate the increase in vehicle price and thereby
maintain market share for the U.S. industry.
We believe that such credits are appropriate to the extent
that CAFE offers benefits such as reduced global warming and
reduced exposure of the economy to global oil price shocks that
flow to the public at large.
We note that in order to offset competitive burdens on U.S.
producers, these tax credits must be on production rather than
purchase or consumption. Purchase credits would reduce the cost
of higher efficiency autos to consumers, but would not help to
preserve U.S. market share. Most economists would agree that
such tax credits, whether on production or purchase, are best
financed through either increased fees on low efficiency
vehicles, or a small increase in gasoline taxes.
The estimated real rate of return to the consumer
investment in auto efficiency averages more than 10 percent per
year. This is more than a third higher than the long-term
average real rate of return on corporate stocks. Returns of
this magnitude imply that consumers have more money to spend,
increasing personal income.
In summary, we have found that increased CAFE standards
would increase employment in the U.S. auto industry, but erode
the market share of U.S. producers. The negative effects of
CAFE on output can be reduced or eliminated and the positive
effects greatly enhanced if tax credits are used to share the
increased cost of superefficient vehicles between the purchaser
and the public.
Finally, increased CAFE standards provide a high rate of
return to the consumer investment and energy efficiency, and
increase personal income.
Thank you. I would be happy to take any questions.
[The prepared statement of Mr. Hoerner follows:]
Prepared Statement of J. Andrew Hoerner, Director, Research Center for
a Sustainable Economy
Good morning Mr. Chairman and Members of the Committee. I want to
thank the Committee on Commerce, Science and Transportation for
inviting me to testify this morning on the economics of increasing
Corporate Average Fuel Economy (CAFE) standards.
I am Andrew Hoerner, Director of Research for the Center for a
Sustainable Economy. The Center is a non-profit, non-partisan research
and policy organization devoted to promoting innovative, market-based
approaches to achieving an economy that combines long-term economic
prosperity, environmental quality, and social fairness.
The issue of CAFE is a complex one. It involves policy issues in
national security, environmental quality, consumer safety, trade and
competitiveness, and the economic health of an important industry. My
testimony today focuses primarily on the consequences of increased CAFE
standards on employment. It is based on a series of economic
simulations that we did jointly with the Economic Policy Institute as
part of an effort to model labor impacts of a comprehensive climate and
energy policy.
Our findings are rooted in one simple observation: every dollar of
the cost of producing a car is paid to somebody. The reason cars are
more expensive when you increase efficiency standards is because you
are using more labor or more expensive materials or both. We find that
higher CAFE standards, which increase the price of automobiles, would
also increase employment in the U.S. auto industry by a modest amount,
despite significantly increased imports of foreign cars and lower
purchases of cars by U.S. consumers.
My testimony will be based on a reference scenario in which the car
and light truck fleets are combined, and the combined CAFE is increased
from its current level of approximately 24 MPG to 34 MPG after 10 years
and 50 MPG in 20 years. This increase is phased in over a 15-year
period, starting in 5 years. These fleet average numbers are
approximately equivalent to auto standards of 48 mpg in 2010 rising to
68 mpg in 2020 and light truck standards of 30 mpg in 2010 and 42 mpg
in 2020.
We do not allege that this scenario is in any sense optimal. It is
a realistic scenario in that the rate of improvement in CAFE is roughly
80 percent of the rate that was maintained in the previous period of
CAFE increases, 1978 to 1985. The specifics of our results depend on
the exact scenario that we analyze. However, we believe that the
qualitative features described below would be maintained over quite a
wide range of CAFE increases, including any increases smaller than
those we examine. These qualitative features include increased auto
cost, reduced fuel consumption and expenditures, consumer impacts that
are positive over the life of the car at auto-financing discount rates,
a decrease in the number of domestically produced autos sold together
with an increase in the total value of those autos, and an increase in
domestic auto industry employment.
Our cost and technology assumptions are taken from estimates by the
U.S. Department of Energy national labs. \1\ They are similar to those
used in the recent National Academy of Sciences assessment of CAFE, \2\
though the policy package we analyze is more aggressive in some other
dimensions, such as public funding of energy research.
---------------------------------------------------------------------------
\1\ Specifically, from the CAFE sensitivity case in chapter six of
Interlaboratory Working Group. 2000. Scenarios for a Clean Energy
Future. LBNL-44029 and ORNL/CON-476. Washington DC: U.S. Government
Printing Office.
\2\ National Academy of Sciences, Committee on the Effectiveness
and Impact of Corporate Average Fuel Economy (CAFE) Standards, Board on
Energy and Environmental Systems, Transportation Research Board,
National Research Council, Effectiveness and Impact of Corporate
Average Fuel Economy (CAFE) Standards, Washington DC: National Academy
Press (2002), .
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These cost estimates were then used to estimate employment, trade,
and other economic consequences of the scenario using the LIFT (Long-
term Interindustry Forecasting Tool) model of the Inforum academic
research and consulting group at the University of Maryland. Inforum
has a well-respected, 20-year track record performing macroeconomic
modeling. The LIFT model is a 97-sector inter-industry macroeconomic
model. It tracks more than 800 macroeconomic variables, and is unique
in the extent to which it builds up aggregate demand from individual
industry demands at a high level of industrial detail.
It is generally agreed that substantial increases in CAFE will
increase the cost of motor vehicles, all other things held constant. In
our scenario, the average cost of passenger cars and light trucks
increases relative to the base price by 1 percent in year five, rising
steadily to 15 percent in year 20. This increase in auto price and fuel
efficiency has a number of effects.
For consumers, the estimated fuel savings offset the increase in
cost of the vehicles. All of the increased cost, however, occurs up
front when the consumer purchases the vehicle; while the fuel savings
occur over the vehicle's life. Thus, whether the net result is positive
or negative depends on the rate at which you discount the fuel savings.
For reasons that are not well understood, but which may relate to
imperfect information in the auto market, consumers appear to discount
energy efficiency savings at a higher rate than most other credit
transactions. At a 15 percent discount rate, similar to the rate
consumers appear to employ for these transactions, the result is a net
benefit for car purchasers in 2010 and a small net burden for car
purchasers in 2020. On the other hand, it would appear to be more
rational to use a rate similar to the typical automobile financing
rate. If such a rate (roughly 9 percent for bank-financed car loans
\3\) is used, the reference CAFE scenario would provide a net benefit
to consumers in every year.
---------------------------------------------------------------------------
\3\ See, e.g., .
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How would such standards affect domestic employment in the auto
industry? Employment is the product of 2 factors, the number of
domestically produced automobiles and the number of workers per car.
We estimate that the increase in the cost of vehicles meeting a
higher CAFE standard will slightly decrease the output of the U.S. auto
industry. Over the first decade, the average decrease relative to the
baseline is 1.4 percent (not 1.4 percent per year). In the second
decade, this average decrease rises to 5.5 percent. A small portion of
this decrease is due to consumer responses to higher prices. However,
the bulk of the decrease--more than 90 percent in both decades--is due
to increased imports of foreign cars.
We assume that foreign producers have the lead on U.S. producers in
the manufacture of high-efficiency vehicles. To capture this in our
modeling framework, we assume that foreign producers are able to supply
vehicles meeting the higher CAFE standards at half the incremental cost
of U.S. producers. The cost advantage assumed here is probably at the
high end of what most industry experts would estimate. If the cost
advantage of foreign producers in producing highly-efficient vehicles
is assumed to be lower, the negative impact on output would be lower
and the employment benefit would be higher.
According to the Department of Energy estimates we used, the cost
of achieving our reference CAFE standards would amount to 15 percent of
vehicle cost in year 20. This cost is divided between increased labor
and increased materials costs, and is born partly by consumers and
partly by producers. Increased materials costs provide employment
benefits to other industries, but not to the auto industry itself. We
estimate increased labor requirements per vehicle to average 2.2
percent in the first decade and 6.1 percent in the second decade.
The combined effect of the decrease in domestic output and the
increase in domestic labor requirements per car is a small net
employment increase, averaging about 0.8 percent (5500 jobs) in the
first decade and 0.6 percent (4400 jobs) in the second decade. These
job gains could be improved by a factor of approximately 2 in the first
decade and 10 in the second decade if policies could be devised to
avoid the loss of market share to imports. I will suggest one such
policy in a moment.
We did not model the effect of an increase in CAFE standards on
exports of U.S.-made vehicles. The rest of the industrialized world is
moving rapidly to adopt increasingly tight auto efficiency standards.
It seems clear that if the U.S. is alone or nearly alone in maintaining
lower efficiency standards, U.S. manufacturers will find it
increasingly difficult to sell their cars in foreign markets. Thus it
appears reasonable to assume that increased CAFE standards in the U.S.
will increase exports of U.S.-made autos. However, we were not able to
quantify this effect. If this effect could be estimated, it would
mitigate the loss of auto industry output and further increase the auto
industry job gain.
One possible approach to reducing the negative impact of increased
CAFE standards on market share is to provide production tax credits for
U.S. producers of super-efficient vehicles that exceed the CAFE
standard. Assuming that the CAFE standards are binding, such credits
would not further improve auto efficiency (unless vehicles receiving
the credit are excluded from CAFE calculations). This is because, for
each vehicle that exceeds the CAFE standard, manufacturers can produce
offsetting vehicles below the standard. However, if properly designed,
production tax credits could offer several other benefits. They could:
provide incentives to accelerate the introduction of new
technologies; \4\
---------------------------------------------------------------------------
\4\ For an estimate of the magnitude of this effect, see Hoerner,
J. Andrew and Avery Gilbert, Assessing Tax Incentives for Clean Energy
Technologies: A Survey of Experts Approach, Washington DC: Center for a
Sustainable Economy (April 2000) .
increase the stock of vehicles exceeding the CAFE standard,
thus providing ``slack'' to reduce the cost of CAFE for other
---------------------------------------------------------------------------
new vehicles not receiving the credit;
mitigate the increase in vehicle price and help maintain
market share for the U.S. industry; and
share the incremental cost of super-efficient vehicles
between the purchaser and the public.
We believe that cost-sharing with the public is appropriate to the
extent that CAFE offers benefits--such as reduced air pollution,
reduced global warming, and reduced macroeconomic exposure to global
oil price shocks--that flow to the public at large.
Note that in order to offset competitive burdens on U.S. producers,
these must be production, rather than purchase or consumption, tax
credits. Purchase tax credits go to U.S. consumers of high-efficiency
vehicles, regardless of where those vehicles are produced. Production
tax credits go to U.S. producers of high-efficiency vehicles,
regardless of where those vehicles are purchased. Purchase credits
would reduce the cost of higher-efficiency autos to consumers, but
would not help to preserve U.S. market share. Production credits are
particularly appropriate to the extent that CAFE standards are intended
to reduce global warming, as super-efficient vehicles produce an
equivalent reduction in CO2 emissions whether they are
purchased domestically or abroad. Most economists would agree that such
tax credits, whether on production or purchase, are best financed
through either increased fees on low-efficiency vehicles or a small
increase in gasoline taxes.
For the economy as a whole, the impact on personal income of the
CAFE program we studied is unambiguously positive. Increased CAFE
standards essentially constitute a program of forced investment in auto
efficiency. The return comes in the form of energy savings. The
estimated real rate of return to this consumer investment in auto
efficiency in our reference scenario varies with the period and vehicle
type. But the return averages more than ten percent over the entire
period and vehicle stock. This is more than a third higher than the
long-term average real rate of return on corporate stocks. \5\ It is
even higher when compared to the average consumer's investment
portfolio, which typically includes securities such as bonds and bank
accounts with lower risks and returns. Returns of this magnitude imply
that consumers will have more money to spend, increasing personal
income. \6\
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\5\ Roger Ibbotson, Stocks, Bonds, Bills, and Inflation: Classic
Edition Yearbook Chicago: Ibbotson Associates (2002).
\6\ Some of this benefit may be offset in terms of economic welfare
(but not in terms of personal income) if high-efficiency vehicles have
lower performance on other dimensions important to consumers, such as
performance or carrying capacity.
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In summary, we have found that increased CAFE standards raise the
price of domestically produced autos and the labor requirements per
car. The net effect of this is to increase employment in the U.S. auto
industry slightly, but erode the market share of U.S. producers. The
latter effect would be smaller if the foreign cost of energy efficiency
improvements were more similar to the U.S. cost, or if increased CAFE
standards cause an increase in exports. We recommend that further
research in these areas be undertaken.
The negative effect of CAFE increases on output can be reduced, and
the positive effect on employment increased, if tax credits are used to
share the increased cost of super-efficient vehicles between the
purchaser and the public. These must be production credits to be
effective. They are best financed with charges on low-efficiency
vehicles or a small increase in motor fuels taxes. Finally, increased
CAFE standards provide a high rate of return to consumer investment and
increase personal income.
Thank you. I would be happy to take any questions.
Senator Kerry. Thank you very much, Mr. Hoerner. Thank you
all for your testimony.
Let me begin, if I may. Ambassador, do you see some
parallels, or is there a distinction between the national
security imperatives of the period when you all confronted this
and what we see today?
Ambassador Eizenstat. No. I think, if anything, the
national security imperative has become heightened. The
instability in the gulf, the threat to moderate Arab regimes
from Islamic fundamentalism in the very regions on which we are
increasingly dependent for imports, all to me heighten the
national security concerns that we faced in the seventies,
rather than diminish them.
Senator Kerry. What do you say to somebody in the industry
who might say to you, well, wait a minute now, we are going to
go from 51 percent to 64. You are going to make some savings in
CAFE. I do not know what you are going to do to the industry as
a whole, but even when you finish doing whatever you do to us,
we are still going to be pretty dependent on foreign oil,
including the Middle East.
Ambassador Eizenstat. That is absolutely true. President
Nixon talked about energy independence in the early 1970's, and
that is a chimera. It is not going to happen, we are going to
continue to be dependent. The question is, how much, and what
we want to do as rapidly as possible is reduce that dependence,
so instead of having a curve in which we go from 51 to 64
percent, we begin to take that curve downward and keep it flat
at least initially and then have it go downward, but Senator,
you are quite right, for a very long time we are going to be
dependent on oil from very volatile regions.
Senator Kerry. I assume that your strategy in adopting the
notion that you want to try to hold it down and sort of reduce
your exposure would also predicate that you would want a very
serious effort to be moving down the road toward complete, sort
of independence from that kind of constraint, or do you see
that, or is that simply pie in the sky?
Ambassador Eizenstat. I think it is pie in the sky in any
reasonable timeframe. I do not think it is pie in the sky to
suggest that we can level off that dependence and begin to
reduce it by an aggressive program which includes CAFE
standards, increased production and, in particular, the kind of
research and development incentives you have championed. That
is not at all pie in the sky. If we look out 10 to 15 years,
there is no reason why, with a very aggressive research
program, strong CAFE standards, and as much increase in
production as we can get domestically, and that obviously is
fairly limited because we simply do not have the kind of
reserves other countries do, that we can begin to reduce that
dependence.
Senator Kerry. When you struggled with the three chief, the
big three sort of sitting in front of you in the White House,
and there you are being told, impossible, cannot do it, we are
going to lose jobs, and so forth. Maybe you might share with us
how you saw through that cloud of negativity so as to take the
step with a conviction that, in fact, you were not going to be
doing harm to the economy and buying into the political
maelstrom?
Ambassador Eizenstat. Well, frankly, I remember that
meeting as if it were yesterday. Tom Murphy was the chairman of
GM. He was the chief spokesman, because GM was by far the
largest of the big three, and he was the most aggressive in
simply saying to the President, Mr. President, we do not have
the technology to make this possible.
There was from our perspective a certain leap of faith. We
believed at that time that the CAFE standards would themselves
drive that technology. We also saw that the Japanese were
beginning to develop cars that were more fuel-efficient, and
that in the end it would be beneficial for the industry to be
more competitive. I shudder to think where we would be had we
not taken that leap of faith.
We also had from Jones Agency studies that did indicate
that the technology could be done, but there was obviously to
some extent a leap of faith, and it was one that was fully
justified, because once the standards were set and industry
shifted its investments, as you suggested, from the increase in
horsepower and other items to fuel efficiency, in fact we came
a long way and met those standards.
Now we have the possibility of going forward. I mentioned
that I myself test-drove just a few months ago this Toyota
Prius that gets 52 miles a gallon in the city. It is a hybrid
car. The State of Maryland provides a tax incentive for that.
It costs $30,000 to make but Toyota, to try to establish a
market, is selling them for $20,000 a car. With the kinds of
credits that you are suggesting and that were just suggested
here, those kinds of technologies will be improved.
So we had some data from NHTSA, but we also believed in a
leap of faith, that with a mandate, the industry would, in
fact, make--to some extent the analogy, build a stadium and
they will come was our philosophy.
Ms. Claybrook. Mr. Chairman, can I comment on that one? One
of the things that was available to the Department of
Transportation and to the White House was a very substantial
amount of work that was done over a 2-year period to document
all of the engine plants, the transmission plants to make an
evaluation of the capacity of the industry, and $10 million was
spent doing this and also subpoenas were sent to the companies
to demand that they supply certain kinds of information that
would make it possible to do the analysis that allowed us to do
this. That was one point.
The second is, there were 40 people working on it, and the
third issue is, there was a statutory mandate, and that
statutory mandate meant the agency had to act. It was just a
matter of how we spaced out those standards, and that gives a
great deal of confidence, because Congress has made
adjustments. This was a national priority.
Senator Kerry. When you describe it as a leap of faith, it
was a leap of faith based upon the judgment that Ms. Claybrook
has just described that you had a certain amount of technology
there, you had a certain trend being evidence din the Japanese,
you knew what was achievable. The leap of faith was when you
put American ingenuity to work it was going to respond, I
assume.
Ambassador Eizenstat. Exactly, and again we did not throw a
dart at a dartboard and come up with a number. The agency
provided us data which gave us confidence that that 27\1/2\
miles per gallon by 1985 was technologically achievable, and
again, by setting it, it drove the incentives, and because oil
prices did decline during the early to mid-eighties. Again, had
we not had that in effect, we would have been even more
dependent on oil from volatile regions.
Senator Kerry. Ms. Claybrook, you heard Mr. Lund describe
the balance here between sort of 4,000 pounds and light
vehicles versus high. I mean, I assume it stands to reason that
a lighter vehicle crashing into a heavier vehicle by and large,
people in the lighter vehicle are going to be at risk. It is
one of the reasons people are running out to buy cars. It is a
defensive measure. I have heard countless families tell me,
well, somebody else has a behemoth, I have to get one. It is
sort of a defense when saying it is their preference.
But do you disagree with this? You have a feeling, I think,
there is a divergence here as to where the cut may be, whether
there will be an automatic reduction in weight that comes with
the standard, or do you think you have to make a standard that
in fact excludes, as Mr. Lund has suggested, the lighter
vehicle so that they do not get factored in and, in effect, you
make it harder, I suppose, to reach it. I mean, it is a more
dramatic change.
Ms. Claybrook. There are a number of different ways of
structuring the fuel economy program. The fact is that in 1977,
when the auto industry saw these new standards they had to
meet, what they did, and what I described, is they took the
weight out of the larger vehicles. They did this, because that
was the only thing that was cost-effective. It is not cost-
effective for the industry to save weight by redesigning a
smaller car to be 100 pounds lighter, so they take the weight
out because that is what makes sense to this industry. And they
used mostly technology. 85 percent of the improvement came from
technology, so I thought it was a very sensible approach that
they took in order to achieve these goals.
The reason that we have gone downhill is because, starting
in 1986, 1987, the industry started putting faster engines,
bigger engines, and designing larger vehicles.
Senator Kerry. They would respond as they did--I mean, I
have been through this with them, and we have sat privately and
we have listened here. The response is, well, that is what the
consumer wants. We provide what the consumer wants, and the
consumer wants to buy those vehicles.
Ms. Claybrook. The larger vehicles, yes, but they buy a lot
of small cars, too. The consumer buys a lot of small cars. That
is part of the answer. Part is that you can design safety into
a vehicle far superior to what it is today. But the increase in
deaths alleged by the manufacturers and the Insurance Institute
for Highway Safety because of CAFE in fact would be mostly in
roll-over crashes, and you can virtually stop deaths and
injuries in roll-over crashes if you have properly designed
cars.
