[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
CLIMATE CHANGE AND ENERGY
SECURITY: PERSPECTIVES FROM
THE AUTOMOBILE INDUSTRY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND AIR QUALITY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MARCH 14, 2007
__________
Serial No. 110-19
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
------
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COMMITTEE ON ENERGY AND COMMERCE
JOHN D. DINGELL, Michigan, Chairman
HENRY A. WAXMAN, California JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts Ranking Member
RICK BOUCHER, Virginia RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey FRED UPTON, Michigan
BART GORDON, Tennessee CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois NATHAN DEAL, Georgia
ANNA G. ESHOO, California ED WHITFIELD, Kentucky
BART STUPAK, Michigan BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland HEATHER WILSON, New Mexico
GENE GREEN, Texas JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado CHARLES W. ``CHIP'' PICKERING,
Vice Chairman Mississippi
LOIS CAPPS, California VITO FOSSELLA, New York
MIKE DOYLE, Pennsylvania STEVE BUYER, Indiana
JANE HARMAN, California GEORGE RADANOVICH, California
TOM ALLEN, Maine JOSEPH R. PITTS, Pennsylvania
JAN SCHAKOWSKY, Illinois MARY BONO, California
HILDA L. SOLIS, California GREG WALDEN, Oregon
CHARLES A. GONZALEZ, Texas LEE TERRY, Nebraska
JAY INSLEE, Washington MIKE FERGUSON, New Jersey
TAMMY BALDWIN, Wisconsin MIKE ROGERS, Michigan
MIKE ROSS, Arkansas SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York TIM MURPHY, Pennsylvania
JIM MATHESON, Utah MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina MARSHA BLACKBURN, Tennessee
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
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Professional Staff
Dennis B. Fitzgibbons, Chief of Staff
Gregg A. Rothschild, Chief Counsel
Sharon E. Davis, Chief Clerk
Bud Albright, Minority Staff Director
(ii)
Subcommittee on Energy and Air Quality
RICK BOUCHER, Virginia, Chairman
G.K. BUTTERFIELD, North Carolina J. DENNIS HASTERT, Illinois,
Vice Chairman Ranking Member
CHARLIE MELANCON, Louisiana RALPH M. HALL, Texas
JOHN BARROW, Georgia FRED UPTON, Michigan
HENRY A. WAXMAN, California ED WHITFIELD, Kentucky
EDWARD J. MARKEY, Massachusetts JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland JOHN B. SHADEGG, Arizona
MIKE DOYLE, Pennsylvania CHARLES W. ``CHIP'' PICKERING,
JANE HARMAN, California Mississippi
TOM ALLEN, Maine STEVE BUYER, Indiana
CHARLES A. GONZALEZ, Texas MARY BONO, California
JAY INSLEE, Washington GREG WALDEN, Oregon
TAMMY BALDWIN, Wisconsin MIKE ROGERS, Michigan
MIKE ROSS, Arkansas SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York MICHAEL C. BURGESS, Texas
JIM MATHESON, Utah JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex officio)
------
Professional Staff
Sue D. Sheridan, Chief Counsel
Bruce Harris, Policy Advisor
Jonathan Cordone, Deputy Chief Counsel
David McCarthy, Minority Counsel
Chris Treanor, Legislative Clerk
C O N T E N T S
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Page
Hon. Rick Boucher, a Representative in Congress from the
Commonwealth of Virginia, opening statement.................... 1
Hon. J. Dennis Hastert, a Representative in Congress from the
State of Illinois, opening statement........................... 3
Hon. Mike Doyle, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 4
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 5
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 7
Hon. Jane Harman, a Representative in Congress from the State of
California, prepared statement................................. 9
Hon. Steve Buyer, a Representative in Congress from the State of
Indiana, opening statement..................................... 9
Hon. Jay Inslee, a Representative in Congress from the State of
Washington, opening statement.................................. 10
Hon. Mike Rogers, a Representative in Congress from the State of
Michigan, opening statement.................................... 11
Hon. Tammy Baldwin, a Representative in Congress from the State
of Wisconsin, opening statement................................ 11
Witnesses
Ron Gettelfinger, president, International Union, United
Automobile, Aerospace and Agricultural Implement Workers of
America, Detroit, MI........................................... 12
Prepared statement........................................... 58
Answers to submitted questions............................... 68
Rick Wagoner, chairman and chief executive officer, General
Motors Corporation, Detroit, MI................................ 14
Prepared statement........................................... 123
Answers to submitted questions............................... 131
Jim Press, president and chief operating officer, Toyota Motor
North America, New York, NY.................................... 16
Prepared statement........................................... 104
Answers to submitted questions............................... 113
Alan R. Mulally, president and chief executive officer, Ford
Motor Company, Dearborn, MI.................................... 18
Prepared statement........................................... 78
Answers to submitted questions............................... 88
Thomas W. LaSorda, chief executive officer and president,
Chrysler Group of DaimlerChrysler, Auburn Hills, MI............ 20
Prepared statement........................................... 46
Answers to submitted questions............................... 49
CLIMATE CHANGE AND ENERGY SECURITY: PERSPECTIVES FROM THE AUTOMOBILE
INDUSTRY
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WEDNESDAY, MARCH 14, 2007
House of Representatives,
Subcommittee on Energy and Air Quality,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 2:00 p.m., in
room 2123 of the Rayburn House Office Building, Hon. Rick
Boucher (chairman) presiding.
Members present: Representatives Melancon, Barrow, Markey,
Wynn, Doyle, Harman, Gonzalez, Inslee, Baldwin, Hooley,
Matheson, Butterfield, Dingell, Hastert, Upton, Whitfield,
Shimkus, Pickering, Buyer, Bono, Walden, Rogers, Myrick,
Sullivan, Burgess, and Barton.
Also present: Representatives Stupak and Engel.
Staff present: Sue Sheridan, Laura Vaught, Jonathan
Cordone, Bruce Harris, David McCarthy, Kurt Bilas, Lorie
Schmidt, Chris Treanor, and Peter Kielty
Mr. Boucher. The subcommittee will come to order. We have a
recorded vote pending on the floor of the House, and we are
going to recess the subcommittee at this point for the purpose
of recording that vote, but a number of members who were
present at this point wanted their presence recorded so that
their priority in asking questions would be preserved. And so
with that having been said the committee stands in recess until
5 minutes after the conclusion of this vote.
[Recess.]
OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF VIRGINIA
Mr. Boucher. The subcommittee will come to order. This
afternoon we continue our focus on the proper United States
response to the challenge of climate change by examining the
views of leaders in the automotive industry. Our goal this year
is to produce legislation that has an economy-wide application.
Each sector of the economy will make a greenhouse gas control
contribution. Applying this broad measure to the transportation
sector clearly poses special challenges.
Unlike some other industries, auto manufacturers are
subject to a pre-existing regulatory program, CAFE, which is
designed to promote fuel economy but which also has a limiting
effect on greenhouse gas emissions, notably the emission of
carbon dioxide. Much thought must be devoted to an effective
means of integrating the existing CAFE regulatory program into
the new regulatory structure which will specifically target
greenhouse gases.
While we have not made decisions at this point about the
shape of the greenhouse gas regulatory program, some form of
cap and trade system is obviously a major candidate for
consideration when an approach is adopted.
Therefore, in order to gain maximum benefit from today's
discussion, I would welcome views from the witnesses on how cap
and trade might apply to the automobile sector and how do we
effectively integrate CAFE along with a cap and trade
greenhouse gas emission program. Some have suggested that
because transport emission sources are individually small,
highly dispersed, and mobile, direct CO\2\ emissions monitoring
per vehicle would be too costly to administer and that it is
better to use proxies for each vehicle, such as the fuel that
contains the carbon, or in the alternative, the fuel economy of
the vehicle. Comment from our witnesses on these possible
alternative approaches would be very helpful.
If transportation fuel is chosen as the best foundation for
a transportation sector cap and trade program, where in the
fuel distribution system should the accounting take place and
tradable credits be generated, should that be upstream at the
refinery gate and the port of entry, or should it be further
downstream at the point of final sale for the fuel? Another
question that we are asking is whether alternative
transportation fuels pose special challenges for emission
trading system design.