There is a huge unused bank account of safety technology
that the manufacturers still have not put in their cars despite
35 years since the passage of the auto safety law, and I
remember, for example, in 1977, when we issued the fuel economy
standards we also issued the passive restraint airbag
requirements simultaneously, within 3 weeks of each other, and
the reason was, we wanted to see safer cars as they went to put
the fuel efficiency provisions into effect.
The manufacturers fought the airbags, delayed them another
7 years, so they are crying wolf, in my view, when they say,
``Well, the problem with fuel efficiency is, it hurts safety.''
If you have a roll-over crash worthiness standard that really
protects people in roll-over crashes, which are not high force
crashes--a high force crash is 60 miles an hour into a
barrier--the roll-over crashes are in the 10 to 20 mile an hour
speed, so if you have a well-padded, well-controlled vehicle
with a proper roof and so on, you do not have much injury in a
roll-over crash. Today 10,000 out of 40,000 deaths, or one-
third of all occupant deaths today, occur in roll-over crashes.
Ambassador Eizenstat. Senator, on the notion of making cars
consumers want, this is where government policy comes into
effect, because you have externalities, as economists would
call it, that consumers do not take into account. They cannot,
when they make a purchase, take into account the national
security implications of being dependent on oil from volatile
regions, potential threats. They cannot take into account the
implications of greenhouse gases. That is not what a consumer
thinks about when he or she buys a car. That is where
government policy and CAFE standards come in to take those
externalities into account.
Ms. Claybrook. And also the aggressivness of these
vehicles, the larger vehicles, that is where there should be a
government policy to reduce the aggressivness of these
behemoths so that they do not do harm to the lighter weight
vehicle.
The research safety vehicle you saw crashes safer than any
car on the road today. It is a 2,500 pound car, and that is
entirely feasible to make. The way they made it lightweight was
that they took the steel and they had it hollowed, and poured a
styrofoam-like liquid material in that hardens so that when it
crashes, it collapses evenly like an accordion, but it does not
weigh very much.
There are all sorts of technologies that are unused in the
industry today, and the only way they are going to put their
ingenuity into it is to have government requirements. In 1978,
a speech was given by a Ford vice president that said, ``This
is the age of the engineer.'' Fuel economy, emissions and
safety standards all had to be met simultaneously by this
industry, and he viewed it as a fabulous challenge.
That is the way the industry should look at the
requirements that we are talking about, and that is one of the
reasons why I hope that in your fuel economy bill you will put
several safety provisions that will completely obliterate any
likelihood that there would be increased injuries.
Senator Kerry. Some of the recommendations I heard you say
seemed to smack when you spoke of a lighter vehicle in this
test vehicle--when you started talking a moment ago about roll-
over capacity and other things, are you adding weight? I mean,
are all of those going to involve weight which then runs
counter to any quick gains, easy, low-picking fruit gains from
fuel efficiency?
Ms. Claybrook. A small amount of weight. It will add a
small amount of weight.
Senator Kerry. Does that put greater pressure on the
industry with respect to what technologies they have to come up
with to get their fuel savings, if they are adding the others?
Ms. Claybrook. A little bit, a very minor amount. It is a
very minor amount. They took out 1,500 pounds, Senator, out of
the large cars in 1977 to 1985. We are talking about maybe 50
pounds or 100 pounds that we are going to add back in.
Senator Kerry. Their argument would come back to you to
say, yes, we did, we took it out because we had not done
anything, and now we have done a lot, and therefore you can
only make these gains at the margins. You cannot grab as much
or as easily, because we have done so much.
Ms. Claybrook. Much of what they did was use fuel efficient
technologies as opposed to weight change. Eighty-five percent
of the improvement came from technologies. That was 1977 to
1980. That was 20 years ago. The advancements that have
occurred since then are enormous in terms of those
technologies.
Second, yes, they did take the weight out. Now they have
put it back in, because now they have gotten an even better
improvement from technology, they just put that weight back in,
and particularly with the SUVs and these larger vehicles, so
there is tons of weight to be taken out of these vehicles, and
it should be, as Mr. Lund has now said, and this is a new
position of the institute.
Senator Kerry. What are the economics of doing that with
respect to foreign competition? The industry again would say to
you, well, most of our profits at this point are coming from
those larger vehicles, and if all of a sudden we become
noncompetitive, then the industry is hurt. I mean, I can think
of 10 answers, but I would like to hear them from you.
Ms. Claybrook. Well, first of all the--I think others on
the panel should answer, too, but the foreign industry, of
course, has made their larger cars as well, their larger
vehicles, and so it is not as though they do not have any work
to do, but it is true that they have spent the last 20 years
doing more work in fuel efficiency technologies that they are
offering for sale than our manufacturers have, and they are
going to have to do some catch-up, and that is really most
unfortunate, because they should not have let that time pass.
Ambassador Eizenstat. One of the positive things positive
things from the original CAFE standard, 1975 to 1985, Senator,
was the fact that our industry actually became more competitive
relative to the Japanese than they otherwise would have been
had they gone on a business-as-usual cycle, and the same will
be true here, as I mentioned.
The Germans, for example, are coming up with a 35-to-40
mile per gallon passenger car diesel. The Japanese are
developing much more energy-efficient cars, and so to be
competitive over time it will be essential for the U.S.
industry to produce cars that can match that kind of foreign
competition.
Ms. Claybrook. I would like to say one more thing, and that
is that oil crises are devastating for the U.S. auto industry.
They are totally devastating, and if the industry does not
understand its own self-interest here in trying to reduce our
dependence on foreign oil so that we do not have gas lines and
higher interest rates and all the other things that come along
with higher gas prices and cutoff of oil, then they are making
a tremendous mistake not looking at the long term. They are
looking at the very, very short-term in the policy
recommendations they make.
Senator Kerry. The car companies say that consumers do not
care about fuel economy. I have found, in fact, that consumers
are somewhat contradicted by what Ford has decided to do,
because increasingly the dealers reported to them that the
people were concerned about SUV economy and therefore they have
set a goal of increasing their fuel economy by 25 percent by
the year 20005. It seems to be a kind of blatant contradiction.
Do consumers care about fuel economy? Would more people buy? Is
that a marketing point? Is that something you could actually
market to Americans?
Ms. Claybrook. I think that it does depend upon the price
of oil, there is no question about it, and when prices are very
high, people think about it more, when prices are lower, they
go with the flow, but if you look at public opinion polls and
you say, what should be the policy of this country, 63 percent
in the Harris poll said that they wanted more fuel-efficient
vehicles even if they had to pay up to 3 percent more to buy
that vehicle, so they understand it costs something. They
understand it gets paid back over time, and that they do want
it.
There is another issue, which is that the industry does not
market fuel-efficient vehicles. This is an industry that knows
how to market, and if it really wanted to do the marketing of
fuel-efficient vehicles and other reasons why you should have
them, the public would be much more responsive, but they have
never really done that.
The automobile industry finally started selling safety in
the early eighties when the public was exposed to things like
the RSV in crash tests and all of those issues on television
and they could all understand why it was important, the public
started to shift, and the industry then started to sell, and
they continue to this day to try and sell safety, but they have
never really sold fuel efficiency.
Senator Kerry. I do have a few more questions, but let me
turn to Senator Allen, who has been very patient over here.
STATEMENT OF HON. GEORGE ALLEN,
U.S. SENATOR FROM VIRGINIA
Senator Allen. Thank you, Mr. Chairman.
If I could use some of this time to give my perspective and
then ask a question--I am sorry I was not here for the
beginning. I have been listening to our distinguished panel,
and Dr. Lund, who I remember from our previous panel back in
August. I have been listening to the testimony of this very
well-educated and distinguished panel, and it strikes me that
there is little faith in free people.
I am one who philosophically puts a great deal of trust in
free people, free markets, and free enterprise, and allowing
people to make their own free choices. Especially in a very
competitive motor vehicle manufacturing market, which is
international in scope, I think that the marketplace can meet
the demands of consumers, as there is a wide variety of
consumers who demand things such as fuel economy. They care
about the size of the cargo capacity, the towing capacity, the
seat arrangements, and the style of a vehicle.
Now, today I think we are the beneficiaries of many
innovations in passenger vehicle technology, all talk about
technology, which is good, and our engineers in this country
have been in competition with others, whether they are from
Sweden, Japan, Korea, Germany, France or elsewhere in the
world, and they have made some unbelievable and very good
advances in automobiles as far as increasing horsepower--I
always have to convert these liters, multiply it by 61 to get
it to the cubic inches to understand the size of an engine. It
is amazing how smaller engines can give you the horsepower that
back in the seventies took longer, whether it is 25 percent or
33 percent more size in an engine, and increasing the overall
performance.
We have seen an increase in fuel efficiency through
technology. We have seen fuel injection, increased air flow,
and also improved exhaust systems and transmissions that helped
provide these advances. The modern engines are burning fuel
more efficiently. They are burning it cleaner, and it results
in an overall reduction in tail pipe emissions. I think the
auto manufacturers have responded to the desires of consumers
here in this country by providing more choices in the form of
new designs for cars and trucks, and there has been the advent
of the minivan and the sport utility vehicle or the SUV, which
seems to be a dirty word around here today.
But let us just use some common sense. Vehicle
manufacturers have two choices to improve fuel mileage. One,
use technological innovation, and certainly we have seen that
in the past several decades, and there is no reason why that
would not continue.
The second choice is to decrease the weight of their
vehicles, which is an easier and more cost-effective way to
ensure increasing fuel mileage in the future.
Now, this boils down to the concept that to me is simple
physics. It takes less energy and therefore less fuel to propel
a lighter and also smaller, less safe vehicle. Our engineers
have certainly applied this scientific principle to conform to
the mandates of CAFE. It is no surprise that most of the
increase in fuel mileage is attributed to the declining weight
of vehicles.
Now, the proposals that are being put forth here say
implicitly that government policy should be designed to take
choices away from consumers. It restricts the ability of auto
manufacturers to respond to market forces and consumer demand.
Most important, it forces mothers and fathers to compromise the
safety of their families and put their children at risk.
Ms. Claybrook, who is highly respected, talked about safety
and advertising for safety. Volvo led the way, and people were
wanting safety. My general view is, as people saw the value of
airbags, they demanded airbags, and I remember someone crashed
off a road in Virginia, hit a tree going 65 miles an hour, had
an airbag, was not wearing a seat belt but had an airbag, and
survived. That will be the best advertising for airbags anybody
would ever want, and people demanded airbags, and not just for
the driver, they wanted them for the passenger. They wanted
them regardless of what government required. Those would have
been accessories that consumers wanted for themselves and their
passengers.
Now, through all of this, the average vehicle weight over
the years has declined approximately 23 percent since the
adoption of the CAFE standard in 1975. This is a direct result
of the government-imposed fuel economy standard. the studies
from the National Academy of Sciences concluded as a result
somewhere between 1,326 additional traffic fatalities occur
each year.
Now, back in August, August 2, I remember asking Dr. Lund
about this issue from the insurance point of view, because they
take into account all these facts, and I will requote from that
testimony. ``There are many studies which have looked at the
relationship between car-size, car weight, and the risk of
serious injury or fatality. Without exception, those studies
find that, as you decrease the size of a vehicle, you increase
the risk of injury. This is one of the best-known facts in
highway safety.''
So let us understand this, and the studies have shown that
approximately--and I am off your quote--the studies show that
approximately 46,000 people have lost their lives due to the
imposition of the CAFE standard on vehicles sold in the United
States.
Dr. Leonard Evans, president of the Science Serving Society
in Michigan, has performed numerous studies on the effects of
CAFE on safety, and illustrates this phenomenon through his
study that showed that adding the weight of that one passenger
will reduce the driver fatality risk by 7\1/2\ percent.
Now, it does not take a scientist to understand that
passengers in, say, a Chevrolet Suburban crashing with a Geo or
a Geo Metro, that the Suburban is more likely to survive, or if
passengers in a Suburban versus a Geo Metro crash into a tree
off the road, or a fire hydrant, or whatever they may run into,
they are more likely to survive and have less injury if they
are in the larger vehicle. That makes sense.
Now, this government proposal is intended to limit consumer
choices, and especially eliminate the size of pick-up trucks,
vans, and SUV's. Doing this not only increases the likelihood
of death or injury in a traffic accident, but it can also cost
jobs to hard-working people, and these are good-paying jobs
over the years. Virginia is not like Michigan, but
nevertheless, we have some good facilities, the Ford pick-up
plant in Norfolk, where there are over 2,300 people working and
the Fredericksburg area--I was just down there a few weeks ago.
They have a power train facility that employs 300 people. They
make the torque converter clutches for the General Motors vans
and trucks and cars, and they were saying they would lose about
25 to 30 of their employees out of that 300.
Now, that is not a big facility, but if you extrapolate all
of that, that is 25 people who would lose their jobs, and they
are good-paying jobs, and they said that would be if they just
increased the CAFE standard by 1 mile per gallon, if that were
imposed on the industry.
Now, if you took this into consideration, let us say you
all wanted to go down there to the Ford assembly plant for
pick-up trucks in Norfolk, you bring all the folks out there
and you say, well, the government wants to do something here.
Yes, we know mothers and fathers and other individuals like to
buy your SUV's or your pick-up trucks, or your minivans, but
the government says they cannot buy them any longer, so we are
going to have to decimate this workforce. Everyone stand up and
one of every 10 of you step forward and lose your job.
I certainly would not want to do something to take away
their jobs, and I do not think you would, either, so there
needs to be some sense as to what this will do to our economy.
Now, here is where I think we can find some philosophical
agreements as to what we ought to do, rather than being
punitive and officious in preventing individual choice. Now,
the solutions to the problems I think are fairly logical. If
the goal is to decrease dependence on foreign oil, I think we
need to increase our domestic supply. I agree with you all that
the demand-side approaches are very important. However, we
should not impose harmful policies that harm people or punish
people by increasing the cost of their cars, lowering the
safety of their vehicles, and ultimately cause them to lose
their jobs.
The philosophical compatibility I think, Mr. Chairman, at
least with me and these panelists, and I think with the
Chairman as well, is that Congress should be in the business of
providing incentives to manufacturers for innovations that do
not compromise safety and do not cost the loss of jobs or
diminished choice on the part of the American consumer.
I think we should establish policies that enable consumers
to choose alternative-fuel vehicles that reward industry for
their production, whether they are hybrids, electric-powered
vehicles, natural gas, or fuel cells. I think they are
absolutely exciting for the future. They should be a part of
the solution, also, new technologies for direct injected
gasoline and the integrated starter-generator and the variable
displacement engine may also prove very valuable.
Unfortunately, I think once again we are facing the
possibility that the free market and the natural evolution of
business and consumer choice will be hindered by the officious
hand of government, so the consequences of whatever policy we
adopt are very significant to our economy, the people, and
their safety.
I think with some of these ideas it is very clear on what
the harm would be, and I very much look forward, Mr. Chairman,
to finding some common ground on some of these incentives and
continue this discussion as we go forward on energy security
legislation. What we need is balance. We need to have common
sense, and I will advocate that we should be trusting free
people to make the right choices for themselves and for their
families, and I thank you, Mr. Chairman, for bringing these
panelists once again on this very important subject. I just
want you all to know what base I am coming from philosophically
on it, and I would conclude, if I may, by asking a question to
Ms. Claybrook.
Senator Kerry. Sure. Let me just say to the Senator that I
really appreciate the comments he has made, because I think it
is helpful to us to kind of lay out here publicly and to give
the panel an opportunity to respond to some of the things you
said. I mean, I think there is this balance, and the Senator is
sincere, I understand, and committed in his feelings about the
free market choices.
At the same time, we have a long history--and I am sure the
Senator, even while he was Governor, enforced some of those
limitations. We put a speed limit on the roads. You enforce
that as a Governor.
Senator Allen. I would have liked them to be higher.
[Laughter.]
Senator Kerry. We have seat belts in the cars, and everyone
in America has come to accept that seat belts save lives. The
fact is, when Ralph Nader showed us the problems with the
Corvair he made cars safer, and it was a government response
that made them safer. Nobody would argue that today. Children
sit in car seats today, and children's lives are saved.
Government intervened.
I do not think you would have voted against any of those
things today, so I think there is a balance here, and the
Senator himself, who talked about limiting choice, turns around
and suggests we ought to have the government create behavior by
having a series of tax credits that I happen to agree with
completely, but that is a limiting choice. It is limiting the
choice of somebody to go out and buy a car that is completely
the antithesis of that, and there is a reason you are limiting
that choice, so I think there is a marginal contradiction in
where you are drawing the line here.
I would like to hear from the panel, though, because I
think the Senator has raised some genuinely felt ideological
and in some cases practical reservations that some people on
both sides of the aisle may have about how we approach this,
and I would like particularly those who have been involved in
this policy (because you have heard these arguments before) to
address the concerns of the Senator with respect to his
opening, and then we will go to the question.
Senator Allen. Before you answer, just so you know, there
are certain policies that I think the government has taken that
are good policies. Some of them come from consumer choice on
safe vehicles. People will not buy them, whether it was the
Corvair or the Pinto, and some of it was litigation. I am not
saying that policy should always be by litigation, but that is
also a concern, and I am not going to argue all of those
others. Just for the record, on the speed limits I was one in
the legislature who was trying to get it to 65, and as Governor
I would have liked to see 70 on the interstates, but the
legislature disagreed. That is the balance of power, so to
speak, but in a place such as Europe, where they artificially
increase the cost of gasoline by high taxes, you would think
these sort of ideas obviously propel manufacturers for the
European market, and obviously there is--Volvo and Peugeot and
Fiat and BMW and Volkswagen, of course, sell in this country as
well.
My field commander for Southside Virginia is so proud of
his Volkswagen Jetta diesel and the great gas mileage he gets
in that vehicle.
So wouldn't a lot of these ideas and innovation come from
Europe just because, I think, of their punishing policies as
far as gas taxes, but why wouldn't those vehicles be sold in
this country?
Ms. Claybrook. Well, first of all you have raised a whole
lot of issues. You mentioned the Pinto. In the era when the
Pinto was in the United States in the 1970's, Ford was selling
a car in Europe that had a far superior fuel tank design for
safety than the Pinto, and finally out of disgust with the
problems with the fuel tanks here in the United States the
government set a safety standard to require the better fuel
tanks they were then selling in Europe. They did not sell them
here.
You mentioned airbags. You could not buy an airbag until
the Government standard came into effect, except for Mercedes
Benz, so essentially what you had was a very, very high end of
the vehicle population. You could buy an airbag beginning in
1982, but until the standard was issued you could not buy an
airbag in an American car except for a very brief period in
1974 to 1976, when General Motors, under Ed Cole, the
president, who was a great safety advocate who loved airbags,
offered them for sale. When he retired, they stopped making
them.
So there are reasons for government standards, and they are
performance standards, at least on the safety side they are
performance standards, so that the companies have a lot of
choice about how they go about achieving that level, but they
are minimum standards. They set a minimum below which you
cannot go when you sell that particular vehicle.
In terms of the fuel economy standards, the corporate
average fuel economy system was designed by the auto companies.
They did not want any standards, but when the government said,
we have to have some standards, we cannot deal with this
variability in gas prices and the heavy importation of fuel,
the companies said, we would like the corporate average fuel
economy because it allows us a great deal of flexibility. We
can sell larger vehicles, smaller vehicles, and we can put
technology in different ones, and we will decide how we are
going to do that.
What they did decide was to install technology for most of
their fuel-efficiency achievement, not weight reduction. You
had mentioned most of it came from weight. That is not true.
Eighty-five percent of the improvement in fuel efficiency came
from technology. That is, engines, transmissions, aerodynamics,
tires and the rest of it. Fifteen percent came from weight
reduction, and almost all of it, came out of the larger
behemoths. It came out of the 5,000 pound vehicles that were
reduced to 3,700 pounds, so that is where they did the weight
reduction, and they did it that way because that was what was
cost-effective for them.
Weight reduction is very expensive. You have to use new
materials, and you have to redesign the whole vehicle. It is
complicated. So it was very expensive, and they decided to do
it only for about 15 percent of their savings.