As these questions suggest, designing a greenhouse gas
regulatory program for the transportation sector is a
formidable task. While I don't expect our witnesses this
afternoon to have complete and detailed answers to all of these
questions, in posing them I want to direct your thinking to
obtaining the answers and sharing those with use as we consider
our approaches to structuring this program.
We are pleased to have each of our witnesses here today,
and momentarily we will be turning to them for their
statements.
I want to say just a word this afternoon about our schedule
for drafting a greenhouse gas control measure. Earlier this
year the Speaker assured me that this committee would have the
time that it needs in order to produce a carefully-constructed
bill. That early assurance was reconfirmed this week by the
statement from the Speaker's office that climate change
legislation will not be part of the July floor agenda.
It is my intention to continue our hearing process through
the early spring and then begin the bill drafting process when
the hearing process is completed, with the goal of having the
comprehensive climate change bill on the floor of the House
later this year. House passage this year will provide ample
time for a conference with the Senate during 2008, and then
completion of the passage of climate change legislation and the
presentation of a bill to the White House during the course of
next year. That is our intention.
Pursuant to a previous agreement between the majority and
minority of the committee, the chairs and ranking members of
both the subcommittee and full committee will be recognized
this afternoon for 5-minute opening statements. Other members
of the subcommittee and other members of the full committee who
are participating in our hearing today will have the
opportunity to offer a 1-minute opening statement. And then
pursuant to the rules of the committee, any member who decides
to waive an opening statement will have added to the time for
posing questions allotted to that member the time that member
could have used for an opening statement.
At this time it is my pleasure to recognize the ranking
member of this subcommittee, the distinguished gentleman from
Illinois, Mr. Hastert, for 5 minutes.
OPENING STATEMENT OF HON. J. DENNIS HASTERT, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF ILLINOIS
Mr. Hastert. I thank the chairman, and thank you for
holding this important hearing to discuss CAFE proposals and
the auto industry's efforts to address climate change. Three
weeks ago we heard from the administration on its proposal to
address CAFE as part of the President's 2010 initiative, with a
goal of reducing U.S. gasoline usage by 20 percent in the next
10 years.
I am very interested to learn about other initiatives that
our domestic auto manufacturers are pursuing to reduce gasoline
use and then to learn about the industry's reaction to the
recent light truck rule. As you know, this rule and the process
that accompanies that will be a precursor for how things may
play out as we discuss modifying CAFE's standards for the
passenger car fleets.
Reducing gasoline consumption in part by strengthening CAFE
standards addresses America's need for energy security. It must
be part of our deliberations on energy and environmental
policy. But CAFE is not the only means.
We need to further increase our efforts to facilitate the
use of alternative fuels, such as E-85 and biodiesel. For
example, the E-85 dispensing pumps still await approval by
Underwriters Laboratories, who have been dragging their feet
now for almost a year. We also need to get more vehicles on the
road that can actually use E-85. I want to hear from all the
panelists on their efforts to increase production of flex fuel
vehicles and their alternative-fuel vehicles and how soon in
their best estimates we can expect real worldly results.
I realize markets don't create themselves overnight. It
will take time for the mainstream consumers to learn and
appreciate the benefits of alternative fuels. And while I
realize that industry is investing hundreds of millions of
dollars in new advanced technologies like hybrid vehicles, fuel
cells, and hydrogen vehicles, clearly more needs to be done. We
all know the number of flex-fuel vehicles currently on the road
remains relatively small, and the number of drivers who know
their vehicles are especially equipped is even smaller. I am
very interested to learn how the auto industry is currently
working to address this and other lingering concerns that are
hindering the advancement of these fuels such as decreased fuel
economy, price sensitivity, and market availability.
To further complicate matters, even the transition to
alternative fuels at retail gas stations has been complicated
by infrastructure issues such as the UL suspending
certification for fuel dispensers for E-85 because of unfounded
corrosion concerns. At this time when others are being asked to
do more to reduce emissions, does the auto industry need to be
doing more to work through all the aspects of the market, from
manufacturer to retail to fueling?
Regarding the CAFE and the CAFE bill that passed this
committee last year, it like the administration bill, would
have given the Department of Transportation authority to
establish fuel economy standards for passenger cars on a model-
size by model-size basis. Had we enacted it, the CAFE reform
process would already be well under way, and we would have
begun enjoying the fuel savings much sooner. So now we have
some catching up to do.
And while the administration has suggested a 4 percent
increase in fuel efficiency it is controversial. It is either
too aggressive or not aggressive enough. I believe any
authority that is derived from a rulemaking should take careful
consideration of safety, cost to automakers, the technologies
involved, and the market and consumer choice. We in Congress
are certainly not the experts on all of these issues. The
examinations this committee gave last year yielded a bill with
excellent balance in my view, and I am interested in hearing
from our panelists where they are on these issues today. I look
forward to their testimony and yield back the balance of my
time. Thank you, Mr. Chairman.
Mr. Boucher. The Chair thanks the gentleman from Illinois
and now recognizes the gentleman from Pennsylvania, Mr. Doyle,
for 1 minute.
OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Doyle. Thank you, Mr. Chairman. Mr. Chairman, I have
consistently voted against arbitrarily raising CAFE standards
because I felt that that policy could threaten thousands of
jobs across our country. However, I must tell you I have grown
extremely frustrated by the slow pace of the industry's
progress in achieving better fuel economy. It is time for
excuses to end and time for us to work together on a real
solution for improvement.
The question is no longer if we are going to do something
but rather what are we going to do. And there is no silver
bullet to fix the problem. We are left with many options as to
how to achieve this goal. I look forward to hearing as to how
our panel will work as active partners in the pursuit of better
fuel economy. I want to know what they can and will do, and I
would like to hear what they believe we can do here in
Washington to assist them.
Global warming is not a problem that can be fixed in
Washington, Detroit, or any specific location. It is a problem
that will take comprehensive solution pursued by a diverse
group of participants from every sector of the American
economy. By the end of this hearing I want to know if the auto
industry will be a real partner. As such, I will pursue
policies that reflect that level of commitment. I yield back.
Mr. Boucher. I thank the gentleman and now call on the
ranking member of the full committee, the gentleman from Texas,
Mr. Barton for 5 minutes.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Thank you, Mr. Chairman. I appreciate you
holding the hearing, I appreciate our witnesses being here
today, especially given the status in their industry. It is
good to have you here, but I want you to get back to your
offices so we can keep the American economy going as
efficiently as possible.
We are having a series of hearings, and I want to thank Mr.
Boucher and Mr. Dingell for these hearings on global warming
and climate change. I am a skeptic. I don't think we need to be
rushing to legislation on this issue given the fact that our
Earth cycles in thousands of years in terms of its climate
warming or cooling. It seems silly to me to have to rush to
judgment in weeks or even months on an issue of this
importance.
I am glad that we have our automobile industry
representatives here today, both on the management side and the
labor side. We are going to look at the CAFE issue and how it
has been addressed in the past and how it may need to be
addressed in the future. Last year this committee passed a CAFE
reform bill. It passed committee, did not go to the floor, did
not go to the Senate, did not become law. Had the bill that
this committee passed become law, we would be doing for
automobiles what we have been doing for several years for light
trucks. We would have given the Department of Transportation
the authority to establish a fuel economy standard on a model-
size by model-size basis. That bill did not pass, but I think
it was helpful in raising public awareness that there are
current problems with the current CAFE system, and the current
CAFE system is in need of reform
With the recent success of the light truck rule, the
administration has further expanded these concepts in its 2010
proposal with reducing gasoline consumption through increased
vehicle efficiency being one of its top priorities.
I am particularly interested in hearing today our panel's
reactions to the administration's suggested yearly 4 percent
increase in fuel efficiency. How feasible is that goal? What
kind of repercussions would occur within the industry if the
administration proposal were enacted or if there were a number
set in statute to accomplish that target? What market-based
lessons have been learned through the recent history of
gasoline price spikes and declines, and what are the industry's
suggestions for moving forward, especially if the current
status quo is not an option?