So that is what happened in meeting the government
standard. I agree with you, regulation is a blunt instrument,
there is no question about that. But what happens is,
regulation emerges when you have a long period of time when the
companies do not do it voluntarily, in whatever field that you
are talking about.
Senator Allen. Why wouldn't consumers demand it? There are
small cars available, are there not?
Ms. Claybrook. Lots of them are sold. Lots of consumers buy
small cars, partly for price, partly for efficiency.
Senator Allen. Then why do people, in your view, buy
minivans and SUV's?
Ms. Claybrook. They buy them because of the false belief
that they are safer. An SUV is a very stiff vehicle, and when
you crash what you want that vehicle to do is to absorb the
energy of the crash so that less of that force is transmitted
to you. The SUV is a very, very stiff vehicle.
Senator Allen. It is larger, though.
Ms. Claybrook. It is larger, and there is an advantage to
that, but I will tell you on the statistics that a four-wheel-
drive Suburban has a higher death rate than the Honda Civic,
and I will tell you that a Ford Expedition crashed in exactly
the same way as a GM Saturn, the Saturn did better, so it
depends upon how you design the car for safety, and it is not
necessarily so that a larger vehicle or heavier vehicle, per
se, is better. Larger is better, but heavier is not necessarily
better. It depends upon how you design the protection.
SUV's roll over. 66 percent of the deaths, or 65 percent of
the deaths in SUVs are from roll-over. Roll-over is a bad type
of crash today, because the roofs crush in and crush your
brain. They could make better roofs, they could have pre-
tension seat belts, they could have side-impact airbags and
padding on the roof, and a roll-over crash is one which you
would survive easily, but the companies do not do that.
Senator Kerry. Can I just intervene in the question, just
for a moment. Ms. Claybrook, I assume you would concede that
that is not the only reason people buy SUVs and minivans.
People buy minivans because they have got to pile a family in
the car.
Ms. Claybrook. Absolutely.
Senator Kerry. And people buy SUVs because of this in many
cases--not all. I mean there is an absurdity in a lot of the
SUVs that go 20 miles from work to home in urban settings,
except for the degree to which they choose them to also
sometimes perform some other needs, but an awful lot of people
in this country,particularly in rural areas, et cetera, have
real needs for the large vehicle that has four-wheel capacity,
whether it takes them hunting or whether it takes them up into
outlying areas, or on a farm, or whatever. Those are very
practical vehicles. I assume you allow for that kind of
variation within the marketplace.
Ms. Claybrook. Oh yes, of course, and I am not saying the
corporate average fuel economy system is the only way to design
a fuel economy standard program, but that program does allow
for a great deal of variability and choice by the manufacturers
in what they offer to the consumers.
One of the problems is, when you talk about the
marketplace, consumers are relatively uninformed, because there
is a lack of information there for them about what is the
safest vehicle, and what is the least-safe vehicle. There is
information available, but it is hard to find and put together,
so only the most industrious consumer will put a whole package
of information together to figure out what makes the most sense
for their needs, measuring fuel efficiency and safety and all
of those things, so it is a hard job to buy a new vehicle, and
it is not just something where you can walk in and you can ask
the dealer, is this the best vehicle to buy. He is going to say
yeah, yeah. You know that.
So it is hard to be a good consumer, and we do not have a
sticker on the windshield, which I believe we should have,
which says, when this vehicle rolls over, what is the result,
and when this vehicle crashes at 50 miles an hour, what is the
result?
You also cannot buy--you know, you mentioned child
restraints. You cannot buy, except in very limited vehicles, a
built-in child restraint. Now, why don't manufacturers make
cars safe for kids? Why don't they build a car restraint like
the Volvo does? You mentioned Volvo, which has an arm rest that
pulls down and there is a child restraint. Those are the kind
of things that really frustrate the consumer and frustrate
safety advocates like myself, who, by the way, do not believe
in 70-miles-an-hour driving because it is bad for fuel
efficiency, and it is bad for safety, even in an SUV.
But those are the problems that we face in the marketplace,
unless we ask the government to make these things available to
us, often they will not be there.
Senator Allen. Mr. Chairman, I would say to Ms. Claybrook,
number one, the interstates are engineered and designed and
constructed for 80 miles an hour.
Ms. Claybrook. No, no, no, no, 70 maximum.
Senator Allen. No, 80, but you set the speed limit at 70 or
75 because folks will instinctively not like limits, which I
think is healthy. I have a libertarian streak in me, as you
might guess.
At any rate, in purchasing vehicles over the years
personally, and this is nothing scientific. I suppose we have
not had a study on it, but in purchasing vehicles, everything
from a Volkswagen diesel Rabbit to pick-up trucks to SUV's and
vans and all the rest years ago, I think for consumers, all you
had was Consumer Reports, and you would have to order those
Consumer Reports and get all the details, and if you are trying
to compare vehicles it was even more costly. Now you get on
Yahoo Cars and put them side by side.
I had a Ford Explorer, now I have a Durango, and the reason
is, I think that I do not like the gas mileage, and generally
you go south of Bull Run or the Occoquan and gas prices are
less than in Northern Virginia, and I know where all the least-
expensive gas stations are everywhere in Virginia, and I go to
them and fill up before I get to Northern Virginia or DC.
Regardless, you can compare all of that, and there are
reports on safety for people who care about safety. Those are
published in the newspapers. You can get them over the Internet
as well, so I think there is even more access to information
now for people. Actually I think it is tough on the car dealers
when you can figure out what the cost is of every accessory to
them, so you can determine how much of a percentage they are
marking up, obviously, for them to stay in business, so I think
consumers have a great deal of ability to decide things.
And again, you talk about the roll-over on SUV's. I like
the wider track on the Durango. It holds the road better on
turns, I thought. I very much like the comfort of the seats on
the Explorer, and you compare all the cargo for our three
children that the chairman talked about, my wife likes the
minivan. It is easier to keep the kids from hitting one another
than in the SUV.
But regardless of all of these demands, again back to
Europe, Europe where they have high gas prices, why would not
those people in Europe, where they have the high gas prices,
why would they not be demanding the type of vehicles you would
have people in this country driving and restricting their
choices in this country to buy the vans or the SUV's or pick-up
trucks they so desire?
Ms. Claybrook. I do not think there is a restriction in
choice. One of the problems is, you can only get an SUV that in
most cases in the larger ones are fuel-inefficient. Why can't
you buy, as the Union of Concerned Scientists showed in their
report--which I believe is a part of this committee's record,
and if it is not, it should be--showed that you can take the
Ford Explorer, the car you like, and you can make it far more
fuel-efficient than it is today. Why hasn't the industry done
that?
Why have they made these large vehicles so that you have to
go to every gas station in Southern Virginia? In order to save
fuel, why didn't they make you a Ford Explorer that is fuel-
efficient, because they could have, and it would not have
increased the prices very much at all, and if it did, you are
going to get that back in your fuel savings.
So that is our concern, is that in fact there is not
consumer choice, often, in our marketplace, and you cannot buy
a Ford Explorer that has a safe roof for crushing. In fact, in
most SUVs you cannot, so that is the concern that we have, that
these government requirements come after long periods of time
when the industry does not take advantage of technology that is
available to them and does not really offer a wide consumer
choice in the marketplace for the kinds of things that most
people want, which is fuel-efficient vehicles that serve their
purposes.
Senator Allen. I guess that is just a basic disagreement. I
think there is more vehicle choice than ever. I look at what
Toyota has out in SUVs. They must have three or four different
types of SUVs, from the Land Cruiser to the Fourrunner, to
whatever these other ones are that are smaller, and that have
better fuel-efficiency.
Ms. Claybrook. They are smaller, but they do not
necessarily have to be to have the fuel efficiency.
Senator Allen. But they are--the point is, if you have to
carry more weight, it is not going to be as fuel-efficient.
That is just basic physics. My general view is that we do not
have restrictions on cars coming in here from Japan and from
Korea and all over the world, and it seems to me----
Senator Kerry. Sure they do. They have to live up to our
standards. Absolutely they have to have restrictions.
Senator Allen. Yes, they do. Yes, they do, they have to
meet our standards, you are right, our safety standards.
However, look at the variety of choices, and I guess that is
just the basic difference is, I think consumers have a lot of
choices now, and they are not just restricted to the big three
auto makers of the United States and, indeed, because of that
competition from the Japanese, even if you did have CAFE
standards, people, especially when fuel prices went up, clearly
they had to react to it because people did not want to be
driving around in those things that look like yachts and get 8
miles a gallon.
Senator Kerry. Mr. Ambassador, you are waiting to say
something I think.
Ambassador Eizenstat. I was waiting, yes. I am glad Joan
came up for breath.
[Laughter.]
Ambassador Eizenstat. Just a couple of points. First of
all, the National Academy of Science report, which was an
exhaustive report, indicated that improved CAFE standards and
fuel economy standards can be achieved without job loss,
without compromising safety, and without increasing consumer
cost. Indeed, they indicate that the consumer in 2012 buying a
more efficient car will save over $2,000 over the lifetime of
the car.
Second, I lived in Europe, Senator, for 2 years as
Ambassador to the European Union. I was privileged to be
confirmed by the Senate for that position in 1993, and the fuel
efficiency in Europe comes at a very significant price, because
gasoline is 4 times more expensive than it is here, which no
one would, I think, want for the American consumer.
That has driven, to use a euphemism, Europeans into
purchasing very tiny cars that would have no market here, so
when you ask, why don't those cars sell here, and those small
cars--and in part they are small because of the huge cost of
gasoline, but also because Europe is very compact, and with
people not going across national borders, there is simply not
the demand for the kinds of cars we want to drive long
distances.
Third, you are quite right that consumer choice is a
tremendously important item on any national agenda. The fact
is, in a low gasoline price, low oil price environment, people
generally will not demand fuel-efficient cars. It is not their
priority, and that is where I believe government policy comes
into effect. It is not a question of denying consumers a
choice, because they will always have that choice. It is
looking at what is good for the Nation as a whole and, as I
mentioned earlier, when a consumer makes a choice, the consumer
does not look at, as the Congress and the President must, the
national security implications of being more and more dependent
on foreign oil.
The National Academy found, for example, that had we not
had the original CAFE standards, we would be importing 2.8
million barrels of oil per day more than we are now. We would
be even more dependent. The consumer does not look at the
impact that greater fuel efficiency would have on reducing
greenhouse gases, and the consumer does not look at the impact
that more and more imports have not only on national security
and greenhouse gases, but on our trade deficit. The largest
single component of our trade deficit in terms of natural
resource imports is oil.
So those are, again, using an economic term, externalities
which have to be factored in when one considers what is best
for the country.
And last, if I may also say, I think market incentives are
tremendously important. I strongly support your concept of
greater, and Senator Kerry's, greater tax incentives for these
technologies, but the technologies will not be driven fast
enough without additional things besides the incentives.
And may I say again that I think we should look, and the
Committee should look at the National Academy of Sciences'
recommendation of providing, as an alternative regulatory
system, the concept of fuel economy credits we again attempted
to put into the Kyoto Accords. This would give you more market-
driven choices and less of a heavy regulatory burden.
I am not prepared to say that that, in and of itself,
should substitute for CAFE standards, but it is certainly
something that over time one should look at.
Senator Allen. Thank you, Mr. Ambassador.
On your point--this is where I think there is, Mr.
Chairman, some common ground. There is a national interest,
first of all, in the long run, and as quickly as possible, of
use of other methods of propulsion, other than the internal
combustion engine. One, they are cleaner, and obviously we do
not have sufficient petroleum supplies in this country to not
import from elsewhere.
So the point is, though, that you are saying the incentives
are not enough. You have to put in the restrictions. I would
just like to use carrots rather than sticks, and I think people
can make decisions, especially when making major purchases of
an automobile, which is probably the second largest purchase
they will ever make in their life, second only to their home,
and I do think there is an interest in getting more domestic
supply for petroleum in this country, which is a whole other
issue we do not need to get into here.
But again, I think if we can find some common ground on the
proper incentives for fuel cell technology, electric vehicles
and so forth, I think that is where we could do a good service
to the country, and then expand the choices, or maybe those
incentives, rather than taking away the freedom of an
individual to choose for their family or for themselves what
size or kind of vehicle they want to drive.
But thank you, Mr. Ambassador.
Senator Kerry. I need to turn this back a little bit. The
weight and size component of this is an important component,
but it is really not the whole story at all, and there are
other significant technological ways in which some of these
gains can be made.
Second, let me just emphasize, in whatever this Committee
proposes, we are not going to take any choice away from the
American people, and I made it very clear in the comments I
made on Tuesday, nobody is going to mandate that you cannot
have variation. All of the choices available today, you can
drive a big car, you can drive an SUV, but they can be more
efficient. There is no question of that.
The National Academy of Sciences, and I want to ask you,
Mr. Lund--you guys have been very patient over there--page 414,
this is the conclusion of the National Academy, it is
technically feasible and potentially economical to improve fuel
economy without reducing vehicle weight or size and therefore
without significantly affecting the safety of motor vehicle
travel. Is that correct, Mr. Lund?
Mr. Lund. That is correct.
Senator Kerry. So let us keep in mind what we are talking
about here. You can have all the choice in the world. You can
buy every single different kind of SUV that is on the road
today. It just can be configured differently, and every family
that needs to pile in six kids and five dogs, or whatever, to
drive 15 miles can do it, but you do not have to do it with the
consumption levels we have today.
Mr. Lund. That is correct, Senator Kerry. I would just,
again, reiterate the remarks I made in my opening, that we are
concerned about the structure of CAFE. Simply increasing CAFE
standards, if we just do it with the current structure, there
is a danger of repeating the negative experience we had in
terms of safety from the 1970's.
Senator Kerry. Now, let us stay focused on that for a
minute. Ms. Claybrook, would you respond to the notion, if you
can, and Ambassador Eizenstat or anybody on the panel, are you
coming back to this 4,000 concept? Is that where your----
Mr. Lund. The 4,000-pound concept is what I am talking
about in terms of restructuring. What you can see from looking
at the fatality experience of cars on the road is that there is
a tradeoff. Occupant protection always increases with heavier
vehicles. Joan, it is simply not correct that a family is as
safe transporting their children in a Civic as they are in a
Suburban. Increased size is protective.
But at around 4,000 pounds, we see there is an offsetting
effect. Joan talked about how the aggressiveness of vehicles is
also an issue. Above that, you start seeing there are more
fatalities being caused by vehicles in this weight range than
are being saved, that is being caused among other road users,
other vehicle occupants, pedestrians, cyclists, than are being
saved by the additional mass of the vehicle, so there is a
complex relationship between vehicle weight and safety.
Ms. Claybrook. I would agree, compatibility of the size of
vehicles generally, the weight of vehicles generally on the
highway is advantageous, and that is actually what started to
emerge with the CAFE standards that were issued in the 1970's.
Senator Kerry. Because it began to bring more vehicles
down?
Ms. Claybrook. They brought the smaller ones up from about
2,000 to about 2,300, 2,400, and they got rid of the great big
ones, and then they started introducing SUVs and we had this
great differential again, so I agree that compatibility is
highly advantageous. The GAO did a study and showed this, and
so on.
But the fact is that when you look at the statistics on the
highway today, you are not looking at what safety can be built
into these vehicles. Roll-overs are one-third of all occupant
fatalities. If you substantially increase the roll-over
protection, the crashworthiness in a roll-over, which is not a
horrendously high velocity type of crash, you could save huge
numbers of lives.
Senator Kerry. Let me come to another point if I can for a
moment. I do not disagree with that, but what really happened
was, you had a compatibility that was being created within all
the vehicles that are on the road, and then people stopped
focusing and enforcing.
We had a downward trend for the last 12 years or so, which
reflects the sort of--I hate to say it, but it is a reflection
of what Senator Allen is talking about that has taken place,
where people have been left completely to their own devices,
with the result that the compatibility that we had achieved
with the sort of reasonableness of consumption has now gone
backward, and the very policy imperatives that drove us in the
first place to adopt this standard, which has resulted in lower
costs to consumers, ultimately, and safer cars, which reduces
insurance costs, which reduces a whole bunch of other things or
a lot of other ways consumers benefit, not to mention hospital
cost and long-term recovery cost, and all of that, that we have
in fact had enormous gains societally from that.
Now, what is really important here as we think about what
we may do is that the recommendations of the National Academy
of Science saying, we could gain somewhere up to--well, they
had one standard for light trucks and one standard for
passenger vehicles, but I think the upper limits were about
37.2 over 10 years, 12 years. Is that right?
Mr. Lund. It is over an extended timeframe.
Senator Kerry. I am going to the back end. I am not trying
to force the envelope, but if you go to the back end it was
37.2, or it was a 10 to 15 variation. 15 was the upper end, and
that was 37.2, but that standard, when they arrived at that
scientifically, technically feasible standard, it did not
factor in hybrids, and other potential savings that could come,
so I do not disagree with the Senator from Virginia.
I think that what we may or may not be able to do here with
respect to credits and market incentives at the same time as we
also consider what is a reasonable standard may be a good
combination, and could facilitate this significantly for the
industry.
Ms. Claybrook. I just wanted to mention, though, the issue
of the 4,000 pounds.
Senator Kerry. We need to wrap up, because we have another
panel.
Ms. Claybrook. Fine, but the issue is that you can make
cars much safer than they are today. The National Academy did
focus on that piece of it, so if you look at what the
statistics are today, you have to adjust that for what you can
do in terms of the way you design and improve vehicles, so that
is the only point I wanted to make, so you do not have to have
4,000 pounds to have that same level of safety. It is the
design of the vehicle that matters for safety.
Senator Kerry. I understand. Let me just ask Mr. Hoerner
something quickly, if I can. I read through your analysis, and
appreciate it very much, and you saw a downturn momentarily,
but that would then be made up in terms of foreign competition,
is that correct?
Mr. Hoerner. We saw that a CAFE standard alone, a fairly
aggressive CAFE standard would increase employment in every
year.
Senator Kerry. Increase employment in every year?
Mr. Hoerner. In every year, modestly. It would have
increased employment substantially, except that increase in
employment was somewhat offset by the increased penetration of
foreign cars.
Senator Kerry. And that is because there is an adjustment
taking place in the marketplace by virtue of choices people are
making?
Mr. Hoerner. It is basically because we think that right
now, foreign producers have an advantage over U.S. producers in
producing these high-efficiency cars. We think they have a
lead.
Now, we assumed, and I think this was a pessimistic
assumption, we assumed that they would maintain that lead over
the entire 20-year period. If you do not make that assumption,
we get a much larger employment benefit than we saw.
Senator Kerry. In point of fact, the history of the CAFE
implementation negated that pessimistic assumption. It in fact
showed that we became more competitive more rapidly and moved
to compete against the cars that Europe at that time also had
an advantage on.
Mr. Hoerner. Well, I think it is true that the increased
CAFE improved the competitiveness of U.S. cars in world
markets. However, foreign cars were also improving their energy
efficiency over the same period. We recommended that further
research be done in the relative cost benefit, cost advantage
of foreign and U.S. producers in producing more efficient cars,
but I think the important conclusion from our study is that
even if you make these very pessimistic assumptions about
foreign advantage, it is still the case that there would be a
net employment gain every year throughout the forecast period.
Senator Kerry. I appreciate it. Thank you all very much.
Senator Allen. If I could ask a followup question, Mr.
Chairman, that is all very interesting, but let us be realistic
here on the folks who are actually in the business.
It seems like every manufacturer in this country, as well
as those who are headquartered in other countries, are opposed
to some of these proposals, and it is not just management, it
is not just the sales force, it is United Auto Workers as well,
and these are the folks whose jobs are on the line, or their
business, and they all are opposed to this, and they all say it
is going to be harmful to their jobs, and obviously I was
talking more on the consumer approach, but regardless, it is
nice to talk about theory, but how do you answer the fact that
all of these people, these workers, whether they are union or
management, say this is going to be harmful for their jobs,
notwithstanding whatever theories you may have? Are they all
wrong?
Mr. Hoerner. Sir, we have been talking to the United Auto
Workers about this question, and we are in ongoing discussion
with them about the research they have been looking at and the
research that we have been looking at.
Certainly there are concerns there, but it is worth
recognizing that the United Auto Workers have a resolution
which is still in place that states that increased auto
efficiency standards are good, provided they can be done in a
way which does not reduce jobs in net, and I think that what we
are looking at here is a careful economic analysis that asks,
can we achieve those efficiency standards in a way that does
not reduce jobs in net, and I think the answer to that is
certainly yes.
It is true with CAFE standards alone, but it is more true
with the combination of CAFE standards and energy efficiency
credits. That combination can guarantee that no net jobs would
be lost to the increased efficiency standards.
Senator Kerry. Mr. Ambassador, you had to confront that
same issue.
Well, thank you very much on this panel. We appreciate it.
If we could shift to the next panel, I would appreciate it.
We have Professor Marc Ross of the Physics Department at
the University of Michigan, Mr. John German, American Honda
Motor Corporation, manager of environmental and energy
analysis, Mr. Allen Schaeffer, executive director of the Diesel
Technology Forum, and Gregory Dana, vice president of
environmental affairs, Alliance of Automobile Manufacturers.
[Pause.]
Senator Kerry. Thank you all very, very much for your
patience. I am going to try if I can hold--the statements to 5
minutes, if you can sort of watch the lights.
Mr. Schaeffer, why don't you lead off.
STATEMENT OF ALLEN SCHAEFFER, EXECUTIVE DIRECTOR, DIESEL
TECHNOLOGY FORUM
Mr. Schaeffer. Good morning. I want to thank the Committee
and Senator Kerry for this opportunity to appear today. My name
is Allen Schaeffer. I am the executive director of the Diesel
Technology Forum, and my remarks will be abbreviated from those
the Committee has in their hands.
First, a word about the Forum. We are a unique organization
of leaders in the diesel technology industry. Our members
include diesel engine and vehicle manufacturers, diesel
refiners, manufacturers of emissions treatment systems, and key
suppliers in the diesel industry. We appreciate the opportunity
to be here this morning.
I would like to cover three main areas with the Committee:
First, the nature, importance, and inherent benefits of diesel
technology, second, the important role of light duty diesel
engines in meeting energy refinement goals in Europe, and
third, how diesel engines can play a major role in meeting U.S.
energy goals.
First of all, the nature of the diesel engine. Diesel
engines are the most inherent efficient internal combustion
engine, converting more of the chemical energy that is fuel
into chemical energy with less energy wasted. The combination
of unique compression ignition cycle, and the fact that the
fuel contains more power, more BTU's per gallon, as it were,
makes the diesel a highly efficient power system. The inherent
performance advantages include more power at lower engine
speeds, better fuel efficiency, more durability, and more power
from a given engine size, and lower greenhouse gas emissions.
Today's diesel technology is perhaps best known as the
technology source that powers over 90 percent of all commercial
trucks, nearly all fire and rescue equipment, two-thirds of all
farm equipment, 100 percent of all railroads and commercial
barges and boats. Diesel power also plays an important role in
the economy, and as an industry it contributes $85 billion each
year, more than the iron and steel industries.
I am here today to explain to you why diesel technology is
an untapped potential for helping the Nation achieve greater
energy security and meeting its energy and environmental goals.
First of all, we can learn a lot from the experience in Europe,
which has been covered here this morning, and the U.S. and
Europe are taking very different approaches to the use of clean
diesel technology to improve fuel economy. Diesel automobiles
are extremely popular in Europe, and demand continues to grow.
One in every three cars sold in Europe today is powered by a
diesel engine. In some countries, it exceeds 40 percent.
Experts predict that diesels will soon gain about 40 percent of
the entire European market.
Why is it, that Europeans favor diesel engines? There are a
series of reasons, including better fuel efficiency,
durability, and lower greenhouse gas emissions, along with the
performance advantages. This information is covered at length
in the study that we have provided for the Committee and the
record here. It is clear, then, that the Europeans are able to
reap the environmental and energy benefits of clean diesel
technology.
I would also like to point out to you why diesel engines
can play a key role in the U.S. by reducing consumption in our
transportation sector, and there are several key indicators of
why that is.
First of all, the July 2001 National Academy of Sciences
report that evaluated fuel economy standards noted the
possibilities of reducing petroleum consumption with the use of
clean diesel technologies, and I quote, ``direct injection
diesel engines are among engine technologies with high
potential with improved fuel consumption, and the application
of small turbo-charged direct injection diesel engines has seen
tremendous expansion in passenger cars and light duty trucks in
Europe.''
A second indicator of the importance of diesel technology.
Last October, as every October, the Department of Energy
releases its annual fuel economy rankings, ranking the cars and
light duty trucks from the most fuel efficient to the least
fuel efficient. This year again diesel-powered vehicles
garnered three of the top five rankings, with only the gasoline
electric hybrids beating those three diesel engines.
I would point out for the Committee's consideration that
advanced European diesel technology vehicles exceed those U.S.
hybrid models that are at the top of the list today by over 60
percent.
One of the greatest opportunities for clean diesels is in
the light duty truck and sport utility vehicle categories, and
now those categories exceed 50 percent of annual sales, as the
Committee is aware, we believe that the use of advanced clean
diesel engines in these vehicle categories offers a cost-
effective and efficient near-term alternative that can reduce
fuel consumption by 30 to 60 percent. Coupled with the
tremendous advances in exhaust emissions controls and after-
treatment technology, today's clean diesel's also have
significantly lower emissions.
According to the Department of Energy, diesel is a proven
and readily available technology. The power and efficiency of
diesels can also be used to reduce Nation-wide fuel consumption
without the safety compromises associated with building lighter
vehicles. Because diesel engines are more powerful and more
fuel-efficient at the same time, the use of diesel allows these
fuel economy improvements to be realized without building
lighter and less safe vehicles.
And finally, according to the U.S. Department of Energy, if
diesel engines were to penetrate the light duty market to 30
percent by the year 2020, the U.S. would have a savings of
700,000 barrels a day of crude oil, and that is equivalent to
cutting in half the total energy consumption used each day in
California.
In conclusion, we believe there are significant
opportunities for advanced clean diesel technology engines to
play a much larger role in boosting the fuel efficiency of
popular sport utility vehicles and light trucks. In the State
of California right now, the California Energy Commission and
Air Resources Board are preparing a report to the legislature
that identifies clean diesel technology in light duty
applications as one of the 26 strategies that can help that
state reduce its petroleum consumption.
In May of this year, the Diesel Technology Forum and the
U.S. Council for Automotive Research, USCAR, will bring
advanced clean diesel technology cars, trucks, and sport
utility vehicles here to the U.S. Capitol for you to have an
opportunity to experience the technology first-hand. We hope
that you will join us.
In conclusion, members of the Diesel Technology Forum,
while not taking a position on specific aspects of corporate
average fuel economy ratings, believe that clean diesel
technology can and should play a greater role in reducing
energy consumption in personal transportation.
Thank you, and we would be happy to answer any questions.
[The prepared statement of Mr. Schaeffer follows:]
Prepared Statement of Allen Schaeffer, Executive Director, Diesel
Technology Forum
Good morning. My name is Allen Schaeffer and I am the Executive
Director of the Diesel Technology Forum.
The Forum is a unique organization of leaders in the clean diesel
technology industry. Our members include diesel engine and vehicle
manufacturers, diesel fuel refiners, manufacturers of emissions
treatment systems, and key suppliers to the diesel industry.
We appreciate the opportunity to appear before the Committee today
on the important issue of energy consumption in the transportation
sector, and would like to make three key points:
(1) the nature, importance and inherent benefits of diesel
technology;
(2) the role of light-duty diesel engines in meeting energy and
environmental goals in Europe, and
(3) how diesel engines can play a greater role in meeting U.S.
energy goals.
I. Nature and Importance of Diesel Engines
Diesel engines are the most efficient internal combustion engine,
converting more of the chemical energy (or fuel) to mechanical energy,
with less energy wasted. The combination of the unique compression-
ignition cycle, and the use of diesel fuel, which packs more energy per
unit volume than gasoline results in a highly efficient power system.
Diesel's inherent performance advantages include more power at
lower engine speeds; better fuel efficiency; greater safety; more
durability; and more power from a given size engine.
Today's clean diesel technology is perhaps best known as the
technology source that powers over 90 percent of all commercial trucks,
nearly all fire and rescue equipment, two-thirds of all farm equipment,
100 percent of all railroads and commercial barges and boats. Diesel
power plays an important role in the economy, and as an industry it
contributes $85 billion each year--more than the iron and steel
industries.
Diesel technology also has untapped potential for helping the
nation achieve greater energy security and energy efficiency in the
transportation sector.
II. U.S. Falls Behind Europe In Use of Clean Diesel Cars
The United States and Europe are taking very different approaches
to the use of clean diesel technology to improve fuel economy in
passenger cars and light-duty trucks. Diesel automobiles are extremely
popular in Europe, and demand continues to grow. One in every three
cars sold in Europe today is powered by a diesel engine. Experts
predict that diesels will soon gain about 40 percent of the European
market. There are several reasons why diesel cars have won such
approval in Europe. These include:
Inherent Performance Advantages of Diesel. Europeans have
found that light-duty diesel vehicles--cars and small trucks--
offer significant inherent performance advantages over
gasoline-powered vehicles. These include:
Better Fuel Efficiency. Light-duty diesels use 30-60
percent less fuel than gasoline engines of similar power. Some
of the most advanced models are attaining astonishing fuel
efficiency, such as the European-market Audi A2 that achieves
87 mpg on the highway.
More Power. Diesels produce more drive force at lower
engine speeds than gasoline engines.
More Durability. A typical light-duty diesel engine is
built to last well over 200,000 miles. Diesel engines also
require less maintenance and have longer recommended service
intervals than gasoline engines.
Fewer Greenhouse Gas Emissions. Because diesels burn less
fuel than gasoline vehicles, they also produce significantly
lower emissions of greenhouse gases such as carbon dioxide.
Clean and Quiet Technology. Use of the latest diesel
technology has nearly eliminated the noise and smoke that many
Americans remember from early diesel cars. With the application
of advanced technologies such as direct injection lean-burn
combustion, particulate traps and catalytic converters, diesel
vehicles are now a clean and quiet alternative to less
efficient gasoline powered cars.
These and other findings came out of our study entitled ``Demand
for Diesels: The European Experience'', * that highlights the dramatic
differences in clean diesel technology use and consumer acceptance of
light-duty automotive applications between the two continents. The
Europeans are able to reap the efficiency and environmental rewards of
clean diesel technology.
---------------------------------------------------------------------------
* The information referred to has been retained in Committee files.
---------------------------------------------------------------------------
The contrast in diesel usage between the U.S. and Europe is stark:
In Europe--one of every three new cars sold today is powered by clean
diesel technology and in the premium and luxury categories, over 70
percent are clean diesels. But in the U.S.--light-duty diesels account
for only about 0.26 percent of all new cars sold, with only slightly
higher figures in the light-duty truck markets.
III. Diesel Engines Can Play a Key Role in the U.S. By reducing energy
Consumption in the Transportation Sector
Given the inherent energy and efficiency benefits and the existing
fueling infrastructure, clean diesel technology can help the U.S. meet
its energy and environmental goals.
The July 2001 report by the National Academy of Sciences evaluating
fuel economy standards noted the possibilities for reducing petroleum
consumption with the use of clean diesel technologies
``direct-injection diesel engines are among engine technologies
with high-potential for improved fuel consumption and ``the
application of small, turbocharged direct injection diesel
engines has seen tremendous expansion in passenger cars and
light-duty trucks in Europe.'' \1\
---------------------------------------------------------------------------
\1\ Effectiveness and Impact of Corporate Average Fuel Economy
(CAFE) standards; National Academy of Sciences, Washington DC July
2001, pp 3-11.
---------------------------------------------------------------------------
There are other more direct indications of the role that diesel
engines can play in reducing energy consumption here in the U.S.. Last
October, the Department of Energy issued its annual fuel efficiency
ratings of new vehicles. This year like previous years, diesel-powered
vehicles captured three of the top 5 ratings, exceeded only by the
gasoline-electric hybrid vehicles. Advanced European diesel technology
passenger vehicles exceed today's U.S. hybrid fuel efficiency by over
60 percent.
One of the greatest opportunities for clean diesel technology is in
the light-duty trucks and sport utility vehicle categories. In 2001,
light-duty truck and SUV sales exceeded 50 percent for the first time
ever. The use of advanced clean diesel engines in these vehicle
categories offer a cost-effective and efficient near-term alternative
that can reduce fuel consumption by 30 to 60 percent. Coupled with the
tremendous advances in exhaust emissions controls and after-treatment
technology, today's clean diesels also have significantly lower
emissions.
According to the U.S. Department of Energy, diesel is a proven and
readily available technology. The diesel has been tested and refined
for more than a century and its versatility and reliability are
legendary.
While technology is constantly evolving, the few models of diesels
available to American consumers today demonstrate that light-duty
diesel vehicles can have economic benefits for consumers through
reduced fuel costs over current technology gasoline vehicles. For
example:
A 2001 turbo-diesel Volkswagen Jetta GLS costs $500 dollars
less than the turbocharged gasoline powered Jetta GLS \2\ and
the owner of a diesel Jetta can expect to save over $2300 in
fuel costs over a 100,000-mile vehicle life at year 2000 fuel
prices. \3\
---------------------------------------------------------------------------
\2\ Based on Manufacturer's Suggested Retail Prices available at
http://www.vw.com/jetta/engspec.htm
\3\ Based on U.S. Dept. of Energy's weekly Petroleum Status Reports
average U.S. retail fuel prices for August, 2000 (Diesel $1.46/Gasoline
$1.50) and MY 2001 U.S. EPA Fuel Economy Ratings.
Fuel cost savings with diesel are proportionally greater for larger
vehicles handling heavier loads. The owner of a 1999 diesel Ford F-250
Super-duty pickup truck would pay $1,650 more for a diesel powered
version, but because the diesel gets 46 percent better mileage under
towing conditions, the diesel owner would save over $8,000 in fuel
costs over the course of 100,000 miles. \4\
---------------------------------------------------------------------------
\4\ ``Diesel Technology and the American Economy,'' Charles River
Assoc. (Oct. 2000)
It is important to note that both of these examples for
illustration only and are a snapshot in time. As technologies improve
and strategies for regulatory compliance evolve for both gasoline and
diesel engines, these comparisons will necessarily change.
The proportional effect of these fuel savings is particularly
significant in the context of the U.S. auto market where now over half
of all new vehicles sold are SUVs, vans or pickups. \5\
---------------------------------------------------------------------------
\5\ ``Drilling in Detroit: Tapping Automaker Ingenuity to Build
Safe and Efficient Automobiles,'' Union of Concerned Scientists &
Center for Auto Safety (June 2001)
---------------------------------------------------------------------------
Because diesel engines are more powerful than gasoline engines,
producing more torque at lower engine speeds, they are perfectly suited
for improving the fuel economy of this burgeoning U.S. light truck/SUV
market. Nearly all of the growth in U.S. vehicle sales over the past 25
years has been in light trucks. Since 1975, light trucks, which include
SUVs, pick-ups and vans, have seen annual sales growth from 2 million
to nearly 7.5 million. The average new SUV/light truck currently gets
20.7 mpg compared to 28.1 for the average new car. Application of
diesel technology in the SUV market could immediately increase the
nation's average fuel economy by targeting a large market share of
vehicles that currently achieve lower fuel economy ratings due to their
size.
The power and efficiency of diesels can also be used to reduce
nationwide fuel consumption without the safety compromises associated
with building lighter vehicles. Numerous studies by the National
Highway Traffic Safety Administration, the National Academy of
Sciences, the Harvard Center for Risk Assessment, and the Insurance
Institute for Highway Safety have found that vehicle weight reductions
in the early 1980's tended to reduce vehicle safety and led to
thousands of additional vehicle fatalities. \6\ Because diesel engines
are more powerful and more fuel efficient at the same time, the use of
diesel allows fuel economy improvements to be realized without building
lighter, less safe vehicles.
---------------------------------------------------------------------------
\6\ http://www.vehiclechoice.org/safety/size.html
---------------------------------------------------------------------------
Because of the size of vehicles driven in the United States and the
popularity of automobile transportation, the United States has the
potential to reap substantially greater fuel and emissions savings than
the less automobile-oriented European countries. In 1992, automobile
miles-per-capita in the U.S. were nearly four times the per-capita
automobile miles traveled in France, Italy, the former West Germany and
Great Britain combined. \7\ The number of vehicle miles traveled in the
U.S. has doubled since 1970 and is expected to rise by an additional 50
percent by 2020. The average fuel economy for all passenger vehicles on
the road in the U.S. is 20.6 mpg. Thus, American drivers on average use
many more gallons of gas than their European counterparts. Because
Americans burn more fuel, the potential for fuel savings and
corresponding CO2 emissions savings from increased use of
diesel is much greater than the savings experienced in Europe.
---------------------------------------------------------------------------
\7\ Schipper, L. ``Determinants of Automobile Use and Energy
Consumption in OECD Countries,'' Annu. Rev. Energy Environ. (1995)
---------------------------------------------------------------------------
More specifically, the U.S. Department of Energy has estimated that
increasing the market share of light-duty diesel technology to 30
percent would reduce net crude oil imports by 700,000 barrels per day
by 2020--an amount equivalent to cutting in half the total energy used
each day in the state of California. \8\
---------------------------------------------------------------------------
\8\ ``The Impacts of Increased Diesel Penetration in the
Transportation Sector,'' Office of Integrated Analysis and Forecasting,
Energy Information Administration, U.S. Department of Energy (Aug.
1998); ``Diesel Technology and the American Economy,'' Charles River
Assoc. (Oct. 2000)
---------------------------------------------------------------------------
Conclusions
We believe there are significant opportunities for advanced
technology clean diesel engines to play a much larger role in boosting
the fuel efficiency of popular sport-utility vehicles and light-trucks.
In May of this year, the Diesel Technology Forum and the U.S.
Council for Automotive Research (USCAR) will bring advanced clean
diesel technology cars, trucks and SUVs here to the U.S. Capitol for
you to have an opportunity to experience the technology first hand. We
hope that you will join us.
In conclusion, members of the Diesel Technology Forum--while not
taking a position on the specific aspects of Corporate Average Fuel
Economy Ratings, believe that clean diesel technology can and should
play a greater role in reducing energy consumption in personal
transportation.
Thank you and I would like to ask that our written statement be
included in the record, and would be happy to answer any questions.
Forum members are the nation's most progressive manufacturers and
suppliers of diesel fuels, engines, and components, along with their
partners in finance and business. Members include Caterpillar, General
Motors, Cummins, Robert Bosch, Detroit Diesel, BP, ExxonMobil, Eaton,
Delco-Remy, Honeywell-Garrett and the Donaldson Company. For more
information, contact the forum at 703-234-4411 or visit our website at
www.dieselforum.org.
Senator Kerry: Thank you very much. Mr. Ross.
STATEMENT OF MARC ROSS, PROFESSOR OF PHYSICS, UNIVERSITY OF
MICHIGAN
Mr. Ross. Yes, Mr. Chairman. I would also like to thank you
for the opportunity to discuss improving automotive fuel
economy. It is a very important topic. There are actually many
different technologies that could increase automotive fuel
economy by 50 percent or more without changing the size and
performance of cars and light trucks. What I present in my
printed testimony is an existence proof. It shows one way to do
it.
Senator Kerry. When you say many, how many?
Mr. Ross. Well, I would say half-a-dozen different
possibilities. Diesels is one. Another is hybrids. I am not
going to talk about hybrids, nor will I talk about diesels or
remote things like fuel cell cars.
If the manufacturers were motivated to increase feul
economy they would choose the technologies and the technologies
would undoubtedly, in my opinion, be different from most of the
specific things that will be suggested to you, because there
are so many possibilities. I am presenting one way to do it, by
making modest changes in the existing engine and system,
primarily using smaller engines, sophisticated controls, and
reducing the weight of the heaviest vehicles along the lines of
some of the discussion we had a few minutes ago. The primary
reason for reducing the weight of the heaviest vehicles is
safety, and detailed suggestions, maybe too many details for
most people's taste, are in my printed testimony.