I am also interested in hearing from our witnesses
regarding the administration's proposal about tradable credits
for manufacturers to buy and sell CAFE. I would especially like
to hear from Toyota and GM, since Toyota has said they won't
sell them, GM has said they won't buy them. Some say that
allowing the trading of these kinds of credits could add
flexibility in meeting CAFE goals, but there are still strong
concerns and several uncertainties with this concept. So I
really hope our witnesses address that issue today.
It seems to me that a CAFE standard must be based on
science and also on safety. We want people who know what they
are doing to get the right balance of mileage and safety. We
expect them to do it without destroying American jobs,
especially jobs like the 2,000 assembly jobs at the GM assembly
plant in my district in Arlington, Texas. This is one of the
most complicated programs that NHTSA administers, and frankly,
scientists and engineers should be better equipped to do it
than activists and politicians.
With that, Mr. Chairman, I will yield back. Again, I want
to thank our witnesses for being here. This is a very important
hearing, and I hope that all members will stay and participate.
Mr. Boucher. Thank you, Mr. Barton. The chairman of the
full committee, the gentleman from Michigan, Mr. Dingell0 is
recognized for 5 minutes.
Mr. Dingell. Mr. Chairman, I waive my right to an opening
statement at this time. I want to commend you for your
leadership and for the responsible and aggressive way in which
you are handling these matters. I want to thank our witnesses
for being with us, and note the presence of our old friend,
Dave McCurdy, the new president of the Alliance of Automobile
Manufacturers.
Mr. Chairman, I defer then my opening statement, I commend
you, and I thank you for your courtesy to me.
[The prepared statement of Chairman Dingell follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Boucher. The gentleman from Michigan waives his opening
statement. The gentlewoman from California, Ms. Harman, is
recognized for 1 minute.
Ms. Harman. Thank you, Mr. Chairman. I want to apologize
for having to leave at 3:30 to chair another hearing, but I
come from a part of the country where the automobile is more
than just a mode of transportation. In Los Angeles the car is a
cultural symbol and a way of life. It is no surprise then that
the North American headquarters including the credit and R&D
facilities of two major automakers are based in my district.
I had a longer statement which I will put in the record,
but I do especially want to welcome my constituent, Jim Press,
and to salute the efforts that Toyota is making to make our
planet healthier and a bit safer. The witnesses today can
either take the opportunity to shape change, or they can resist
it. I hope they will take the opportunity to shape change,
because change surely will come. Today is the first birthday of
my first granddaughter, and I would love to give Lucy, her name
is really Lucy, a safer and healthier world, and working
together we can do that. Thank you.
[The prepared statement of Ms. Harman follows:]
Prepared Statement of Hon. Jane Harman, a Representative in Congress
from the State of California
I come from a part of the country where the automobile is
more than just a mode of transportation. In Los Angeles, the
car is a cultural symbol and a way of life. It is no surprise
that the research and development facilities of two major
automakers are based in my district.
Since I was first elected to Congress in 1992, I have
watched with pride as my constituents engineered leaps and
bounds in automotive technology and design. Hybrid cars--to
cite one example--represent the first step in meeting the
energy challenges of the 21st century that we are here to
discuss and resolve. I'm proud to say that California has
played an indispensable role in that technology.
But hybrids are only the first step. The breakthroughs of
the future--including plug-in hybrids and hydrogen fuel-cell
vehicles--will be symbols of not only energy efficiency and
changing business models, but of good corporate citizenship. We
will rely on automakers to help us solve the climate change and
energy independence problems we face today.
The question is not whether we are pushing the ball
forward--it is clear from the testimony we will hear today that
innovation in the automotive industry is alive and well. The
question is whether it will come fast enough.
The science is in, and the news from the Middle East
depressingly repetitive. Energy independence and reductions in
greenhouse gas emissions cannot come soon enough.
I hope our witnesses can help us find ways to push the
envelope on R&D. As I've said before, done right, this is a
win-win for both our planet and our economy.
----------
Mr. Boucher. Thank you, Ms. Harman. The gentleman from
Michigan, Mr. Upton, for 1 minute.
Mr. Upton. I am going to defer and reclaim my minute in
questions.
Mr. Boucher. The gentleman defers. The gentleman from
Indiana, Mr. Buyer, for 1 minute.
OPENING STATEMENT OF HON. STEVE BUYER, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF INDIANA
Mr. Buyer. Thank you. I would like to thank all of you for
coming. I agree with Mr. Barton. You live pretty busy lives,
and I am glad you are here. I am also glad that Mr. Boucher is
chairing this subcommittee. He is thoughtful, and he is
deliberative, and I think you are here because I am just as
concerned.
Washington, DC, is a dynamic city that loves to make
decisions and judgments based on the emotion of the moment.
Now, if you gentlemen did that in your business, you wouldn't
last very long. And Washington, DC, has a very poor reputation,
and so your concerns are real, and I understand that is why you
are here. In Indiana, obviously, we have a great history with
the automobile invented there in Kokomo, Indiana. The 15 years
I have represented 30 counties of Indiana, and I have got
manufacturing facilities of every one of you, and a lot of, you
are successful because there are a lot of great workers out
there and innovators that are making it happen. And they are
equally as concerned.
So we will work through this, and I appreciate your
presence here today.
Mr. Boucher. Thank you, Mr. Buyer. The gentleman from
Washington State, Mr. Inslee, for 1 minute.
OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON
Mr. Inslee. Thank you. I want to welcome Alan Mulally,
native little Boeing company out in our neck of the woods in
Washington State. I want to note our success in aeronautics
because we believe in game changing, changing the game in
aeronautics, and I am optimistic now we are going to tackle
this beast of global warming because we are going to have some
game changers out of your industry.
And what I am interested in is how we can help create
incentives and conditions for those true game changers to hit
the road, and the reason I say that is that we have to reduce
our CO\2\ emissions by a full 80 percent to stabilize CO\2\
emissions to pre-industrialized levels by 2050. Eighty percent
reductions. We cannot do that by modest baby steps, incremental
even, improvements. We have got to think of having whole
revolutions in automobiles in this country, and I believe it is
our destiny to lead the world to do that, and you have got the
geniuses to do it.
So what I am interested in particularly is how we shape a
regulatory environment to create an incentive that have true
revolutions in the fuels we use so that we can move to advanced
cellulosic ethanol and have the pumps available and the flex-
fuel vehicles for Americans to use it broadly, not sort of on a
marginal use. How we move to a true electrical platform, how we
get to fuel cells, how we use the technology that is there
today as quickly as possible to get it on the road. And I just
think we have been stuck arguing about baby steps for now for
20 years, and we have got cars with less mileage than they did
when Jimmy Carter was President of the United States.
So I look forward to this revolution. I would like to think
this is the start of that revolution today and look forward to
working with you.
Mr. Boucher. Thank you, Mr. Inslee. The Chair now
recognizes the gentleman from Michigan, Mr. Rogers, for 1
minute.
OPENING STATEMENT OF HON. MIKE ROGERS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Rogers. Thank you, Mr. Chairman. Thank you for being
here. I think it is incredibly important that we find the
balance in this, and I want to commend all of you on the work
that you have done, and sometimes I don't think that we in
Congress give enough kudos to the investment, the amount of
dollar investment that you make in research and development to
get us to that next generation of alternative fuels. Your work
on lithium batteries, your work on the next generation of
ethanol engine, your hybrid technology. I know many of your
companies are doing, you are looking at putting hybrids on
heavier vehicles so you get a higher yield, a bigger bang for
the buck. I know many of you have many lines that are over 30
miles per gallon.
So I hope that in this this is your opportunity to talk to
us about that kind of investment that you make and the success
that you think is right around the corner, and I think it is
really exciting where we are in cars. My generation was going
to the moon. The next generation was the E economy, and I think
this generation is going to be that alternative fuel vehicle
that Americans want to buy and park in their car and brag to
their friends about. And I can guarantee you, if it is designed
by Congress, it ain't going to be all that attractive. If you
design it and develop it and build it and get it on those
parking lots around those auto dealers, I know Americans will
buy them, and we are all going to be better off for it.
So I am eager to hear how you can do that, how we can help
you and not punish you to that end. And I look forward to your
testimony today. Thank you.