The advantage of the approach I will discuss is that it is
based on today's conventional vehicles, it can be applied to
all cars and light trucks, and although there would be
development costs to refine the control systems to make a
satisfactory product for all customers, the incremental
manufacturing costs would be small. So once refined, this
approach is inexpensive and can be applied to all cars and
light trucks. The problem with something like alternative fuels
is that it applies to a tiny group of cars and light trucks,
and although it is exciting and challenging, glamorous, it is
not the way to make progress with our oil and greenhouse gas
problems in a foreseeable timeframe.
Why aren't more conventional technologies already being
adopted? We had a lot of discussion about that with the first
panel. Of course, they are being adopted to a degree, but at
the same time, mass and power are being increased. It seems
like the CAFE standard has become a ceiling for most
manufacturers.
I think, as a variation on some of the discussion we had
this morning, that while buyers have some interest in fuel
economy, they are interested in many characteristics of an
automobile and, in that kind of a market, manufacturers have
found they do not have to go to the trouble of improving fuel
economy. They can focus on other aspects of marketing, and
there are many aspects, as has been mentioned. The result has
been that we do not have middle of the market vehicles with
high fuel economy. With a couple of exceptions, we only have
small cars, cheap cars with high fuel economy.
I have asked people from General Motors about that. They
say they assume the only people who care enough about fuel
economy want a really cheap car.
I am not a policy person, but I have three general remarks
about policy. I do agree with people who see some difficulties
with CAFE as a number that you would just increase. First of
all, we care about fuel, and so we should be regulating gallons
per mile, in analogy with what the Europeans do, instead of
miles per gallon. A large increase in fuel economy in miles per
gallon corresponds to a smaller percentage decrease in gallons
per mile, and we should talk about what is really relevant.
Second, we care about safety as well as fuel, so we should
be motivating, through our policies, technologies that reduce
the weight of the heavier light trucks. I have a study with a
collaborator from Lawrence Berkeley Laboratory on ``losing
weight to save lives'', along those lines.
Third, coming from Michigan, I care about our domestic
industries, as I am sure that many people do. And I care about
the UAW. We want to help the big three remain competitive, but
they are not going to innovate on fuel economy unless they are
pushed, and pushed hard. So it is an awkward situation. My own
thought here is not detailed. It is simply to set ambitious
goals, but to be generous about the amount of time that is
allowed for the progress.
Senator Kerry. Which means?
Mr. Ross. Well, it means that you need 10 to 15 years to go
to 40 miles per gallon, in my view. It takes a lot of time to
develop and introduce new engines. You can do some things in
shorter time, and so I think a progression is very sensible,
but to get all the way there would take a lot of time.
And finally, I would suggest that we should incorporate the
occasional review of technological progress, as we do with the
appliance standards. It should be a formal requirement to do
so, and that might help avoid the bind we are in now.
Let me finish by saying for the last dozen years I have
been going to the Society of Automotive Engineers Annual
Congress. It is just overwhelming how much technology has
changed during that period, and yet we do not have a higher
expectation for our automotive fuel economy. I recommend to the
staff, look at the current (January) Automotive Engineering
Magazine. There is an article on gasoline engines and new
technologies, including astonishing progress, for example, at
Honda. It is an entirely different world out there, and yet we
are still talking about the same standards that we had in the
mid-eighties.
Thank you.
[The prepared statement of Professor Ross follows:]
Prepared Statement of Marc Ross, Professor of Physics, University of
Michigan
Efficient Automotive Propulsion
I want to thank the Committee for giving me this opportunity to
discuss improving automotive fuel economy.
Developmental Concept
I am not going to discuss revolutionary technologies like fuel-cell
propulsion or high-voltage hybrid propulsion (although there are two
outstanding hybrid cars sold in the U.S.). The proposed improvements
are based on evolution, not revolution, and have two advantages:
The technologies can be implemented in all new light-duty
vehicles; and
the incremental manufacturing cost would be low, less than
the value of the fuel savings.
Although more than a decade would be needed to fully achieve these
changes in a way satisfactory to all customers, substantial
improvements in fuel economy could be made sooner.
Technological Goal
The goal of the proposed propulsion technologies is:
high efficiency in typical low-power operation, while
retaining the capability for high power.
Present automotive propulsion systems have high-power capability,
but are inefficient in ordinary driving. High power driving is rare
(mainly high-speed hill climbing and acceleration at high speed);
almost all fuel is consumed in low-power driving. For example, high
speed driving on a level road does not involve high power compared to
today's engine capabilities.
Physical Concept
Today, friction is used to control the use of energy in
automobiles. It is used to smoothly shift gears in automatic
transmissions (with a torque converter), to regulate the flow of air
into the engine (with a throttle), and to adjust the output of the air
conditioner. It's analogous to dimming lights with a variable resistor.
The way that was done, the energy used in the light was reduced with
the resistor, i.e. by heating it. Now we dim lights by controlling the
system electronically, rapidly switching the electricity on and off
such that the on-time yields the desired amount of lighting. Very
little energy is wasted.
There are two advantages to sophisticated control of automotive
propulsion: Friction is reduced. And the improved controls enable
efficient technologies to be designed so they are satisfactory to
customers.
Technologies
1) The basic change is to smaller higher-speed engines coupled with
sophisticated transmission.
A smaller engine has less internal friction. In today's typical
engines, while the work done on the pistons by the hot combustion gases
is about 38 percent efficient (thermodynamic efficiency), the work done
overcoming internal friction introduces, on average, another 50 percent
efficiency factor in the Urban Driving Cycle, for an overall engine
efficiency of only 0.38 *0.50 = 19 percent. Smaller engines are more
efficient because they involve less friction, while, if they have high-
speed capability, they can provide the same maximum power. An excellent
example of such an engine is the 1.7 liter engine of the Honda Civic
EX. Scaled to 2.0 liters, it would have the same power capability as a
typical 3.0 liter engine with two-thirds as much friction.
Either continuously variable transmission or motor driven gear
shifting can enable rapid and controlled changes in engine speed. These
technologies are now available on a few production cars. With good
design, the torque converter can be eliminated, so that engine speed
and vehicle acceleration are smoothly controlled through intelligence
rather than friction. In this way, a smaller engine can be made fully
satisfactory to customers even though it involves more gear shifting
and higher engine speeds. Further work is needed in this area, but it
is engineering of the kind the industry regularly does, and does very
well.
After development, such propulsion systems would cost less than
what they replace.
2) Sophisticated controls and high-efficiency accessories enable
turning the engine on-and-off.
With modern controls the engine can be turned off and on with
almost no noise or vibration. However, enhanced electrical capability
and high efficiency accessories, like air conditioning, are needed to
enable turning the engine off for most of the time when the vehicle is
stopped or in braking. The industry move to 42 Volts instead of 12
Volts will help engine on-and-off capability happen as a by-product.
For air conditioning, what is needed is high efficiency in normal low-
demand situations, combined with the capability to handle extreme
situations. Air conditioning for electric vehicles has provided some
experience in this area. This improvement would increase costs, but the
increase would not be large in the overall picture.
3) Weight reduction can be used to make heavier vehicles lighter to
enhance safety.
Traffic safety can be greatly enhanced by systematic changes in
design. One part of this safety strategy is to redesign the heaviest
vehicles, decreasing their weight, while maintaining the weight of the
lightest vehicles. The smaller engine and simpler transmission
discussed here would enlarge the design opportunities. To make a
definite projection, the weight reduction in the calculation that
follows is taken to be 10 percent. More than this reduction could be
accomplished with increased use of high-strength steels or other
materials, and with the smaller engine and simpler transmission. It
would be wise to make larger weight reductions for typical light trucks
and no reductions among the lightest cars. A 10 percent reduction in
aerodynamic and tire loads is also assumed, perhaps less than might be
expected normally over the next decade.
4) Sophisticated engine controls offer engine efficiency benefits
Valve controls enable decreased frictional loss in air management
by substituting valve action for the throttle. (The action is closely
analogous to light dimming.) This has been fully implemented in a BMW
production engine. Less-ambitious variable valve timing, already
implemented in several engines, improves efficiency at low and high
engine speeds.
The above technologies have been grouped so they address different
energy opportunities. The first involves reducing engine and
transmission friction; the second, turning off the engine; the third,
load reduction; and the fourth, residual engine efficiency
opportunities.
Potential Gains in Fuel Economy
Consider a recent midsize sedan similar to Ford Taurus with its
standard engine. First I establish a reasonable limit: the fuel economy
that could be achieved strictly through propulsion system efficiency
improvement--without reducing mass or tire and aerodynamic loads (Table
1). For this exercise, I assume that all engine and transmission
friction is eliminated (certainly not practical), while,
conservatively, I assume that the engine's ``thermodynamic efficiency''
is at today's optimal of 38 percent and that the accessory load is
reduced by one-third.
Table 1. ``Test'' Fuel Economies of a Recent Car, & a Very Efficient Car with the Same Load
Highway
Urban Driving Driving Cycle Composite
Cycle (mpg) (mpg) Cycle (mpg)
late 1990s base car............................................. 22.2 35.3 27.0
``limit'', car w/ same load..................................... 56.3 64.2 59.6
Now consider implementing the four types of technologies
sequentially. (See Table 2.)
Table 2. Projected Fuel Economies from Implementing the Four Types of Technologies
Highway
Urban Driving Driving Cycle Composite
Cycle (mpg) (mpg) Cycle (mpg)
base car plus step (1).......................................... 29.6 42.9 34.4
w/ steps (1) and (2)............................................ 33.3 42.9 37.0
w/ steps (1), (2) and (4)....................................... 35.0 43.9 38.5
include 10% lower load.......................................... 37.7 48.5 41.9
Summary of the Fuel Economy Projections
The fuel economy gain projected here is 41.9/27.0 or 55 percent.
This corresponds to a fuel saving at the same number of miles of 27.0/
41.9 of 35 percent. Our study of light-truck fuel economy shows larger
gains than I have projected here. The major point is that savings on
this scale could apply to all new light-duty vehicles, albeit more for
heavier light trucks and less for lighter cars.
Why aren't such technologies being adopted?
Some speculations: (1) All the manufacturers are adopting some of
these measures, but they tend to simultaneously increase vehicle mass
and engine power. (2) Most manufacturers prefer to sell vehicles like
those they already produce, emphasizing changes in style rather than
technology. (3) The manufacturers know that buyers are interested in
many vehicle attributes, and they know it's hard for buyers to select
for fuel economy in those circumstances. (4) Large, heavy and expensive
vehicles are the most profitable (because the market is moving to
higher income buyers, and because competitors are more numerous among
smaller, lower-priced vehicles).
Finally, while these fuel economy technologies offer the same
maximum-speed and acceleration-times, they have subtle disadvantages,
somewhat uneven acceleration and somewhat more noise. Unless
engineering efforts are made to moderate these disadvantages, the
changes would not be satisfactory for some customers.
Policy.
I am not a policy specialist, but I have three general suggestions:
(a) We care about fuel. Let's regulate gallons per mile instead of
miles per gallon. (b) Motivate reducing the weight of the heavier light
trucks. That's also justified by safety. (c) Strive to enable the old
``Big-Three'' to remain competitive. This requires pushing them
strongly to be innovative, but not too hard. I think a good combination
is to set ambitious goals, but to be generous with the rate of
progress.
Citations to Our Recent Work in This Area
DeCicco, J, F An & M Ross, 2001. Technical Options for Improving
the Fuel Economy of Cars and Light Trucks by 2010-2015, American
Council for an Energy-Efficient Economy.
An, F, J DeCicco, & M Ross, 2001. Assessing the Fuel Economy
Potential of Light-Duty Vehicles, Society of Automotive Engineers Paper
No. 2001-01-2482.
An F, D Friedman & M Ross, 2002. Fuel Economy Potential for Light-
Duty Trucks, Society of Automotive Engineers 2002-01-xxxx (to be
published).
M Ross & T Wenzel, 2001. Losing Weight to Save Lives: A Review of
the Role of Automobile Weight & Size in Traffic Fatalities, American
Council for an Energy-Efficient Economy.
Senator Kerry. Thank you very much, professor. We
appreciate it. Mr. German.
STATEMENT OF JOHN GERMAN, MANAGER, ENVIRONMENT AND ENERGY
ANALYSES, AMERICAN HONDA MOTOR
CORPORATION, INC.
Mr. German. Thank you. I am the manager for environment and
energy analyses, in the Product Regulatory Office for American
Honda Motor. I testified before this Committee on July 10, and
I am pleased to be invited back to further discuss technology
feasibility. I will summarize my prepared statement and ask the
full statement be printed in the hearing record.
Even though car and light truck CAFE have remained constant
for the last 15 years, there was a substantial amount of
efficiency technology introduced during this period. However,
this new technology was usually introduced to respond to
vehicle attributes demanded by the marketplace, rather than to
increase fuel economy.
For the past two decades, consumers have insisted on such
features as enhanced performance, luxury, safety, and greater
utility. As reflected in my prepared statement, vehicle weight
increased 12 percent from 1987 to 2000, zero to 60 acceleration
time improved by 22 percent from 1981 to 2000, and average
horsepower increased by more than 70 percent, all while
maintaining the same CAFE level.
The bottom line is it is these other attributes, not fuel
economy, which influence customer decisions in the marketplace.
Given the low price of gasoline in the United States, this
should come as no surprise. Since 1987, technology has gone
into the fleet that could have improved fuel economy by almost
1\1/2\ percent per year if it had not gone to other attributes
demanded by the market. Thus, while fuel economy did not
increase, the fuel efficiency of these vehicles did.
We see four pathways to improve fuel efficiency. First, in
the near term, we believe that the 1.5 percent annual
efficiency improvements from conventional technology
introduction could continue into the future. There are a number
of technologies that are just beginning to penetrate the
market, including 5-speed automatic and 6-speed manual
transmissions, continuously variable transmissions, cylinder
cutoff during light load operation, direct injection gasoline
engines, and idle-off features.
In addition, many existing technologies have not yet spread
to all vehicles, such as four-speed automatic transmissions,
four valves per cylinder, variable valve timing, and reduced
friction. The challenge is applying these new technologies
toward fuel economy instead of vehicle attributes more highly
valued by the customer.
Second, vehicle loads can be reduced. This can be effective
in both the short term and the long term. Examples include use
of materials for weight and strength optimization, measures to
reduce friction and accessory losses, and aerodynamic designs.
Honda's superior fuel economy performance is a direct result of
our decision to aggressively incorporate advanced technology
across our product line. Just a few examples; Honda pioneered
variable valve timing in the early 1990's and now use it on
over 80 percent of our vehicles. Virtually all of our engines
are aluminum block with overhead cam shafts and four valves per
cylinder, and all of our automatic transmissions have at least
four speeds.
Third, over the next 5 to 15 years, the most promising
opportunities will come through hybrid technology, vehicles
which employ two power sources. Two such vehicles are sold in
the U.S. today, the Honda Insight, and the Toyota Prius. Honda
will also sell a hybrid version of our five-passenger Honda
Civic sedan this spring.
Hybrid technology can markedly reduce fuel consumption in
three ways. First, by using an electric motor to provide a
power boost when needed, a smaller, more fuel-efficient
gasoline engine can be used. Second, the electric motor can
recharge the battery by capturing the energy that would
normally be lost during deceleration and braking. Third, the
electric motor can rapidly restart the engine, facilitating
engine shut-off at idle.
Hybrids do not require a new refueling infrastructure, and
do not need to be plugged in for recharging. However, hybrids
currently cost at least several thousand dollars more than the
equivalent conventional gasoline vehicle, with the cost
increasing proportionately for larger vehicles. With fuel costs
so inexpensive in the U.S., absent incentives, hybrid costs
must dramatically decrease before hybrids will be accepted in
the mass market.
In the long term, fuel cells are extremely promising. Honda
and other manufacturers are actively working on both direct
hydrogen fuel cell vehicles and on reformers, which convert
fuel to hydrogen on board the vehicle. However, major hurdles
remain. Reformers are expensive, take up valuable space in the
vehicle, are slow to warm up and respond to transient driving
conditions, and reduce the efficiency of the vehicle. There are
significant technological challenges with on-board hydrogen
storage, in addition to the formidable challenge of developing
an entirely new refueling infrastructure. It is highly unlikely
that a consumer market will develop for fuel cells within the
timeframes currently being evaluated by Congress.
The NAS report did a good job in laying out the different
technology options and it presented a reasonable framework for
assessing the cost and feasible fuel economy gains available
from the application of new technology. Congress should follow
the NAS analyses and recommendations when balancing the
Nation's need to conserve energy with market acceptance.
A related issue is the safety impact of increasing fuel
economy requirements, which was talked about extensively
earlier. With respect to safety, Honda supports the dissenting
opinion expressed by NAS committee members David Greene and
Maryann Keller that existing data is insufficient to conclude
that overall safety is compromised by smaller vehicles. Honda
recently retained a contractor, Dynamic Research, Incorporated,
to update NHTSA's 1997 analysis of the safety effects of
reducing weight by using more recent accident data and newer
vehicles with updated safety technology.
The preliminary conclusion is that the effect of a 100-
pound weight reduction on the traffic fatalities of the
combined car and light truck fleet is very small, and is
statistically insignificant. Earlier this year, DRI presented
an extensive overview of the analysis to NHTSA. NHTSA indicated
that DRI appeared to have done a credible job of replicating
their statistical techniques and updating their earlier
analyses.
Although additional research is needed, the updated
analysis indicates that weight reduction across the entire
vehicle fleet may not have a negative safety impact. Honda will
submit the completed DRI report to NHTSA shortly.
Mr. Chairman, there is much that technology can do to
achieve enhanced fuel efficiency, but we must be realistic
about the pace of technology and the hurdles that we will
encounter. Manufacturers can only sell what customers are
willing to buy. Absent programs or marketplace conditions that
stimulate demand or provide incentives, the manufacturer's
challenge would be to increase fuel efficiency without
sacrificing the performance, safety, convenience, and comfort
that customers demand.
Thank you. I would be happy to answer any questions.
[The prepared statement of Mr. German follows:]
Prepared Statement of John German, Manager, Environment and Energy
Analyses, American Honda Motor Co., Inc.
Good morning, my name is John German, Manager, Environment and
Energy Analyses, Product Regulatory Office, American Honda Motor Co.,
Inc. Honda appreciates the opportunity to appear before the Senate
Commerce, Science and Transportation Committee to discuss automotive
fuel efficiency with a focus on technology.
Honda products have always focused on the most efficient use of
resources. It has been a part of Honda's culture from the beginning. To
quote our founder, Mr. Honda, in 1974, ``I cannot overstress the
importance of continuing to cope with the pollution problem.'' We
believe we must think about more than just the products we make. We
think about the people who use them and the world in which we live. We
believe that it is our responsibility, as a manufacturer of these
products, to do all we can to reduce the pollutants that are created
from the use of products that we produce.
Conventional Technology
There is a popular misconception that vehicle manufacturers have
not introduced fuel efficient technology since the mid-80s. This is
understandable, as the car and light truck CAFE have remained constant
for the last 15 years (and the combined fleet has gone down due to
increasing light truck market penetration), as shown in Figure 1.
However, there has been a substantial amount of efficiency technology
introduced in this time period. Some examples for the entire car and
light truck fleet from EPA's 2000 Fuel Economy Trends are shown in
Figure 2.
However, this new technology has been employed more to respond to
vehicle attributes demanded by the marketplace than to increase fuel
economy. Over the past two decades consumers have insisted on such
features as enhanced performance, luxury, utility, and safety, without
decreasing fuel economy. Figure 3 shows the changes in vehicle weight,
performance, and proportion of automatic transmissions since 1980 in
the passenger car fleet. Even though weight increased by 12 percent
from 1987 to 2000, the 0-60 time decreased by 22 percent from 1981 to
2000. This is because average horsepower increased by over 70 percent
from 1982 (99 hp) to 2000 (170 hp). In addition, the proportion of
manual transmissions, which are much more fuel efficient than automatic
transmissions, decreased from 32 percent in 1980 to 14 percent in 2000.
It is clear that technology has been used for vehicle attributes
which consumers have demanded or value more highly than fuel economy.
Figure 4 compares the actual fuel economy for cars to what the fuel
economy would have been if the technology were used solely for fuel
economy instead of performance and other attributes. If the current car
fleet were still at 1981 performance, weight, and transmission levels,
the passenger car CAFE would be almost 36 mpg instead of the current
level of 28.1 mpg. The trend is particularly pronounced since 1987.
From 1987 to 2000, technology has gone into the fleet at a rate that
could have improved fuel economy by about 1.5 percent per year, if it
had not gone to other attributes demanded by the marketplace.
There is no reason why this technology trend of improved efficiency
(as opposed to fuel economy) should not continue. Many of the
technologies in the 2000 fleet, such as 4-valve per cylinder, have not
yet spread throughout the entire fleet (although Honda vehicles have
been virtually 100 percent 4-valve per cylinder since 1988). In
addition, several new technologies that will have significant
efficiency benefits are just beginning to penetrate the fleet. One
technology pioneered by Honda is variable valve timing. While Honda
used variable valve timing in almost 60 percent of our 2000 vehicles,
penetration in the other manufacturers' fleets is only a percent or
two. Other technologies that have recently been introduced or for which
at least one manufacturer has announced plans to introduce include:
Direct injection gasoline engines (only announced for Europe
and Japan to date)
5-speed automatic and 6-speed manual transmissions
Continuously variable transmissions (works like an
automatic, but more efficient)
Lightweight materials
Low rolling resistance tires
Improved aerodynamics
Cylinder cut-off during light-load operation (for example,
an 8-cylinder engine shuts off 4 cylinders during cruise
conditions)
Idle-off (the engine stops at idle)
Technologies are continuously being incorporated into vehicles.
However, consumer's sense of value usually puts fuel efficiency near
the bottom of their list. The dilemma facing manufacturers is that
customers may not value putting in these technologies just to improve
fuel economy.
Gasoline-Electric Hybrids
The most promising technology on the mid-term horizon (5-15 years)
are hybrid vehicles--vehicles which employ two power sources. The two
hybrid vehicles recently introduced in the U.S., the Honda Insight and
the Toyota Prius, both use innovative hybrid techniques. In addition,
Honda will introduce a hybrid version of our Civic sedan this spring.
There are some basic operating characteristics that help shape the
design of any hybrid system. The greatest demands on horsepower and
torque occur while accelerating and climbing grades. Minimal power is
needed to maintain a vehicle's speed while cruising on a level road. By
using an electric motor to provide a power boost to the engine when
appropriate, a smaller, more fuel-efficient gasoline engine can be
used. In addition, the motor can be used to capture energy that would
normally be lost during deceleration and braking and use this energy to
recharge the battery. This process is referred to as ``regenerative
braking''. These vehicles do not need to be plugged in. Finally, the
powerful electric motor can restart the engine far quicker than a
conventional starter motor and with minimal emission impact, allowing
the engine to be shut off at idle.
Honda's Integrated Motor Assist (IMA) relies primarily on a small
gasoline motor and is supplemented by a high torque, high efficiency DC
brushless motor located between the engine and the transmission. \1\
This 10 kW motor is only 60 mm (2.4") thick and is connected directly
to the engine's crankshaft. It supplies up to 36 ft-lb. of torque
during acceleration and acts as a generator during deceleration to
recharge the battery pack. This is a simple, elegant method to package
a parallel hybrid system and minimizes the weight increase.
---------------------------------------------------------------------------
\1\ ``Development of Integrated Motor Assist Hybrid System'', K.
Aoki et al, Honda, June, 2000, SAE # 2000-01-2059.
---------------------------------------------------------------------------
Toyota's hybrid system combines both series and parallel systems.
\2\ The Prius powertrain is based on the parallel type. However, to
optimize the engine's operation point, it allows series-like operation
with a separate generator.
---------------------------------------------------------------------------
\2\ Prius information is based upon October, 1999 Presentation by
Dave Hermance of Toyota, ``Toyota Hybrid System Concept and
Technologies.''
---------------------------------------------------------------------------
Both models use relatively small battery packs. The Insight's NiMH
battery pack is rated at about 1 kW-hr of storage and only weighs about
22 kg (48 pounds). The battery pack on the Prius is larger, but is
still no more than twice the size of the Insight's. These lightweight
battery packs help to maintain in-use performance and efficiency while
maintaining most of the hybrid system benefits. The larger motor and
battery on the Prius also allow limited acceleration and cruise at
light loads on electricity only.
Both the Insight and the Prius incorporate substantial engine
efficiency improvements, in addition to the downsizing allowed by the
hybrid system. The Prius uses a low friction, Atkinson cycle 1.5L
engine. The Atkinson cycle uses a longer expansion stroke to extract
more energy from the combustion process.
The Insight engine incorporates a number of different strategies to
improve efficiency. The engine has Honda's variable valve technology,
which boosts peak horsepower and allows even more engine downsizing.
The 1.0L, 3-cylinder engine also incorporates lean-burn operation, low
friction, and lightweight technologies to maximize fuel efficiency.
Despite the small engine size, the Insight can sustain good performance
with a depleted battery, due to the high power/weight from the VTEC
engine.
What is especially interesting about the Insight and Prius
comparison is that very different powertrain technologies were used to
achieve similar efficiency goals. One important lesson is that the
different types of hybrid systems have reasonably similar environmental
performance. The new continuously variable transmission (CVT) Insight
is rated as a SULEV. There are an infinite number of ways to combine
hybrid components to create a practical hybrid electric vehicle.
Both the Insight and the Prius have achieved impressive fuel
economy improvements. The manual transmission Insight has the highest
fuel economy label values ever for a gasoline vehicle, 61 mpg city and
68 highway. The CVT Insight is rated at a slightly lower level. While
much of the high fuel efficiency is attributable to the hybrid engine,
other fuel efficient technologies, such as aerodynamic design and
strategic use of lightweight materials were incorporated into the
Insight as well. The Prius values are 52 mpg city and 45 highway. The
label values on the Civic hybird will be about 50 mpg city and highway.
Projections have also been made for prototype or future hybrid
designs. Table 1 compares the manufacturer claims for the prototype
vehicles to the production values for the Insight, Civic, and Prius. It
should be noted that Table 1 presents CAFE values, instead of fuel
economy label values. \3\
---------------------------------------------------------------------------
\3\ EPA discounts the city test by 10 percent and the highway by 22
percent when calculating fuel economy values, so the combined FE based
upon the label values discussed in the last paragragh is about 15
percent lower than the CAFE values in Table 1.
While it is easy to overlook because of the large efficiency
benefits, hybrids also offer some potential emission reductions. The
lower fuel consumption directly reduces upstream emissions from
gasoline production and distribution. If the higher efficiency is used
to increase range, evaporative emissions from refueling are reduced.
Future potential for hybrid powerplant applications and volume sales
Hybrids have a number of positive features that are desired by
customers. They use gasoline (or diesel fuel); thus there are no
concerns about creating a new infrastructure to support fueling. The
customer benefits from lower fuel costs, extended range, and fewer
trips to the gas station. Hybrids have good synergy with other fuel
economy technologies and even help reduce emissions. Equally important,
there is little impact on how the vehicle operates. The vehicles drive
and operate similar to conventional vehicles.
Recent announcements from a number of manufacturers indicate that
hybrid systems are being considered across a very broad vehicle
spectrum. Toyota has announced production of a hybrid electric minivan
for the Japanese market. \4\ Ford has announced plans to put a hybrid
system into a 2003 model year Escape, a small SUV. \5\ DaimlerChrysler
will offer a hybrid in its Durango SUV sometime in 2003. \6\ General
Motors is already selling hybrid bus systems and plans to sell hybrid
versions of its full-size pickup truck and the forthcoming Saturn VUE
SUV in 2004. \7\ There appears to be no inherent limitation on the use
of hybrid systems, as long as packaging, weight, and cost issues can be
managed.
---------------------------------------------------------------------------
\4\ ``Toyota sees a hybrid future'', Autoweek, October 30, 2000.
\5\ Ford Motor Co. press releases, January 10, 2000 and April 7,
2000.
\6\ Associated Press article by Justin Hyde, October 25, 2000.
\7\ General Motors Co. press release, January 9, 2001.
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While there have been tremendous strides in hybrid technology,
there remain some packaging issues such as finding space for the motor,
battery pack, and power electronics, as well as some additional weight.
However, these issues are secondary compared to the cost issue.
Unfortunately, hybrid systems are not cheap. Initially, hybrids
also have high development costs spread over relatively low sales.
Manufacturers are understandably reluctant to discuss the cost of their
hybrid systems, so it is difficult to determine a realistic cost.
Still, it is clear that hybrids currently cost at least several
thousand dollars more than the equivalent conventional gasoline
vehicle, with the cost increasing proportionally for larger vehicles.
To put the cost issue into context, one must examine what customers
might be willing to pay in exchange for the fuel savings, both in the
U.S. and overseas using several assumptions. The most critical is
customer discounting of fuel savings. It is generally understood that
most customers in the U.S. only consider the first 4 years of fuel
savings, plus they heavily discount even these 4 years. This is roughly
equivalent to assuming that customers only value the fuel savings from
the first 50,000 miles. For lack of information, the same 50,000 mile
assumption is used for overseas customers (who drive less per year but
may value the fuel savings more).
Estimates were made for three different size vehicles, small cars,
midsize cars, and large trucks. Three estimates were also made for the
hybrid benefits, as the improvements listed in Table 1 range from 15
percent to 91 percent. Of course, some of the vehicles in Table 1
include factors that go well beyond the impact of the hybrid system
itself, such as weight and load reduction and engine efficiency
improvements. A reasonable factor for just the hybrid system and
corresponding engine size reduction is probably about 30-40 percent
over combined cycles. Sensitivity cases of 20 percent (for very mild
hybrids) and 80 percent (for hybrids combined with moderate engine and
load improvements) are also shown in Table 2.
The final factor is fuel cost. Table 2 lists two cases: $1.50/
gallon (U.S.) and $4.00/gallon (Europe and Japan). The formula used to
calculate the fuel savings in Table 2 is:
The results are sobering. From a societal view, the fuel savings
over the full life of the vehicle (which are about three times the
values in Table 2), would likely justify the approximately $3000 cost
of hybrid systems. However, the typical customer would not make up the
incremental cost of $3000 by the fuel savings, especially in the U.S..
In Japan and Europe, there may be a substantial market for hybrids even
at a cost of $3000, due to the higher fuel prices. If the hybrid cost
could be reduced to $1500 or $2000, the majority of customers in Japan
and Europe might be willing to purchase a hybrid vehicle.
Even in the U.S., there are customers who, because they drive a lot
or value the benefits more highly, will be willing to pay a $3000
premium for a hybrid vehicle. However, it is clear that hybrids will
not break into the mainstream market in the U.S. unless the cost of
hybrid systems comes down and/or some sort of market assistance or
incentive program is adopted.
Over the next 5 to 10 years, we are likely to see a gradual
increase in hybrid sales in the U.S. While the approximately $3000 cost
increment in 2003 is too high for the mass market in the U.S., enough
customers will desire the features to keep the market growing. In
addition, hybrid sales are likely to increase much faster in Europe and
Japan, due to their much higher fuel costs. This will lead to higher
volume production and further development, both of which will reduce
cost worldwide. Sales in the U.S. will continue to increase as the
costs come down.
But there is a broader message here for U.S. policymakers. All of
the technology improvements that can be made are incremental and have a
financial cost. Absent marketplace signals as well, progress on
achieving higher fuel efficiency in the marketplace may be slower than
we may desire.
Fuel Cells
Fuel cells are the most promising mid- to long-term option.
Hydrogen fuel cells have virtually no emissions and are extremely
efficient. Large-scale production of hydrogen would probably use
natural gas, which would reduce our dependence on fossil fuels. Even
longer term, we may be able to produce hydrogen using solar energy or
biomass fuels.
However, there are many issues to resolve before fuel cell vehicles
become commercially viable. Cost and size must be drastically reduced
and on-board hydrogen storage density must be significantly improved.
Durability must also be proved. Even after all these problems are
solved, there are still infrastructure and fueling system issues to
resolve. Thus, fuel cells will be a long time in development.
There also are serious concerns about on-board reformers for
creating hydrogen. Reformers are the hardware that converts fuel like
natural gas or methane, to hydrogen. These reformers are expensive,
take up valuable space in the vehicle, and are slow to warm up and
respond to transient driving conditions. In addition, they reduce the
efficiency of the vehicle, both because of the energy needed for the
reforming process and because the resulting fuel stream is not pure
hydrogen. The dilution of the fuel stream requires a larger fuel cell
stack to maintain the same performance, increasing weight, size, and
cost of the system. In fact, recent research has concluded that fuel
cells with on-board reformers may not be more efficient than a good
gasoline hybrid. \8\
---------------------------------------------------------------------------
\8\ ``On the Road in 2020'', M. Weiss, J. Heywood, E. Drake, A.
Schafer, and F. AuYeung, Massachusetts Institute of Technology, October
2000.
---------------------------------------------------------------------------
Honda's current research efforts are focused on direct hydrogen
fuel cell vehicles. These are not yet ready for the public, not ready
for ``numbers'', and not ready to help fill requirements for zero
emission vehicles. But even if all of the technological and
infrastructure obstacles can be overcome, we are still one to two
decades away from serious commercial introduction. However Honda is
serious about this technology because it holds promise for
environmentally sound transportation.
NAS CAFE Study
The recent report of the National Academy of Sciences (NAS)
entitled ``Effectiveness and Impact of Corporate Average Fuel Economy
Standards'' provides the Committee with a good point of departure for
considering this complex technological, economic and public policy
issue. We commend the NAS on its report on fuel economy. While we do
not agree with all the findings and recommendations, the Panel had a
formidable task, which it completed on an extremely tight time frame.
A number of the recommendations of the NAS on any future increase
in CAFE parallel our thinking. The report recognizes the importance of
providing adequate lead-time to design and introduce new technology to
meet future standards. The report focuses on a 15-year timeframe.
Certainly, the more significant the increase in the standard, the
longer the lead-time needed. We also note the NAS Report is not
unanimous on its position with regard to safety. We have more to say
about this critical issue later, but we concur that more research is
warranted.
The pace of technology improvement is significant in the context of
the NAS finding that ``[t]echnology changes require very long lead
times to be introduced into the manufacturers' product lines.''
Accelerated mandates that are met through piecemeal modifications to
existing vehicle designs, rather than through integration of fuel-
efficient technologies from the inception of a new vehicle design, can
have disruptive and undesirable effects. The NAS notes that the
downweighting and downsizing that occurred in the late 1970s and early
1980s, may have had negative safety ramifications. But the ability to
``design in'' fuel economy from the beginning--through the use of
aerodynamic styling, enhanced use of lightweight materials, and
incorporation of the newest drivetrain technologies--can produce
significant fuel savings with little sacrifice of other vehicle
attributes that consumers desire. We can say unequivocally that this
has been Honda's experience.
As long as adequate leadtime is provided, the technology analyses
in the NAS report are reasonable. Similar to Honda's position, the NAS
found that there are significant amounts of conventional technology
that can be applied to the vehicle fleet, but that hybrids may cost too
much for mass market acceptance and fuel cells are not ready for the
consumer market. The minor corrections in the NAS Letter Report of
January 16, 2002 and the committee's stated desire for readers to focus
on the average results, instead of the upper and lower bounds, are also
reasonable. The fuel efficiency and cost estimates in the NAS report
are in the ballpark and can be used to help Congress balance the
nation's need to conserve energy with consumer acceptance of the costs
and impacts on other consumer attributes.
Safety Issues
It is significant that safety considerations are the only issue
that produced a dissenting opinion in the NAS Report. Honda concurs
with that dissenting opinion expressed by committee members David
Greene and Maryann Keller, that the data is insufficient to conclude
that safety is compromised by smaller vehicles. The level of
uncertainty about fuel economy related safety issues is much higher
than stated in the majority report. Significantly, existing studies do
not address the safety impact of using lightweight materials without
reducing size, especially for vehicles with advanced safety technology.
As the dissenters state, ``[t]he relationship between vehicle
weight and safety are complex and not measurable with any degree of
certainty at present.'' We believe it is important to understand the
differences between size and weight. We have demonstrated through the
use of sophisticated engineering and advanced lightweight materials
that smaller cars can be made increasingly safer. For example, Honda's
2001 Civic Coupe, with a curb weight of 2502 pounds, was the first
compact car to receive a five star safety rating in the NHTSA crash
results for the driver and all passenger seating positions in frontal
and side crashes. The fuel economy of the Civic HX coupe with a
continuously variable automatic transmission (CVT) and a gasoline
engine is 40 mpg (highway) and 35 mpg (city). In addition, there are
many ways to increase fuel efficiency that do not affect weight
including power train technology and the efficient use of space.
Thus, vehicle design and size, and not just vehicle mass, must be
considered when studying the relationship between fuel economy and
safety. There are accident scenarios where less weight may actually be
an advantage in some vehicle accidents. In others, it is a
disadvantage. But, there is much we do not know. For example, to what
extent can advanced crash avoidance technologies, such as forward
collision warning/avoidance, lane keeping and road departure
prevention, and lane change collision warning/avoidance systems, be
employed to make weight considerations less relevant? To what extent
can new, lightweight materials and sophisticated engineering provide a
level of crash protection comparable or even superior to vehicles with
traditional materials and designs?
Honda supports the NAS recommendation that NHTSA undertake
additional research to clarify the relationship of weight and size in
the context of newly evolving advanced materials and engineering
techniques in the array of accident scenarios that are encountered on
American roads. Honda recently retained a contractor, Dynamic Research,
Inc. (DRI), to update NHTSA's 1997 analysis of the safety effects of
reducing weight by using more recent accident data with newer vehicles.
The preliminary conclusion is that the effect on traffic fatalities of
a 100 pound weight reduction on the combined car and light truck fleet
is very small and not statistically significant. On January 15, 2002,
DRI presented an extensive overview of the analysis to NHTSA staff.
They indicated that DRI appeared to have done a credible job of
replicating their statistical techniques and updating their earlier
analysis. The updated analysis indicates that weight reduction across
the entire vehicle fleet may not have a negative safety effect. Honda
will submit the complete DRI study report to NHTSA in the very near
future. Honda supports the NAS recommendation that NHTSA undertake
additional research to clarify the relationship of weight and size in
the context of newly evolving advanced materials and engineering
techniques in the array of accident scenarios that are encountered on
American roads.
Customer Preference
Honda believes it has a duty to be a responsible member of society
and to help preserve the global environment. Honda is committed to
contributing to mitigation of greenhouse gas emissions through
technological progress. We believe it is our responsibility to develop
and offer efficient products in the market. We have been an industry
leader in introducing such products and will continue to do so.
However, unless the customer becomes an integral participant in the
process of reducing greenhouse gases, market acceptance of these
products will be limited. Programs will be far more effective if they
include government and customers, not just industry. The industry can
provide a ``pull'' by providing products desired by the consumer. But,
we cannot push customers into buying vehicles they do not want.
Government programs to stimulate demand, provide incentives, and
educate the customer could dramatically affect acceptance of new
technologies and market penetration.
Thank you for this opportunity to testify. I would be happy to
answer your questions.
Senator Kerry. Thank you very much. Mr. Dana.
STATEMENT OF GREG DANA, VICE PRESIDENT,
ENVIRONMENTAL AFFAIRS, ALLIANCE OF AUTOMOBILE
MANUFACTURERS
Mr. Dana. Mr. Chairman, thank you for the opportunity to
testify before the Committee today regarding CAFE standards. I
will summarize my written report.
Senator Kerry. All of the statements will be placed in the
record as if read in full.
Mr. Dana. First, the alliance supports efforts to create an
effective energy policy based on broad, market-oriented
principles. Policies that promote research, development, and
employment of advanced technologies and provide customer-based
incentives to accelerate demand of these advanced technologies
set the foundation.
Second, the alliance believes that Congress does not need
to set new standards or change the structure of the CAFE
program. Current law requires the Department of Transportation
to promulgate new light truck standards at a maximum feasible
level, taking into consideration technology feasibility,
economic practicability, the effect of other motor vehicle
standards on fuel economy, and the need of the United States to
conserve energy. These are the same issues that are the focus
of today's hearing.
In fact, the National Highway Traffic Safety Administration
has issued a proposal to set standards for the 2004 model year,
and we expect the agency will soon issue a rulemaking notice to
address the proper level of light truck CAFE standards for the
2005 model year and beyond. Auto makers will be working
cooperatively with the agency in these rulemakings.