Mr. Boucher. Thank you, Mr. Rogers.
I am now pleased to recognize the gentlewoman from Oregon,
Ms. Hooley, for 1 minute. Ms. Hooley waives her statement. The
gentleman from Texas, Mr. Gonzalez, for 1 minute. Mr. Gonzalez
waives his statement
The gentlewoman from Wisconsin, Ms. Baldwin, for 1 minute.
OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WISCONSIN
Ms. Baldwin. Thank you, Mr. Chairman, and thank you to
today's witnesses. It is one of the largest industries in the
United States. The automobile industry plays an important role
in addressing climate change, and in addition to being the
major player in ongoing discussions about CAFE standards, auto
companies also should be involved in conversations about
increasing the energy efficiency through their day-to-day
manufacturing operations. Both emissions output and energy use
will only increase as more cars are on the road.
For far too long I think that Congress has failed to take
action or show the leadership required to meet today's
challenges. We have not required that manufacturers take
advantage of or make use of the most energy-efficient and
technologically-advanced products that are available today. We
have set CAFE standards that fall far below levels that we are
currently capable of achieving. Quite frankly, until recently
we in Congress have taken the easy way out. I think now is the
time to push that envelope, and with your cooperation and input
show that the American auto industry can be a leader in
efficient and effective climate solutions.
I look forward to hearing your testimony today about how
you plan to contribute in that bold effort. Thank you, Mr.
Chairman.
Mr. Boucher. Thank you very much, Ms. Baldwin. Now
recognized is the gentleman from Texas, Mr. Burgess, for 1
minute.
Mr. Burgess. Mr. Chairman, I will defer and save time for
questions.
Mr. Boucher. Mr. Burgess waives his statement.
The gentleman from Oregon, Mr. Walden, for 1 minute.
Mr. Walden. Mr. Chairman, I am going to waive as well.
Mr. Boucher. Mr. Walden waives his opening statement. The
gentleman from Louisiana, Mr. Melancon, for 1 minute. Mr.
Melancon waives.
The gentleman from Kentucky, Mr. Whitfield, for 1 minute.
Mr. Whitfield. I will waive.
Mr. Boucher. Mr. Whitfield waives. And the gentleman from
Maryland, Mr. Wynn. Mr. Wynn also defers.
We now have an opportunity to hear from our witnesses, and
I want to say a word of welcome to them this afternoon. We have
a very distinguished panel of witnesses to share their thoughts
with the subcommittee today. Mr. Ron Gettelfinger is the
president of the United Auto Workers, which represents more
than 640,000 workers and 500,000 retirees of the United States.
Mr. Rick Wagoner is the chairman and chief executive officer of
the General Motors Corporation, which is the largest passenger
car and light-duty truck manufacturer in the world with
approximately 150,000 direct employees in the United States.
Jim Press is the president and chief operating officer of
Toyota Motor, North America, which has operated in the United
States since 1957. It directly employs approximately 34,000
workers in the United States. Alan Mulally is the new president
and chief executive officer of the Ford Motor Company,
headquartered in the district of our full committee chairman in
Dearborn, Michigan. Ford employs approximately 280,000 workers
in more than 100 plants world wide. Tom LaSorda is the
president and chief executive officer of the Chrysler Group of
DaimlerChrysler Corporation. The company employs more than
382,000 workers with more than 120,000 located in the United
States. We welcome each of our witnesses. Without objection
your prepared written statement will be made a part of the
record, and we would welcome your oral summary of approximately
5 minutes each. Mr. Gettelfinger, we will be pleased to begin
with you.
STATEMENT OF RON GETTELFINGER, PRESIDENT, INTERNATIONAL UNION,
UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS
OF AMERICA, DETROIT, MI
Mr. Gettelfinger. Thank you. Mr. Chairman, my name is Ron
Gettelfinger. I am president of the UAW, and we appreciate the
opportunity to testify before this subcommittee.
The UAW believes that climate change and energy security
are serious problems. We urge Congress to pursue initiatives
that will deal with these issues in an integrated and balanced
manner that protects jobs and benefits for American workers and
retirees.
To address the problem of global warming, the UAW supports
the establishment of an economy-wide, mandatory, tradable-
permits program that will slow the growth of and eventually
reduce greenhouse gas emissions in the United States. We
believe this type of cap and trade program should be done on an
upstream basis in order to minimize regulation and to ensure
that all sectors of the economy participate in a proportionate
manner.
In considering auto sector policies to address climate
change and energy security, the UAW believes Congress should
keep in mind several key principles. To be effective, any
policies must address the fuels that go into vehicles as well
as the efficiency of the vehicles themselves. The promotion of
alternative fuels can make an enormous contribution to reducing
greenhouse gas emissions and our dependence on foreign oil.
Furthermore, any auto policies requiring improvements in
vehicle efficiencies should include measures to help level the
playing field in the automotive industry and to provide
struggling manufacturers with the resources needed for
retooling efforts. Any assistance should be tied to investments
in domestic production that will generate jobs for American
workers and help the overall U.S. economy. It should also be
structured in a manner that recognizes and helps to address the
fundamental imbalance in the auto industry related to retiree
healthcare legacy costs. Without such measures the UAW would be
deeply concerned about the economic feasibility of any
proposals to mandate significantly higher vehicle efficiency
standards.
In light of the extremely serious financial conditions of
General Motors, Ford, and DaimlerChrysler, and the disparate
burden they face in retiree healthcare legacy costs compared to
their competitors, the UAW believes that the imposition of
stringent increases in vehicle efficiency standards could lead
to calamitous results. This could include the closing of
additional facilities and the loss of tens of thousands of
additional automotive jobs in this country. It could also
include the loss of healthcare coverage for 500,000 retired
workers and their families.
The UAW urges Congress to explore the feasibility of
establishing an additional carbon control policy requiring
reductions in the carbon emissions of light-duty vehicles, as
well as reductions in the carbon intensity of the fuels that go
into these vehicles. This two-pronged approach could make a
major contribution to reducing greenhouse gas emissions and
contribute enormously to a reduction in oil consumption.
The UAW also urges Congress to use tax or other incentives
to encourage domestic production of advanced technology
vehicles and their key components. As was demonstrated by a
November 2004, study conducted by the University of Michigan,
this type of approach would help to maintain and create tens of
thousands of automotive jobs in this country. At the same time
it would help to accelerate the introduction of these advanced-
technology vehicles and thereby reduce global warming emissions
and our dependence on foreign oil.
The UAW believes Congress should pursue several policies to
promote the use of alternative fuels in motor vehicles. We
would support legislation mandating that certain percentages of
all vehicles sold in the U.S. by each automaker must be flex-
fuel capable by specified dates. We also would support
incentives or mandates relating to the conversion of filling
stations so they have the capability to distribute alternative
fuels.
The UAW believes that changes in the CAFE Program are the
least desirable option for addressing the problems of climate
change and energy security. Moving to an attribute-based CAFE
system for passenger cars would enable auto manufacturers to
offshore all of their small car production. Over 17,000
American workers are currently employed in five U.S. assembly
plants that produce small passenger cars. Almost 50,000
American workers produce parts for these vehicles. To prevent
the loss of these jobs and to prevent the auto companies from
upsizing their vehicles, thereby resulting in worse overall
fuel economy, the UAW urges Congress to impose an anti-
backsliding requirement on any new CAFE rules.
In conclusion, the UAW appreciates this opportunity to
testify before this subcommittee concerning this critically-
important issue of climate change and energy security. We look
forward to working with this subcommittee to fashion measures
that will enable the U.S. to make significant progress in
reducing greenhouse gas emissions and oil consumption while
protecting jobs and benefits for American workers and retirees.
Thank you.
[The prepared statement of Mr. Gettelfinger appears at the
conclusion of the hearing.]
Mr. Boucher. Thank you very much, Mr. Gettelfinger. Mr.
Wagoner.
STATEMENT RICK WAGONER, CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
GENERAL MOTORS CORPORATION, DETROIT, MI
Mr. Wagoner. Good afternoon, Mr. Chairman and members of
the committee. I am Rick Wagoner, chairman and chief executive
officer of General Motors Corporation. Thank you for the
opportunity to speak about advanced technology and the very
important subjects of climate change and energy security.