Setting future CAFE standards requires knowledge of auto
makers future product plans, their technology roll-out, and
their financial situation. This requires NHTSA to gather and
analyze a vast amount of data, along with propriety information
from manufacturers and suppliers. Given the many variables and
uncertainties in the marketplace, auto makers believe that
NHTSA is the appropriate forum to consider CAFE standards.
NHTSA is the best to judge the complexities of the program and
the need to balance public policy goals.
In discussions involving future CAFE standards on auto
makers, consumers cannot be left out of the equation, for their
decisions drive today's sales and influence future research and
product planning. According to the Environmental Protection
Agency, vehicle fuel efficiency, as measured on a pound for
pound basis, has increased nearly 2 percent per year since
1975. Fuel economy has marginally declined, however,
representing consumers' increasing preference for safety,
utility, and performance.
When considering what kind of vehicle to buy, consumers
evaluate all the different uses they will demand of their new
car or light truck. Most customers select vehicles that best
serve their peak uses, whether carrying kids, car-pooling
adults, towing trailers, or handling adverse terrain or
weather. Auto manufacturers are working on future technologies
such as hybrid and fuel cell vehicles that may lead to
substantial improvements in efficiency and emissions
performance without sacrificing safety, utility, and
performance.
Successful introduction of these new and emerging
technologies all share the need for cooperative efforts that
bring all the key stakeholders together, including the auto
makers, energy providers, Government policymakers and, most
importantly, the customers.
Auto makers have also been developing a new generation of
highly fuel-efficient clean diesel vehicles as a way to
significantly increase fuel economy and reduce greenhouse gas
emissions. Low sulfur diesel fuel is necessary to enable the
new clean diesel technology to be used in future cars and light
trucks. Cleaner fuels will also provide emission benefits for
the existing on-road fleet of vehicles. We know that advanced
technologies with a potential for major fuel economy gains are
on the horizon, and as a Nation we need to get these
technologies developed and on the road as soon as possible in
an effort to reach the national energy goals as fast and as
safely and as efficiently as we can.
What can Congress do to assist in this process? We urge
that the Senate consider new approaches for the 21st Century
which accelerates the consumer's acceptance of advanced
technologies. The alliance and its 13 member companies believe
the best approach for improved fuel efficiency is to
aggressively promote the development of technologies through
cooperative public-private research programs and competitive
development and incentives to pull the technologies into the
marketplace as rapidly as possible.
In closing, let me comment we are in general support of the
concepts in Senate bill 760, the CLEAR act, which you, Mr.
Chairman, and other members of this Committee have cosponsored,
and this bill would provide consumer tax credits for the
purchase of fuel-efficient vehicles, and we appreciate your
help in that area.
I would be happy to answer any questions, Mr. Chairman.
[The prepared statement of Mr. Dana follows:]
Prepared Statement of Greg Dana, Vice President, Environmental Affairs,
Alliance of Automobile Manufacturers
Mr. Chairman,
Thank you for the opportunity to testify before the Committee
regarding energy issues. My name is Greg Dana and I represent the
Alliance of Automobile Manufacturers (Alliance), a trade association of
13 car and light-truck manufacturers. Our member companies include BMW
Group, DaimlerChrysler Corporation, Fiat, Ford Motor Company, General
Motors Corporation, Isuzu Motors of America, Mazda, Mitsubishi, Nissan
North America, Porsche, Toyota Motor North America, Volkswagen of
America, and Volvo.
Alliance member companies have more than 620,000 employees in the
United States, with more than 250 manufacturing facilities in 35
states. Overall, a recent University of Michigan study found that the
entire automobile industry creates more than 6.6 million direct and
spin-off jobs in all 50 states and produces almost $243 billion in
payroll compensation annually.
The automobile industry has played an integral role in the economic
and job growth of the nation. 2001 was the second best year for new
vehicle sales and this was certainly helped by the zero-percent
financing offered by many companies in response to the September
terrorist attacks. However, the current economic recession has affected
many in our country and the automobile industry is no exception.
The economic downturn in the industry offers many challenges for
our industry in 2002. In recent months, many companies have announced
restructuring plans to address changing business conditions and
consumer demands and ensure long-term financial health. The overriding
goal has not changed and that is to provide American consumers with a
wide of range of vehicle choices to meet their needs and desires.
However, policies that are at odds with the market add a real cost to
manufacturers and their customers. Higher Corporate Average Fuel
Economy (CAFE) standards beyond the maximum feasible level threatens
our ability to provide customers with the vehicles they want and/or
price increases that reduce demand for new automobiles. Both of these
have the potential to undermine the growth of the auto industry and
their contribution to U.S. economic growth.
As automakers research, design and build cars and light trucks, a
number of factors are taken into consideration including some which are
the subject of today's hearing. Technology, safety, utility
requirements, and cost are key components for any vehicle and companies
are constantly striving to balance these issues in manufacturing
vehicles and meeting government regulatory standards. We welcome the
opportunity to discuss the Alliance views on our nation's energy policy
and, specifically, the benefits of advanced technology vehicles for
consumers and its role in domestic policy.
The Alliance supports efforts to create an effective energy policy
based on broad, market-oriented principles. Policies that promote
research, development and deployment of advanced technologies and
provide customer based incentives to accelerate demand of these
advanced technologies set the foundation. This focus on bringing
advanced technologies to market leverages the intense competition of
the automobile manufacturers worldwide. Incentives will help consumers
overcome the initial cost barriers of advanced technologies during
early market introduction and increase demand, bringing more energy
efficient vehicles into the marketplace.
Over the past year, there has been increased attention on vehicles
and their fuel economy levels with particular discussion of the CAFE
program. The Alliance believes, however, that Congress does not need to
set new standards or change the structure of the program. Current law
requires the Department of Transportation (DOT) to promulgate new light
truck standards (pickups, SUVs, minivans and vans) at the ``maximum
feasible level'' taking into consideration technological feasibility,
economic practicability, the effect of other motor vehicle standards on
fuel economy, and the need of the U.S. to conserve energy. These are
the same issues that are the focus of today's hearing. In fact, the
National Highway Traffic Safety Administration (NHTSA) has issued a
proposal to set standards for the 2004 model year and we expect the
agency will soon issue a rulemaking notice to address the proper levels
of light truck CAFE standards for the 2005 model year and beyond.
Automakers will be working cooperatively with the agency in these
rulemakings. Setting future CAFE standards requires knowledge of
automakers' future product plans, their technology rollout, and their
financial situation. This requires NHTSA to gather and analyze a vast
amount of data along with proprietary information from manufacturers
and suppliers. Given the many variables and uncertainties in the
marketplace, automakers believe that NHSTA is the appropriate forum to
consider CAFE standards given the complexities of the program and the
need to balance public policy goals.
What can Congress do to assist in this process? We urge that the
Senate consider new approaches for the 21st century which accelerate
the consumers' acceptance of advanced technologies. The Alliance and
its 13 member companies believe that the best approach for improved
fuel efficiency is to aggressively promote the development of advanced
technologies--through cooperative, public/private research programs and
competitive development--and incentives to help pull the technologies
into the marketplace as rapidly as possible. We know that advanced
technologies with the potential for major fuel economy gains are on the
horizon. As a nation, we need to get these technologies developed and
on the road as soon as possible in an effort to reach the national
energy goals as fast and as safely and efficiently as we can.
In discussions involving energy policy and automakers, consumers
cannot be left out of the equation, for their decisions drive today's
sales and influence future research and product planning. According to
the Environmental Protection Agency, vehicle fuel efficiency, as
measured on a pound for pound basis, has increased nearly 2 percent per
year since 1975. The fleet fuel economy has marginally declined,
however, representing consumers' increasing priority for safety,
utility and performance. When considering what kind of vehicle to buy,
consumers evaluate all the different uses they will demand of their new
car or light truck. Most customers select vehicles that best serve
their peak uses, whether carrying kids, carpooling adults, towing
trailers or handling adverse terrain or weather.
Another important consideration is that technologies that produced
significant car fuel economy improvements, such as front wheel drive
and aerodynamic styling, are not always possible to a great extent on
light duty trucks. The majority of light duty truck buyers have
specific performance requirements related to their use of pickups and
vans for cargo capacity, towing, and utility. Manufacturers are
developing engine technologies that will increase fuel efficiency and
incorporate these performance requirements without impacting those
attributes.
R&D Focus
The University of Michigan study also found that the total R&D
spending by the industry is approximately $18.4 billion per year, with
much of it in the high tech sector. In fact, the study stated the
following: ``The level of automotive R&D spending and the relatively
high employment of research scientists and engineers in the U.S. auto
industry has traditionally earned it a place in any U.S. Government
listing of high technology industries generally thought to be central
to the long-term performance of the U.S. economy.'' A number of other
industries are affected by the decisions, actions and economic health
of the automakers. For instance, automobile companies are the rail
industry's 3rd largest customer. Other affected industries include:
steel, aluminum, plastics, tires, trucking, glass, iron, carpeting and
semiconductor manufacturers.
As we begin the 21st century, the auto industry is committed to
developing and utilizing emerging technologies to produce safer,
cleaner, more fuel-efficient cars and light trucks. The National
Academy of Sciences (NAS), in its July, 2001 report to Congress on
CAFE, introduced their discussion of promising technologies by stating
that the 1992 NAS report outlined various automotive technologies that
were either entering production at the time, or were considered
``emerging'' based upon their potential and production intent.
Automotive technology has continued to advance, especially in
microelectronics, mechatronics, sensors, control systems, and
manufacturing processes. Most of the technologies identified in the
1992 report as ``proven'' or ``emerging'' have already entered
production.
The 2001 NAS report also demonstrates the complexity of the CAFE
program and the impact on a number of fronts including one of this
Committee's key concerns: safety. Following are key excerpts:
``The majority of this committee believes that the evidence is
clear that past downweighting and downsizing of the light-duty
vehicle fleet, while resulting in significant fuel savings, has
also resulted in a safety penalty. In 1993, it would appear
that the safety penalty included between 1300 and 2600 motor
vehicle crash deaths that would not have occurred had vehicles
been as large and heavy as in 1976.'' (page 2-26)
``If an increase in fuel economy is effected by a system that
encourages either downweighting or the production and sale of
more small cars, some additional traffic fatalities would be
expected.'' (page 6-5)
The Alliance believes NHTSA, as the nation's highway safety agency,
is best situated to issue new fuel economy standards that do not result
in a degradation of safety.
Auto manufacturers are working on future technologies such as
hybrid and fuel cell vehicles that may lead to substantial improvements
in efficiency and emissions performance without sacrificing safety,
utility, and performance. Fuel cell technology also serves as a
potential vehicle to move away from a petroleum dependent
transportation sector. Successful introduction of these new and
emerging technologies all share the need for cooperative efforts that
bring all the key stakeholders together . . . including the automakers,
energy providers, government policy makers and most importantly, the
customers.
Key Energy Policy Initiatives
1) Promoting Market-Driven Principles
The focus on bringing advanced technologies to market leverages the
intense competition of the automobile manufacturers worldwide. This
competition drives automakers to develop and introduce breakthrough
technologies to meet a variety of demands and customer needs in the
marketplace.
The National Academy of Sciences summarized this diversity of
demand and priorities in the marketplace when it stated that
``automotive manufacturers must optimize the vehicle and its powertrain
to meet the sometimes-conflicting demands of customer-desired
performance, fuel economy goals, emissions standards, safety
requirements and vehicle cost within the broad range of operating
conditions under which the vehicle will be used.'' This necessitates a
vehicle systems analysis. Vehicle designs trade off styling features,
passenger value, trunk space and utility. These trade-offs will
likewise influence vehicle weight, frontal area, drag coefficients and
powertrain packaging, for example. These features together with the
engine performance, torque curve, transmission characteristics, control
system calibration, noise control measures, suspension characteristics
and many other factors, will define the drivability, customer
acceptance and marketability of the vehicle.
This is a long, but necessary, way of saying that in the end, the
customer is in the driver's seat. Market based incentives and
approaches ultimately will help consumers overcome the initial cost
barriers of advanced technologies during early market introduction and
increase demand, bringing more energy efficient vehicles into the
marketplace. This will also accelerate cost reduction as economies of
scale are achieved in a timelier fashion.
The Alliance supports enactment of consumer tax credits during
early market introduction to help offset the initial higher costs of
advanced technology and alternative fuel vehicles until more
advancements and greater volumes make them less expensive to produce
and purchase. These types of tax incentives would ensure that advanced
technology is used to improve fuel economy and energy savings.
Performance incentives would be tied to improved fuel economy in order
for a vehicle to be eligible for the tax credits. These performance
incentives would be added to a base credit that is provided for
introducing the technologies into the marketplace.
2) Maintaining Technology Focus
The Alliance and its 13 member companies believe that the best
approach for improved energy security and fuel efficiency gains is to
aggressively promote the development of advanced technologies--through
cooperative, public/private research programs and competitive
development--and incentives to help pull the technologies into the
marketplace as rapidly as possible.
The automobile companies are convinced that advanced technologies
with the potential for major fuel economy gains are on the horizon
which will allow automakers to continue offering products that
consumers demand without sacrificing safety, performance or cargo
features. Increased costs during early market penetration for those new
technologies, however, create a critical hurdle for customer acceptance
and demand. As a nation, we need to get these technologies on the road
as soon as possible and tax credits will help spur consumer acceptance
so we can reach the national energy goals as fast and as efficiently as
we can.
New Technologies--Promises and Challenges
Focus on Powertrain and Vehicle Technologies
Automobile companies around the globe have dedicated substantial
resources to bringing cutting-edge technologies--electric, fuel cell,
and hybrid electric vehicles as well as alternative fuels and
powertrain improvements--to the marketplace. Each of these technologies
bring a set of unique advantages to the marketplace. At the same time,
each technology has a unique set of challenges that inhibit widespread
commercialization and acceptance. The internal combustion engine,
fueled by relatively inexpensive gasoline, has been and continues to
be, a formidable competitor against which all new technologies must
compete.
For consumers sensitive to cost, fuel economy gains must be
compared to the increased investment costs and risks in their new
vehicle purchase decision. Assuming today's gasoline price per gallon,
a 20 percent increase in vehicle fuel efficiency offers an annual fuel
savings of about $100. This savings must be weighed against the
increased vehicle price to provide this 20 percent as well as the
convenience, utility and performance tradeoffs. As automakers, we are
keenly aware of the importance of consumer choices and the challenges
we have to deliver new technologies that meet their affordability,
performance and utility needs.
Fuel Cell Vehicles
The most promising long-term technology offers breakthrough fuel
economy improvements, zero emissions and a shift away from petroleum-
based fuels. From a vehicle perspective, hydrogen-fueled fuel cells
offer the biggest improvement in efficiency and emissions but at high
cost and with major infrastructure challenges. Onboard hydrogen storage
also presents some difficulty. Gasoline infrastructure is well
established, but gasoline reformers are the least developed and the
most costly of reformer technology. Current sulfur content in gasoline
will most likely need further reduction to zero or near zero levels.
A robust fuel cell commercialization plan incorporates
breakthroughs and complementary research in stationary power units. A
primary challenge in the introduction of fuel cells into America's
light vehicle passenger and truck fleet are the packaging restrictions
of size and weight. Experience and commercial expansion of stationary
power units, relatively unconstrained by size and weight will be
helpful gaining the experience necessary to meet the cost targets for
commercialization in the vehicle sector.
Hybrid-Electric Vehicles
Hybrid-electric vehicles can offer a significant improvement in
fuel economy. These products capture power through regenerative
braking. When decelerating an internal combustion vehicle, the brakes
convert the vehicle's kinetic energy into heat, which is lost to the
air. By contrast, a decelerating hybrid vehicle can convert kinetic
energy into stored energy that can be reused during the next
acceleration. Hybrid vehicles do not require additional investments in
fuel infrastructure which helps reflect their potential for near term
acceptance.
Battery Electric Vehicles
Vehicles that utilize stored energy from ``plug-in'' rechargeable
batteries offer zero emissions. Battery electric vehicles continue to
face weight, energy density, and cost challenges that limit their
customer range and affordability.
Advanced Lean Burn Technology Vehicles
Vehicles that are powered by direct injection diesels are faced
with a significant challenge in meeting the new California and Federal
exhaust emission standard. If the technology challenges can be
overcome, these types of vehicles could provide fuel economy gains in
excess of 25 percent above comparable conventional vehicles.
Focus on Fuels and Infrastructure
Much of the discussion regarding fuel economy centers on the
vehicles of the automobile manufacturers and their role in a national
energy policy. But it is important not to forget about a vital
component for any vehicle--the fuel upon which it operates. As
automakers look at the competing regulatory challenges for our
products--fuel efficiency, safety and emissions--and attempt to move
forward with advanced technologies, we must have the best possible and
cleanest fuels. EPA has begun to address gasoline quality but fuel
needs to get even cleaner. This is important because gasoline will
remain the prevalent fuel for years to come and may eventually be used
for fuel cell technology.
Low Sulfur Gasoline
In 1999, new EPA rules were issued which direct oil refiners to
reduce the amount of sulfur in gasoline to an average of 30 parts per
million, a reduction of 90 percent over current levels. Low sulfur
gasoline is vital to ensuring that vehicle pollution control devices,
such as catalytic converters, work more efficiently. This is especially
important as automakers phase-in more stringent Tier II emission
standards beginning in the 2004 model year. Further improvements will
be needed especially if gasoline is to be used in fuel cells.
Low Sulfur Diesel
In addition to alternative fuels, companies are constantly
evaluating fuel-efficient technologies used in other countries to see
if they can be made to comply with regulatory requirements in the
United States. One such technology is diesel engines, using lean-burn
technology, which has gained wide acceptance in Europe and other
countries. Automakers have been developing a new generation of highly
fuel-efficient clean diesel vehicles--using turbocharged direct
injection engines--as a way to significantly increase fuel economy and
reduce greenhouse gas emissions. However, their use in the U.S. must be
enabled by significantly cleaner diesel fuel which provides the best
opportunity to achieve the more stringent emission standards in this
country.
Last year, EPA promulgated its heavy-duty diesel rule that the
Alliance supports, as far as it goes. The rule reduces the amount of
sulfur in the fuel. Low sulfur diesel fuel is necessary to enable the
new clean diesel technology to be used in future cars and light trucks.
Providing cleaner fuels, including lowering sulfur levels in gasoline
and diesel fuel, will provide emission benefits in existing on-road
vehicles. Unless there are assurances that such fuels will be
available, companies will not invest in new clean diesel technologies.
Efforts to reduce sulfur content will provide environmental benefits
and allow vehicles to operate more efficiently.
As you can tell, the automobile companies--from the top executives
to the lab engineers--are constantly competing for the next
breakthrough innovation. If I can leave one message with the Committee
today, it is to stress that all manufacturers have advanced technology
programs to improve vehicle fuel efficiency, lower emissions and
increase motor vehicle safety. These are not ``pie in the sky''
concepts on a drawing board. In fact, many companies have advanced
technology vehicles in the marketplace right now or have announced
production plans for the near future. That's why now is the perfect
time for the enactment of tax credits to help spur consumers to
purchase these new vehicles which years of research and development
have made possible.
The Alliance and its member companies would urge that public policy
decisions focus on the steps that will achieve real reductions in fuel
consumption and which support our national energy goals. The advanced
technology fuel-efficient vehicles are typically more expensive than
their gasoline counterparts because of the new technologies. Therefore,
market penetration is a challenge. As a result, the Alliance supports
personal and business tax incentives for the purchase of qualifying
advanced technology hybrid and fuel cell powered vehicles as well as
alternative fueled vehicles and infrastructure development. These tax
incentives should help ``jump start'' the market penetration of these
highly fuel efficient vehicles leading to increased sales and volumes
so that the cost will come down in the long-term with positive
implications for energy security.
Thank you for the opportunity to testify before the Committee
today. I would be happy to answer any questions you may have.
Senator Kerry. Thank you, Mr. Dana.
In your written testimony you state that the CAFE standards
should not be set, ``beyond the maximum feasible level.'' What
is that level?
Mr. Dana. That level is something that we think has to be
determined by NHTSA as part of their rulemaking.
Senator Kerry. Well, you guys know what your industry is
capable of. What is the level?
Mr. Dana. I do not know what my manufacturers' confidential
product plans are 4 or 5 years out That is the kind of data
they share with NHTSA to help them determine what the maximum
feasible level can be, based upon advances in technology and
also the product plans of the manufacturers.
Senator Kerry. So the industry is sort of unwilling
publicly, as an industry, to even suggest a range?
Mr. Dana. I cannot suggest a range, as I said, not knowing
what the future product plans the members are. That is
confidential information.
Senator Kerry. We are not asking for the product plan. We
are asking for a range within which you think you could provide
greater efficiency. I mean, is it 1 mile per gallon over 10
years? Do you think the industry could do 1 mile per gallon
over 10 years?
Mr. Dana. I think that is something NHTSA has to decide
based upon its rulemaking, Senator.
Senator Kerry. So you are not even prepared to say you
would give 1 mile per gallon over 10 years. Don't you think
that renders you sort of silly?
Mr. Dana. No, sir, I do not.
Senator Kerry. I beg your pardon?
Mr. Dana. No, sir, I do not.
Senator Kerry. You do not think it is kind of strange that
Andrew Card in 1995 would suggest that Congress ought to make
the decision, not NHTSA? Now that NHTSA is in different hands,
and Congress is, you are reversing that choice, sort of forum-
shopping your way? It does not mean anything to you?
Mr. Dana. I am a technical person, Senator. I do not deal
with policies like that.
Senator Kerry. Well, technically, can you tell me
technically is it feasible to have a gain in fuel efficiency
along the lines suggested by the National Academy of Sciences?
Do you technically agree with the National Academy of Sciences?
Mr. Dana. We think what the National Academy of Sciences'
report points out is the complexity and the difficulty of
arriving at what fuel economy levels might be achievable, given
all the demands on those levels by the consumers and by the
other technologies.
We do believe that technological progress has been made in
the past. We think there are chances for improvements in
technology in the future. We are the largest industry in the
country, and we have the most R&D money spent in this country,
and we are very proud of the technology we have been able to
develop, and what we hope to develop in the future.
Senator Kerry. Well, that is not my question. My question
is, ``NAS, is it technically--and you said you are technical--
is it technically feasible and potentially economical to
improve fuel economy without reducing vehicle weight or size,
and therefore without significantly affecting the safety of
motor vehicle travel. Do you agree with their technical
conclusion?''
Mr. Dana. I would cite the fact that the NAS said the
numbers in their report are not intended to be CAFE standards
per se. You can discuss technology improvements and you can
discuss fuel economy improvements, but again, the NAS made it
very clear that those should not be considered as part of CAFE.
Senator Kerry. Well, within the industry there is sort of a
variance, I guess. I mean, again, I am not asking you--I am not
trying to trap you into accepting the figures they put out. I
am asking you to accept the principle that it is technically
feasible. I mean, do you see what I am saying? I did not ask
you to adopt 37.2 as a goal in 15 years. I am asking whether it
is technically feasible to achieve in the equation they have
set forward.
Mr. Dana. We think it is technically feasible to achieve
improvements in fuel economy technology based upon
technological developments.
Senator Kerry. Without affecting the safety of motor
vehicle travel?
Mr. Dana. I have not worked on automotive vehicle safety
for 5 years. I am not sure I can address that.
Senator Kerry. Mr. German, can you share with me a sense--
you have sort of worn a couple of hats. You have been with EPA
previously, now with the industry. Obviously, we need to give
time to the industry to incorporate economy improvements into
new fleets, and I understand that, and we want to try to be
sensible about how we do that. In your judgment, what is a
reasonable timeframe for that? I mean, I understand the model
cycles and so forth. What do you think is a reasonable
timeframe for improvements, leaving out what might or might not
be a figure?
Mr. German. The real issue is the amount of time it takes
to design and tool, and you have natural product cycles which
are 5, 6 years before you can roll it out to the entire fleet,
so something in the range of 12 to 15 years is probably
reasonable.
Senator Kerry. So the academy's range is 10 to 15. That is
a fair range.
Mr. German. Honda is completely supportive of the academy's
assessments of lead time.
Senator Kerry. And that did not reflect, obviously, the
potential of hybrid or other--I mean, I assume it did not even
reflect diesel injection, did it?
Mr. German. Well, the National Academy report considered
them, but what they concluded is that conventional technology
is available at much lower cost.
Senator Kerry. If we were to make allowance as we have
talked about here, and Mr. Dana, maybe you could answer this,
too, for the CLEAR act components, the tax credit, and perhaps
even some kind of a framework for credit trading of some
notion, would that then make the academy goals which on their
own, freestanding, they said are achievable, even more
palatable and more achievable to the industry?
Mr. German. The CLEAR act would be very helpful if you are
trying to make hybrid vehicles commercial. Right now, their
costs are just too high. There are two ways you can reduce
cost. One is economics of scale, increase the sales volumes,
and the other is further development, and the CLEAR act will
help with both of those. It will help bring the cost down. The
hybrids do have a ways to go before they are going to be
accepted by most consumers.
Senator Kerry. What is the restraint on that? You said
before it is accepted.
Mr. German. It is cost.
Senator Kerry. But the cost, as we heard earlier, they have
lowered the cost down at least into the marketplace now, to try
to gain a foothold.
Mr. German. There is a lot of different types of consumers
out there. There is a small group which are very much into
technology and innovation, and like those kinds of
characteristics, and value them fairly highly, so there is an
niche market right now, even at current prices.
Senator Kerry. And what does it take to get it beyond
niche, lowering the cost even further?
Mr. German. The cost has to come down.
Senator Kerry. Below 20?
Mr. German. The incremental cost of the hybrid technology
probably has to come down under $1,500 before most customers
will accept it.
Senator Kerry. What is the incremental cost today?
Mr. German. It is over $3,000. How much over, it is hard to
determine, because manufacturers do not really reveal that
information.
Senator Kerry. What happens when you factor in the CLEAR
act?
Mr. German. Absolutely, at that stage it does become
acceptable to a much, much larger audience of people. That is
one of the advantages of the CLEAR act, we will be able to
significantly increase volumes with that.
Senator Kerry. What happens to the overall--I mean,
pricing, is there an efficiency that begins to cut in here with
larger consumption, more production, or not? In other words, if
you are selling a lot more, do you suddenly--do you bring your
cost down?
Mr. German. Usually, yes, and the problem is that the
higher production volumes allow you to do things more
efficiently, and sometimes it has a huge impact, sometimes it
has a small impact. We expect that. For example, on hybrids you
have three primary costs. You have the motor, the power
controls, and the batteries. We do expect to see dramatic
decreases in the electronics, maybe dramatic decreases in the
motor, hard to say, but the battery pack is a tough one. So how
the overall thing is going to work out at this stage is very
unclear, but having incentives is helpful for establishing this
and helping us progress to the next stage.
Senator Kerry. You will, acknowledge, I assume, that the
academy did not contemplate the hybrid component when they came
up with their feasibility. I mean, their feasibility does not
have the cushion of the hybrid in it.
Mr. German. Right.
Senator Kerry. Mr. Dana, the chair of the NAS panel said it
might cost about $800 to substantially increase fuel economy of
the new car, or sport utility. Is that a cost that the industry
cannot work with to create an affordable package fort the
consumer?
Mr. Dana. As Mr. German said, we are in a very competitive
marketplace, and we would like to keep costs from going up much
at all. We have already done a lot of that with emissions and
safety standards. I think it is safe to say that any kind of
cost increment is difficult in the marketplace. We would like
to see an ability to get that cost down so that we can more
effectively compete.
The CLEAR act also represents things like hybrids and
advanced diesels which have a larger incremental cost to them,
and that is why the CLEAR act is clearly necessary for them. I
think over time, as manufacturers improve technology, I think
you have to look at the NAS numbers, too, as a cumulative
overtime number. I mean, we have improved fuel efficiency of
models 2 percent per year over a long period of time, and those
costs have been incorporated in vehicles over time as well, so
it has been a gradual change in price.
Senator Kerry. Well, the National Academy again said that
just existing technologies--I mean, you have to go out and
spend a lot of money on the R&D and push the technology curve,
but existing technologies, from variable valve timing to
integrated starter generators and so forth, would significantly
reduce fuel consumption and could improve fuel economy by 20 to
40 percent.
Notwithstanding that, I saw the chart earlier which shows
that you folks have put most of your technological money into
horsepower and acceleration. Can't the auto industry just take
the existing technologies and begin to reverse that a little
bit in order to improve fuel economy?
Mr. Dana. As I said in my statement, we have continued to
improve fuel efficiency of models.
Senator Kerry. But efficiency is different from economy. I
understand the distinction. I am talking about economy.
Mr. Dana. Well, economy, and talking about CAFE standards
in particular requires consumers' input in terms of that demand
equation, and you said how the industry has taken technology
and improved performance. Well, part of that is what I said and
what Mr. German said, is that we are driven by market demands,
and consumers want performance, they want safety, they want
other things they value more than fuel economy, so what we have
had to do is do a balancing act with the technology we put on
the vehicles, trying to meet all those competing demands as
well as trying to use it to improve fuel efficiency of that
vehicle model.
Senator Kerry. Well, with all due respect, again you come
back to fuel efficiency. There is a distinction between fuel
efficiency and fuel economy, and I know you have improved fuel
efficiency, but what we are concerned about here is the economy
side of it.
Second, a huge amount of that increase--I have bought
enough cars in my lifetime, in the last few years, to be pretty
familiar, as we all are as consumers, with the marketing
process. A huge amount of that increase in what you call
performance, which is in horsepower and acceleration, is almost
unused by most Americans. They like it when you go in, the
salesman can pitch it, but it is almost nonessential.
I mean, how much faster you get between red lights is not
all that in the end, important relative to some of these other
choices, and the speed limits on these cars, or the speed
capacity of these cars and acceleration is so far in excess of
performance needs that the question is whether the industry
when you measure that against where we are with this need to
try to get economy, where there cannot be some sort of better
balance of that.
Ms. Claybrook earlier talked about how at one point we
began to ratchet down the weights. Now, the weights have all
been added back, and that is one of the reasons why the
efficiencies of the economy has gone down. What do you say to
that?
Mr. Dana. Well, again, we are driven by the consumers in
the marketplace.
Senator Kerry. You do not think you drive the consumers at
all? You think there is no, which comes first here?
Mr. Dana. All of the surveys we have show that fuel economy
is very low on the list of what consumers value, and so we do
our best to balance that along with other demands that
consumers have in the models we make.
Senator Kerry. So what about Mr. Eizenstat's comments about
security and national need, the externalities. Does that not
compel us to sort of change the externalities as we did in 1975
so you respond differently?
Mr. Dana. What we said is NHTSA should take its role under
current law and look at the maximum feasible levels based upon
the considerations they have to look at to make the standards
effective.
Senator Kerry. But we may have to set the standard. What if
we just set the standard and let them decide how it is going to
be achieved? But you are again setting the standard.
Mr. Dana. We think that NHTSA is better equipped to do
that. They can review the confidential plans together. They
have to be considered like that.
Senator Kerry. Mr. German, with respect to the hybrid and
the balance of these other technologies that are available now,
help us to understand what would the balance be if Congress
raises the standard? Do you know at this time whether you would
look mostly to the hybrids to try and meet that, or would you
adopt some of these available standards, available technologies
that are there now, or would it be a mix?
Mr. German. Assuming you are talking about standards in the
range of what NAS considered, we would definitely look forward
toward conventional technology, incremental technology. There
is a lot--Marc is right, I read this article in Automotive
Engineering on the plane on the way in yesterday. It is a good
summary of just some of these things that are being worked on
right now. There is a lot happening in conventional engine
technology, and most of those, not all of them, are more cost-
effective at this stage than hybrids are, so they would come
first.
Senator Kerry. Professor Ross, you have done a lot of work
on this, and a lot of it with the industry itself. The average
percentage of energy and fuel converted by an internal
combustion engine to the mechanical energy is now--what is it
now?
Mr. Ross. Well, I think you mentioned 15 percent. If we
consider the accessories it might be a bit more.
Senator Kerry. 18 to 20 percent?
Mr. Ross. More like 17 or 18.
Senator Kerry. What is the maximum percentage of energy
that could be converted by an internal combustion engine into
mechanical energy?
Mr. Ross. Well, we know what percentage is converted into
work by the pistons, and that is followed by all kinds of
frictional losses before you get to the 17 percent. The initial
percentage is 38 percent with today's conventional gasoline
engines, and somewhere in the low 40's, up to 44 percent maybe,
with the diesel engine.
Senator Kerry. So if you were able to--and is one able to,
incidentally--is there a technically feasible way to get
between that roughly 19 percent today, 18, 19 percent, and then
38 percent?
Mr. Ross. Not all the way. If you went halfway there you
would get beyond what the National Academy was projecting.
Getting rid of all the friction is too hard. You know, we have
bearings at electric power plants, and those machines can be
efficient in the upper nineties in terms of frictional losses,
but an internal combustion engine is a much cruder device, a
much, much cheaper device.
Senator Kerry. What is not pushing the curve, in your
judgment? I mean, if you were to--and I am sort of trying to
reach for reasonableness here. What is a reasonable expectation
of the engine efficiency you could gain just in the
thermodynamic efficiency component?
Mr. Ross. Well, half again better would be reasonable,
about 25 percent.
Senator Kerry. Where does that take you in terms of the
academy?
Mr. Ross. You could go somewhat further than the academy,
maybe to 40 miles per gallon.
Senator Kerry. That could take you there at roughly what
you sort of deem the reasonable medium, and that is without
measuring, that is just on the internal combustion engine. That
is without measuring what you could get through hybrid or other
kinds of combinations here?
Mr. Ross. That is right. It is based on the engine and
transmission. The transmission is also very important, the
gearing and the management of it.
Senator Kerry. Is there room for improvement, from your
knowledge, with respect to hybrids themselves at this point?
Could we have greater gains there? I mean, it is a very new----
Mr. Ross. There is room, but the two high voltage hybrids
that are being offered for sale now are very ambitious, and
they recover quite a lot of breaking energy, which is one of
their really special features, and they have relatively
efficient internal combustion engines. They have done a good
job. Of course, they could go further, but not much further.
Senator Kerry. But the gain that you have described that
comes just in the internal combustion engine through the more
efficiency of the fuel component is also augmented, would it
not be, by other potential existing technologies that are there
if you wanted to also grab them?
Mr. Ross. Well, it depends on what you are talking about.
If you are turning the engine on and off, which is part of what
the hybrid vehicles do, that could also be done at much lower
cost in a conventional vehicle. So I would lump that together
with engine efficiency as a part of the engine efficiency
improvement.
Senator Kerry. What about the 5-4-3 valves per cylinder,
the variable valve timing? You just mentioned idle-stop-start
cylinder, deactivation, variable compression ratio, variable
displacement, and then, of course, the advanced IC engines that
we were hearing about earlier. Are those a legitimate part of
the mix?
I mean, as we are sitting here--and incidentally, I am not
talking about choosing between them or anything like that. That
is not our role. I am happy to say NHTSA or somebody else ought
to make that decision. I just want to understand from a policy
point of view, as Mr. Eizenstat mentioned earlier when they sat
there, they had a sense of what the feasibilities were so they
were not just whistling in the dark. Are these legitimate? Are
they real potentials? Are they within reach? How do we make a
judgment about these?
Mr. Ross. You know, most of them are legitimate. Most of
them cover some of the same ground. You do not have to do all
those things. They are covering the same ground. There are
different ways of reducing the friction within an engine, for
example, so the fact that we see different ways, whether they
are putting in more air into the cylinder with one technology
or reducing friction in the engine, or turning the engine off
when it is not needed, there are all kinds of different things
which have become practical in the last 15 years. They were
thought of much earlier. In fact, Rudolph Diesel himself
thought of some of these things back in the 19th Century, but
they were entirely impractical until we had the control systems
that are now practical.
Let me just say, one of the reasons why 10 or 15 years is
needed is that these technologies, when you apply them, have to
be refined. The programming has to be refined, so time is
needed even though the technology in principle is available.
Senator Kerry. Fair enough. Just a couple more questions,
and then we will wrap it up.
Is it possible to have--and I do not know the answer. Is it
possible, is there any reason you could not have a diesel
hybrid?
Mr. Ross. None at all. That is certainly one of the
possibilities.
Senator Kerry. So if you had a diesel hybrid, you have a
much more significant gain than you augment, don't you?
Mr. Ross. It is another factor.
Mr. German. I think that the hybrid certainly improves the
overall diesel efficiency, but I think I would suggest that by
not quite as high a percentage as on gasoline. It is just a
function of the fact that the diesel has lower pumping losses
under light load conditions to begin with, and the light load
condition is where the hybrid really helps most.
Senator Kerry. Mr. Schaeffer, what is the reason that the
diesel is not more successful here? Can it be, are there
barriers and restraints to its introduction?
Mr. Schaeffer. There are a number of issues, Senator, one
of those being consumer familiarity. Right now, diesels in the
U.S. make up less than one third of 1 percent of all light-duty
vehicles, so 0.26 percent of all the fleet that is out there
today are diesel-powered, so there is not a strong familiarity
with the technology.
The second issue, obviously, had been talked about before.
That is, the petroleum prices right now, gasoline prices being
very low, relatively speaking. I think the third thing is there
are still some technological issues that are working to be
overcome. Just last year the Environmental Protection Agency
promulgated new standards that include requirements for cleaner
diesel fuel, and people are working to figure this new system
out of how these advanced technology diesel engines can meet
the lower NOX and particulate matter standard and
still provide their inherent benefits of efficiency and lower
greenhouse gases.
So it is a number of factors that lead there to be not a
high presence of diesels in the marketplace today.
Now, having said that, I think there is a significant
amount of research underway not just here in the U.S. but
around the world, including companies like Honda and Toyota
have significant diesel operations in Asia and really around
the globe. Diesels are very predominant global technology, and
I think the U.S. can reap the benefits from those, especially
sport utilities, those kinds of vehicles, and the three leading
diesel manufacturers in the U.S. today, Caterpillar, Cummins,
and Detroit Diesel, are all working on the kinds of diesel
engines that would make the SUVs have higher fuel economy, so
there is lots of work underway. We are just a little bit before
the market.
Mr. Ross. If I could interject just for a moment, there
still is an issue with the health effects of particulates, and
research is still needed. The Europeans have gone into quite
deliberately to diesels, nevertheless the smallest particles
are not regulated by EPA or anybody else. We still need more
research in that area before we wholeheartedly embrace the
light duty vehicle diesel. That research can be done and I am
optimistic about it, but we still need that work.
Mr. German. There is one other factor that I think does
tend to get overlooked, and that is that diesels are not cheap.
The four-cylinder diesel Volkswagen uses is an $1,100 price
increment over the comparable gasoline engine. The kinds of
diesels that are used in the large sport utilities and pick-up
trucks are over $3,000 price increments. It is not a complete
barrier, of course, but it is a factor that needs to be
considered.
Mr. Schaeffer. If I might respond to that, those numbers
are correct, but for folks that own that vehicle for 5 or 10
years, or have a need for a vehicle of that type, those cost
differentials are returned in their fuel savings in a fairly
short amount of time, especially because here in the U.S. we
travel a lot more than in Europe.
Also a comment about the particulate issue. Light duty
diesels right now, the EPA inventory suggest they make up one-
half of 1 percent of all the particulate that is in the
inventory today, and on the heavy duty side, the particulate
emissions have been reduced by over 80 percent today, and there
is going to be another 90-percent reduction in just a few
years, so with the new traps and filter technology diesels will
be very clean, and the differential between diesel performance
and, for example, natural gas has narrowed to a point now where
there is very little difference in some applications.
Senator Kerry. Well, that is exciting and interesting, and
I have heard that actually. I know that people in Europe are
extraordinarily excited about the DI capacity, which is--and I
know there have been some sort of environmental constraints
here that people have been concerned about it, but they are
obviously ironing that out in a way that offers some terrific
possibilities, there is no doubt about it.
Well, I appreciate everybody's patience and participation
in this today. Thank you very, very much. I think we hope to
move forward. We are going to have some meetings in the
Committee and see where we go from here.
Thank you. We stand adjourned.
[Whereupon, at 12:50 p.m., the Committee adjourned.]