The global auto industry as a business necessity and as our
obligation to society is developing alternative sources of
propulsion based on diverse sources of energy to meet the
world's growing demand for our products.
At GM we are committing massive resources to this effort,
and we think it is very important for us and for the American
public that we are working on the right things, things that
will really make a difference in reducing oil consumption and
CO\2\ emissions.
At GM we are fully prepared to discuss these issues,
including carbon constraints on the U.S. economy, and we
believe the discussion should begin with a frank evaluation of
the Corporate Average Fuel Economy Program.
The stated goals of the original CAFE Program were to
reduce U.S. gasoline consumption and oil imports. However,
because the number of vehicles on the road has nearly doubled
since CAFE was enacted and the total number of vehicle miles
traveled has also nearly doubled, U.S. gasoline consumption has
increased by 60 percent and U.S. oil imports have increased by
more than 100 percent. These increases have occurred despite
the fact that since CAFE was enacted automakers as a whole have
increased new vehicle fleet fuel economy for light trucks by 60
percent and more than doubled it for passenger cars.
I am proud to note that General Motors has improved its
fuel economy more than any other major auto manufacturer over
this period, and I hasten to point out that we are applying a
broad range of technologies to continue improving fuel economy
going forward.
But clearly, no matter how you measure it, the CAFE Program
has failed dramatically in meeting its stated goals. And yet
our, for our Nation, the original goals of the CAFE legislation
remain as important as ever. In fact, more so. It is time to
move away from approaches that don't solve the problem and on
to solutions that address not only the legitimate and important
issue of reducing U.S. gasoline consumption and oil imparts,
but also the critical challenges presented by CO\2\ emissions.
And the good news is that we now have these solutions within
our grasp.
In the near term the best opportunity for reducing gasoline
consumption, oil imports, and greenhouse gas emissions is
through increased use of biofuels, and the biofuel with the
greatest potential to displace petroleum-based fuels in the
U.S. is ethanol. Consider the differences between CAFE and
ethanol. A 4 percent per year CAFE increase would be
extraordinarily expensive and technologically challenging to
implement. On the other hand, GM, Ford, and DaimlerChrysler
have already committed to make half of our annual vehicle
production biofuel capable by 2012.
Beyond that, a 4 percent per year increase in CAFE
according to the administration's analysis--would save 8.5
billion gallons of gasoline annually by 2017. That is less than
half of the projected growth in American oil consumption. In
other words, even with this proposed CAFE increase, as
difficult as it is, America will still be using more and most
likely importing more oil than ever before, as well as
producing more CO\2\ emissions.
On the other hand, if all the E-85 capable vehicles on the
road today, along with those that GM, Ford, and DaimlerChrysler
have already committed to produce over the next 10 years, if
they were to run on E-85, we could displace 22 billion gallons
of gasoline annually. And if all manufacturers made the same
commitment, we could increase the savings to 37 billion gallons
of gasoline annually. That is more than quadruple the savings
that a 4 percent per year CAFE increase would achieve and very
importantly, enough to actually reduce America's oil
consumption by more than 10 percent versus today's levels as
well as CO\2\ emissions.
The potential of biofuels like E-85 is to significantly
displace petroleum is within our grasp today. The vehicles are
on the road or in the works, but they are not being fully
utilized because of the constraints on E-85 supply and
distribution. With continued push from Congress and the
administration to grow biofuel production and distribution,
including next generation cellulosic ethanol, we can make a big
difference very quickly.
So E-85 offers tremendous opportunities to reduce oil
consumption and imports even within a decade. Is there even
more we can do beyond that? Absolutely, yes. And we are already
working on it. At GM we are making a major commitment to
electrically-driven vehicles, including development of plug-in
hybrids, fuel-cell vehicles like the Chevy Sequel concept, and
range-extended electric vehicles like the Chevy Volt. Why are
we doing this now? Because of recent advances in energy storage
technology, specifically in lithium ion batteries and hydrogen
fuel cells. While not yet ready for prime time, in our view
these technologies are getting close to commercial reality. And
this is an area where Congress can really help by significantly
enhancing funding for domestic advanced battery research and
development and also expanding funding for development of
hydrogen and fuel-cell technology.
In summary, we at GM believe now is the time for a new,
more comprehensive and forward-looking national energy strategy
that insures we are working on the right things, things that
will really make a difference in reducing oil consumption and
CO\2\ emissions. At GM we are willing and able to play a
leadership role in helping develop and implement that strategy.
Thanks very much, and I look forward to answering your
questions.
[The prepared statement of Mr. Wagoner appears at the
conclusion of the hearing.]
Mr. Boucher. Thank you, Mr. Wagoner. Mr. Press.
STATEMENT OF JIM PRESS, PRESIDENT AND CHIEF OPERATING OFFICER,
TOYOTA MOTOR NORTH AMERICA, NEW YORK, NY
Mr. Press. Good afternoon, Mr. Chairman and members of the
subcommittee. I am Jim Press, president of Toyota Motor North
America. I am both humbled and honored to have this opportunity
to discuss these issues of climate change and energy security
with you today.
Two of Toyota's founding principles are the elimination of
waste and service to society. These principles permeate our
products and our actions now and well into the future. They are
part of our DNA, and they guide us as we address climate change
as well as energy security issues.
Toyota has long been mindful of and accepts the broad
scientific consensus that climate change is occurring and will
continue unless there are significant and coordinated global
efforts to slow the growth of man-made greenhouse gas
emissions. Toyota is committed to continued action to address
climate change and promote greater energy diversity. We plan to
increase the fuel efficiency of our products, develop new
markets for advanced vehicle technology and alternative fuels,
and reduce the greenhouse gas footprint from our vehicles,
manufacturing, and distribution portions of our business.
The motor vehicle industry has a responsibility to be part
of the solution, but these issues cannot be addressed by the
industry alone. U.S. action on both issues must, by definition,
be national in scope and involve a range of industries and
sectors of the economy, as well as the consumers.
The centerpiece of our fuel efficiency efforts has been
hybrid technology, a revolutionary powertrain system derived
from our in-house research and development programs. This
innovative system is designed to substantially increase vehicle
fuel economy and reduce emissions significantly. Toyota hybrid
vehicles are over 70 percent cleaner for smog-forming emissions
than the average new vehicle and can offer up to twice the fuel
economy. And beyond that hybrid technology is an essential and
enabling element of future powertrains, such as plug-in hybrids
and fuel cells.
The year 2007, marks the 10th year of our Prius, the first
hybrid. I am happy to say the introduction of Prius was a sound
business decision. Last year the Prius was our third best-
selling passenger car in the U.S. after Camry and Corolla. As
of January 2007, we have sold nearly half a million hybrids
profitably in the United States, and we now offer six different
hybrid models.
Hybrid technology embodies our core belief that the most
effective solutions are mass market solutions, and that is why
we see hybrid technology as critical to the commercialization
of future drivetrains. Many of the same components found in our
current hybrids are being used in hydrogen fuel cell vehicles
that we are currently testing here in the United States. The
same can be said for plug-in hybrids and other technologies we
are pursuing.
It is not a lack of will that is keeping plug-in hybrids
from commercialization. It is the absence of technical
breakthroughs to address the issues of battery technology,
weight, and cost.
While fuel cell and plug-in hybrid research continues, so,
too, does our application of advanced technology on
conventional gasoline engines. We are aggressively pursuing
clean diesel technology, as well as vehicles capable of
operating on renewable fuels such as ethanol and biodiesel.
In addition to vehicle technology improvements, in-use
impacts from the existing fleet of vehicles can be reduced
through a series of measures. For example, smarter land use
planning, increased reliance on mass transit, and greater use
of so-called intelligent transportation systems can reduce
traffic, congestion, and energy consumption.
Toyota supports the use of national performance-based
regulatory programs, as long as the programs are fair,
technologically feasible, cost effective, and they do not
discourage early compliance, technological innovation, or
safety. In this context, we support increasing both the
passenger car and light-duty fuel economy standards and giving
NHTSA the authority to reform the passenger car standard.
The greenhouse gas impact from motor vehicles is inexorably
linked to their fuel economy. Toyota's fleet in the United
States has exceeded the applicable fuel economy standards since
their inception in 1978. In 2005, our combined car and truck
fleet economy was 28.9 miles per gallon, exceeding the combined
average of the rest of the industry by 4.1 miles per gallon.
That is nearly 17 percent. We have done this while providing a
full range of vehicles from subcompacts to the best-selling
passenger car, Camry, the best-selling luxury vehicle line,
Lexus, as well as a full line of SUVs and trucks.
Toyota has a proven record of bringing advanced technology
to market and achieving high levels of fuel economy. Over their
lifetime, the past 10 model years of Toyota vehicles sold in
the U.S. will use 11 billion fewer gallons of gasoline. That is
265 million fewer barrels of oil than if we had just met the
standards. These same vehicles will emit over 100 million
metric tons less of carbon dioxide.
Our commitment to reducing the greenhouse gas footprint of
our products does not stop there. Energy conservation and
energy efficiency are core considerations in the life cycle of
our vehicles. In 2002, we set an internal target to reduce
energy consumption from our manufacturing operations by 15
percent per unit of production by 2005, compared to a baseline
of 2000. We have not only met but we exceeded that target ahead
of schedule, and we now have an even more aggressive goal for
the 2007-11, time period.
Tackling climate change and fostering energy diversity
require careful deliberation and balancing with other national
priorities. It also demands innovation, unconventional
thinking, and most of all, action. I believe the time is right
to enlist the immense talent and the might of the auto industry
to help solve some of the key issues of our time. As an
industry we have an obligation to be part of the solution, not
the problem. Toyota pledges to do its part to lend a hand and
to work with the rest of the world to help create real
solutions.
I thank the subcommittee for its interest in our views and
for this opportunity to share some of our current thinking. We
will be happy to respond to your questions. Thank you.
[The prepared statement of Mr. Press appears at the
conclusion of the hearing.]
Mr. Boucher. Thank you very much, Mr. Press. Mr. Mulally.
STATEMENT OF ALAN R. MULALLY, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, FORD MOTOR COMPANY WORLD HEADQUARTERS, DEARBORN, MI
Mr. Mulally. Good afternoon. I am Alan Mulally, president
and chief executive officer of the Ford Motor Company. It is a
pleasure to be here and provide our perspective on these
important issues.
Ford Motor Company operates facilities in 45 States. About
one in every five American autoworkers is employed by Ford.
Beyond direct employment of over 100,000 people in the United
States, Ford impacts nearly 2 million American jobs. Over the
last 3 years Ford has spent nearly $23 billion on research and
development, the vast majority of which has been here in the
United States. Ford was the first company in our industry to
issue a report on the challenges of climate change for our
business going forward, and I also brought a copy of that I
would like to add to the record for your reference.
In addition, since 1999, we have had a specific focus on
sustainability, the triple bottom line that addresses the
environment, financial, and social impacts. Today I am here to
tell you that Ford remains committed to working with you to
secure our energy future and address climate change. But we
need Government to be our partners, not our adversaries.
Energy security and climate change issues are linked. An
effective policy for both must reflect an integrated approach
among key stakeholders, including the automobile industry, the
fuel industry, Government, and of course, the consumers.
Yes, we need more efficient vehicles, but we also need
lower carbon fuels and policies that affect travel demand,
infrastructure development, and consumer decisions. But in the
end it is the consumers that will decide what they buy and how
much they drive. This consumer demand, future developments in
technologies, and ever-changing markets and political
uncertainties require flexible solutions as well. The business
strategy that Ford implements and the policies that we
encourage must have the flexibility to meet a range of
scenarios. There is, as was pointed out, no silver-bullet
solution, and that is why Ford is investing in a broad range of
innovative technologies.
CAFE isn't a silver bullet either. When the CAFE law was
passed in the 1970's, the goal was to reduce our dependence on
foreign oil. Frankly, that did not work. Even though today's
average light truck gets better fuel economy than a 1970's
compact car, the unintended consequence was that as gas prices
fell, people actually drove more.
Ford will continue to do our part in producing flex-fuel
vehicles and improving fuel efficiency. We support increasing
CAFE standards to the maximum feasible levels and reforming the
passenger car CAFE structure similar to the light-truck reform.
We also support taking the policies out of the CAFE
decision. Setting CAFE standards can only be properly
accomplished after a thorough analysis of the data; the
technology data, economic data, and safety data. We believe
NHTSA has this capability.
Ford also recognizes that we must particular in the
solution to these issues, and we have invested substantial
resource money into the research and development of innovative
vehicle technologies. We are developing a range of advanced
technologies that improve fuel efficiency through advanced
gasoline engines and accommodate a range of alternative fuels
including hybrid flex fuel vehicles, clean diesel, hydrogen
internal combustion engines, and hydrogen fuel cells.
We are proud that Ford produced the first American-made
full hybrid electric vehicle on the road, the Ford Escape
hybrid. We have been building flexible-fuel vehicles for over a
decade and have placed more than two million of these vehicles
on American roads, and that is only a start. Just a few weeks
ago we introduced the Ford Escape hybrid, electric E-85
demonstration project that combines two petroleum-saving
technologies; hybrid electric power and E-85 flex-fuel
capability.
Though there are many technical and cost challenges to
address, if just 5 percent of the fleet were powered by E-85
hybrids today, oil imports could be reduced by 6 million
gallons of gasoline each year. We stand ready with the
technology, and we are willing to lead the way, but we need a
partner with Government and the fuel providers. We must have
renewable fuel infrastructure before we can effect change. We
believe that there is a substantial opportunity to use
American-grown renewable fuels to reduce carbon emissions and
the nation's dependence on foreign oil. Today's corn ethanol
has the ability to reduce CO\2\ emissions by approximately 25
percent. Tomorrow's cellulosic ethanol can increase the savings
to about 85 percent, all while reducing imported oil.
Ford also supports incentives that encourage the
production, distribution, and the use of these low carbon
renewable fuels and flex-fuel vehicles capable of running on E-
85. We can have a single American solution to both of these
problems. However, Congress will have to make some tough
choices. In the transportation sector alone there are a number
of possible ways to limit carbon emissions. Increasing CAFE too
quickly and aggressively without appropriate engineering lead
times or necessary customer incentives to drive market demand
will have a serious negative consequence on the American
automobile industry. And it would significantly reduce customer
vehicle choice. We can't lose sight of the benefits of
transitioning to low-carbon fuels. We need to have a serious
dialog with all key stakeholders, including Congress to develop
real solutions to these problems.
Is the upstream cap and trade approach the answer? What
about low carbon or biofuel standard? Or increasing the cost of
driving, like a higher fuel tax the answer? How can we
positively influence the customer without negatively impacting
small business and denying families their mobility. These are
tough questions and will require tough choices. At Ford we look
forward to working with you on a comprehensive approach that
will be both effective and fair without seriously impacting the
U.S. economy.
I look forward to taking your questions. Thank you very
much.
[The prepared statement of Mr. Mulally appears at the
conclusion of the hearing.]
Mr. Boucher. Thank you very much, Mr. Mulally. Mr. LaSorda.
STATEMENT OF THOMAS W. LASORDA, CHIEF EXECUTIVE OFFICER AND
PRESIDENT, CHRYSLER GROUP OF DAIMLERCHRYSLER, AUBURN HILLS, MI
Mr. LaSorda. Mr. Chairman and members of the committee,
thank you for inviting me to testify before you on the subject
of climate change.
DaimlerChrysler is committed to developing new advanced
technologies which minimize the effects our products and
processes have on global climate and the environment in
general. We recognize that climate change and national security
are serious concerns that require all of us; individuals,
industry, and Government, to take actions to help reduce our
dependence on oil and emissions of CO\2\, and we have already
taken actions to do so.
We have produced more than 1.5 million flexible-fuel
vehicles, or FFV's, capable of running on E-85. That is more
than 10 percent of our production over the last 9 years, a
higher percentage than any other automaker. We stand ready to
make by 2012, along with GM and Ford, 50 percent of our
production as either flexible-fuel vehicles or vehicles capable
of running on biodiesel. DaimlerChrysler offers seven clean
diesel models this year, providing improved fuel economy of 30
percent and greenhouse gas reductions of 20 percent. And we are
actively pushing for the adoption of a national standard for B-
20 biodiesel fuel to speed its adoption in the marketplace.
We are partners in a global alliance in hybrid development
with General Motors, BMW, and our sister company, Mercedes Car
Group, in developing a new hybrid system that we expect will
leapfrog the competition. The first Chrysler Group product, the
Dodge Durango, will make its debut in the first quarter of
2008. DaimlerChrysler is a leader in producing 1,500 hybrid
diesel electric buses through our Orion Transit Bus Company,
and they are being sold in New York, San Francisco, and other
cities across this great land.
We also have the only demonstration fleet of plug-in
hybrids in service through our Dodge Sprinter vans. As you may
not know, we are the world's leader in fuel-cell vehicle
production with more than 100 vehicles ranging from small
passenger cars to transit buses in worldwide operation today.
And we continue to put advanced technology into our gasoline
engine vehicles. Last year we introduced a new world engine for
our four-cylinder cars and trucks, along with a new fuel-
efficient continuously-variable transmission to achieve 30 plus
miles per gallon. We are doubling the capacity of our four-
cylinder engine plant to 840,000 units per year.
Just last month I announced a $3 billion powertrain
investment. This investment will include development and
production of more fuel-efficient powertrains, a brand new V-6
engine family, new cutting-edge transmissions and axles for our
products. All in all these investments will further secure tens
of thousands of jobs here in the United States.
We are also addressing our product mix. Earlier this year
we announced the 40-plus mile per gallon Smart city car that
will arrive in the U.S. early next year.
I have focused on where we are going from a technology
perspective, to reduce petroleum consumption, and since they
are directly related, greenhouse gases. Now I would like to
comment on calls for a 4 percent annual CAFE increase over the
next 10 years, which translates to a 50 percent fuel economy
increase. In fact, we already do it. It is in Europe. The U.S.
combined fleet averages about 24 to 25 miles per gallon, and in
Europe the fleet averages 36 miles per gallon. That is a 50
percent difference.
Why the huge disparity between there and here? We are the
same companies in Europe that we are in the U.S. with access to
similar technologies. The difference is the European approach
to energy and greenhouse gas policies. They have made some
tough political choices. They have highly taxed gasoline,
making the price three plus times higher than in the U.S., and
they have incentives on diesel fuel.
Through policies which affect consumer demand, the mix of
vehicles sold in Europe is radically different than here. About
60 percent of the products are compact cars or smaller,
compared to about 15 percent here in the United States. About
50 percent of passenger vehicles sold in Europe are diesel
powered. The European model, while far from perfect, is based
on policies that leverage demand and market forces, not on
policies that fight them.
However, in the United States our policies have
historically addressed the supply side; light-duty vehicle fuel
economy standards. But consider how a 50 percent fuel economy
improvement relates to new vehicle technology alone. Assume if
all the new vehicles sold in the U.S. 10 years from now were
hybrids or diesels, something that no one really believes is
even feasible, fuel economy would improve by only 25 to 30
percent.
U.S. policymakers must adopt a new and unique formula that
fits here. DaimlerChrysler supports a three-pronged
comprehensive approach to climate change and energy security in
the transportation sector, one that includes a combination of
vehicle efficiency improvements by our industry, the expanded
use of alternative fuels such as ethanol and biodiesel, and the
harnessing of market forces to help drive consumer demand.
But the climate change challenge is bigger than any one
industry. So today I am here to commit personally to work with
you on a broad-based climate change program that addresses all
sectors of the economy, not just automobiles, is market-based
to insure that greenhouse gas reductions do not significantly
harm the economy, is upstream, and is national, if not global,
in scope.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. LaSorda appears at the
conclusion of the hearing.]
Mr. Boucher. Thank you very much, Mr. LaSorda, and thanks
to each of our witnesses for your presence here this afternoon
and sharing that information with us. I will recognize myself
for a round of 5 minutes of questions.
Under the current CAFE requirements and the system that
those requirements are effectuated through, there is no ability
on the part of the automotive manufacturers to trade CAFE
credits. I think you are allowed to bank those credits under
certain circumstances and use them yourself at a later time,
but there is no opportunity to trade those within the industry.
Some have suggested that it might add to your flexibility
if you had that opportunity, and it might give you some early
experience with a trading program in the event that our climate
change proposal leads to the imposition of cap and trade.
And so my question to you is whether or not you would
support legislation that we could perhaps pass at an early date
that would institute a credit trading program with regard to
CAFE. Mr. Wagoner, do you have a comment?
Mr. Wagoner. Thank you, Mr. Chairman. It would be my
personal view that it, such a program would not have a
significant impact on addressing the issues that I think we are
trying to address, which is really to try to provide
appropriately-costed energy to the economy but at the same time
reduce oil imports and reduce CO\2\ emissions. I think
realistically from a manufacturer's perspective we are going to
do our best to meet any standard ourselves, and the prospect of
if one is short, writing a check to your competitor so they
will have more money to invest is one that practically isn't
consistent with my competitive spirit. So I guess I can't say
it would never work, but I would have to say I don't see it as
a major part of a solution to the issues that I think we need--
--
Mr. Boucher. So you are not recommending that to us?
Mr. Wagoner. That is correct. Yes.
Mr. Boucher. Mr. Press, very briefly.
Mr. Press. Yes. I think that we would be open to
considering that concept. But if a competitor had an expensive
technology that generated credits, and they could sell it to a
competitor who could buy it for less than the company spent on
the technology, it really wouldn't do either company any good.
Mr. Boucher. All right. So you are not recommending that
either. Mr. Mulally.
Mr. Mulally. I sure agree with my colleagues. I think I
would also add that the idea though has a lot of merit of
moving it up to almost like a sector of transportation or even
higher where the real value would be trading between say the
energy companies and the automobile industry. I think it would
be a lot more effective and beneficial.
Mr. Boucher. All right. Well, we will certainly examine
that opportunity. Mr. LaSorda, would you care to comment?
Mr. LaSorda. I agree with my colleagues here, and have
nothing more to add, Mr. Chairman.
Mr. Boucher. All right. Chairman Dingell and I are
currently working to draft a climate change control measure.
Let me just talk about some of the characteristics and then I
am going to ask you for your view of this. Our goal is to have
a mandatory program that would make a substantial contribution
to addressing the challenge of greenhouse gas emissions. It
would be digestible by the economy. It would spread the burden
equally across the economy. It would assure that no sector of
the economy will be dislocated or disadvantaged in comparison
with any other economic sector.
It will be a bipartisan measure. It will be an industry-
supported measure, and it would be capable of passage both in
the House and in the Senate and hopefully signature by the
President during the next 2 years. That is the goal that we
have. We are soliciting the views of all interested parties. We
are particularly soliciting both views and participation in
crafting this measure from the industries that are greenhouse
gas emitters, and we welcome your participation.
So my question to you, and I think a one-word answer would
be preferable, will you agree to participate with us? Mr.
Gettelfinger, let us begin with you.
Mr. Gettelfinger. Yes.
Mr. Boucher. Mr. Wagoner.
Mr. Wagoner. Yes.
Mr. Boucher. Mr. Press.
Mr. Press. Yes.
Mr. Boucher. Mr. Mulally.
Mr. Mulally. Yes.
Mr. Boucher. Mr. LaSorda.
Mr. LaSorda. Absolutely.
Mr. Boucher. This is a fabulous panel of witnesses. Thank
you. Thank you very much. Do you have any thoughts this
afternoon on what I think is going to be one of the major
challenges that we will confront, which is devising a way to
bring the transportation sector into the broader greenhouse gas
emission control program. We are probably going to be
considering as a major approach to that measure some form of
cap and trade, and so for purposes of discussion this afternoon
let us assume cap and trade is the approach that we adopt. Do
you have any thoughts today on how we might successfully
integrate your pre-existing regulatory program, CAFE, with a
cap and trade regime. I wouldn't expect detailed answers but if
you have any preliminary thoughts on that, we would certainly
welcome that today. Mr. Wagoner.
Mr. Wagoner. A complex topic, as you indicate. I would say
in general we do believe there is merit to addressing the issue
as you have cited it. We think there are ways to go about this
that could lead to solutions. We have some specific guidelines
that we would like to suggest as part of that process and we
would be pleased to work with your staff towards that end.
Mr. Boucher. Thank you. We would welcome your information
on that. Mr. Press.
Mr. Press. Yes. Again, we would be open to considering any
national program that would be fair and equitable, and that
would make sure that those that have already made investments
in technology are not disadvantaged. While credit trading
between companies may be one concept, another idea is to allow
a company to trade credits among its own fleets.
Mr. Boucher. Thank you, Mr. Press. Mr. Mulally. No comment.
Mr. LaSorda.
Mr. LaSorda. Based on what you said earlier about all
sectors in the economy being involved in the solution obviously
we would like to participate in the discussions on this.
Mr. Boucher. OK. Thank you very much. My time has expired.
I am now pleased to recognize the ranking member designate for
the moment of the--oh, I am sorry, Mr. Barton, the ranking
member of the full committee for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman. I have nothing but
supreme affection and respect for our full committee chairman
and subcommittee chairman. What Mr. Boucher just outlined would
literally be a legislative miracle of Biblical proportions if
he is able to pull it off, so let us wish him well, and if
there is a way, we will attempt to be helpful but we are going
to have to answer some very tough questions. And I am going to
start asking some of those questions right now. My first
question to the panel since everybody has kind of nodded your
head that you support cap and trade, I want to make sure I
understand that.
You support mobile sources being subject to carbon caps, is
that true? Everybody on this panel supports there being not
just on stationary sources but on mobile sources like tailpipe
emissions for cars and trucks--the industry and labor union
that represents UAW supports a mandatory cap and trade system.
Mr. Gettelfinger.
Mr. Gettelfinger. Yes, we support that, and we believe that
there is a lot of merit to it, and we believe if is it upstream
if it reduces the amount that goes into the fuel itself, and
then on the----
Mr. Barton. I just want to make sure you understand what
you are saying.
Mr. Gettelfinger. Yes, absolutely.
Mr. Barton. You know that you are supporting a mandatory
carbon cap on tailpipe emissions, you said yes.
Mr. Gettelfinger. When you say tailpipe emissions----
Mr. Barton. That is where the CO\2\ comes out.
Mr. Gettelfinger. That is correct, and we refer to that as
the carbon burden, and that is correct, we do support that.
Mr. Boucher. Mr. Wagoner.
Mr. Wagoner. Yes, Congressman, we said we would support
that, and we would. I think to be honest we have to be clear
the devil is always in the details so with equity and fairness,
et cetera, et cetera, is a big caveat to that.
Mr. Barton. Yes.
Mr. Wagoner. Absolutely.
Mr. Barton. Mobile source CO\2\ is about 30 to 35 percent
of emissions man-made, and so are stationary sources. They are
both about the same. They are around a third so I am not happy
with that answer, but if that is your answer, that is your
answer. Mr. Press.
Mr. Press. Yes, I agree that we would be in support based
on what the actual details would allow us to operate within. I
think it is important for us to realize we have to be open to
many new approaches, and we need to look at the whole plethora
of opportunities. As for cap and trade, I think the further
upstream you go the more efficient you are going to be.
Mr. Barton. Mr. Mulally.
Mr. Mulally. You bet. I just echo the upstream part because
clearly we are never going to get to our mutual objective
unless we include all the people that are associated with
production of CO\2\, and so our agreement is to help work with
the entire industry, the whole sector, not just what comes out
of the tailpipe because we need to have everybody involved.
Mr. Barton. I understand that.
Mr. Mulally. So cap the most upstream that we can.
Mr. Barton. Mr. LaSorda.
Mr. LaSorda. The upstream, as I stated earlier, and the
rest, is absolutely critical. Also, that we look at all sectors
and what can be done upstream. And as my colleagues have
stated, we would like to get into the details with members of
the committee.
Mr. Barton. My next question is a simple question. If we
want to regulate greenhouse gases everybody seems to--right now
the hysteria seems to be that we need to do that. I am a
skeptic about that, but are we going to have greater impact
regulating the greenhouse gases 0.01 percent or 95 percent?
Which gives you the biggest bang for the buck if you decide to
regulate greenhouse gases? The greenhouse gas that is 95
percent of the atmosphere or the greenhouse gas that is 0.01
percent in terms of man-made? It is not a trick question.
Mr. Press. I fully don't understand the question and can't
answer at this time.
Mr. Barton. If you are trying to impact an outcome, do you
manage 95 percent of the problem or 0.01 percent of the
problem? Which gives you the greatest likelihood of getting the
outcome you want?
Mr. Wagoner. Well, obviously if you can address the problem
the most comprehensive way you have got the greatest likelihood
of getting a cost effective outcome. To be honest, that is one
of the issues that I try to address in my testimony as far as
improving both energy security and emissions, really better to
try to address it by----
Mr. Barton. My time has expired, but water vapor is 95
percent of greenhouse gases and man-made CO\2\ is 0.01 percent,
and you gentlemen have just gone on record that you want to
manage that 0.01 percent, and I will postulate that anything in
any activity that I have ever had any part in trying to manage,
you do a better job of getting your outcome when you tackle
what causes the majority of the problem instead of what even
barely scratches the surface. And with that, Mr. Chairman, I
yield back and good luck on your miracle.
Mr. Boucher. Well, thank you very much, Mr. Barton. Let me
just comment on your very generous offer to work with us
assuming that challenging test is met, but if that test is not
met, I can't vote for the bill either so thank you very much,
and I appreciate that.
Mr. Whitfield. Mr. Chairman, can Mr. Mulally make his
comment? I think he wanted to make a comment.
Mr. Boucher. Absolutely. Mr. Mulally, we would be happy to
hear from you.
Mr. Mulally. I think I certainly do understand what you
were asking, and I think our answer would be that what we
really want to do is to address the greenhouse gases that stay
in the atmosphere the longest and clearly CO\2\ can stay in the
atmosphere for 100 years. So the most important thing is to
deal with the gases that stay there the longest. The water
vapor in the case that you----
Mr. Barton. Well, the water vapor is constant in the
atmosphere. It goes up and down a little bit but it is a
constant too.
Mr. Mulally. So the one that you are adding that stays up
there the longest is the one that I think we want to address.
Mr. Boucher. The time of the gentleman has expired. I am
now pleased to recognize the chairman of the full committee,
Mr. Dingell, for 10 minutes.
Mr. Dingell. Mr. Chairman, I begin by thanking you for your
recognition but also commending you for the diligent, vigorous,
energetic, and competent fashion in which you have been
addressing the difficult questions before us. I have been
pleased to listen to the comments made by Mr. Barton. I look
forward as this matter goes through the markup process to
working with him. His comments on CAFE and caps on CO\2\
emissions remind me that for all intents and purposes, these
two things are somewhat different but mostly similar versions
of the same thing.
Gentlemen, our witnesses here, I have listened to all of
your testimonies and almost all of you have exclusively
discussed Corporate Average Fuel Economy and Government
incentives to encourage advanced technology vehicles. I would
observe several things. First, I support incentives for the
domestic production of advanced technology vehicles, and I
believe this committee would too. We need to find ways to
develop and produce technologies for the new century here in
the United States.
Second, I understand our current system of regulating fuel
economy is dependent upon what consumers choose to buy, not
what your companies are capable of producing. It is not, I
think, a perfect mechanism. Third, I understand that a
statutory increase in fuel economy standards may have
unintended consequences in the marketplace to the detriment of
jobs, and so I think our good friend, Mr. Gettelfinger, would
observe vehicle safety and competitiveness of American
manufacturers. And by that I am not simply referring to Ford,
General Motors or Chrysler alone. I want everyone to know that
my position on this matter has been consistent and is quite
clear.
Fourth, I understand the administration's proposal to
increase fuel economy standards by 4 percent annually is not
currently feasible. I have my doubts about what an attribute
based system would be and how it would affect passenger, cars,
jobs and everything else in this country. I have even greater
doubts that any manufacturer would utilize a CAFE credit
trading system, and I also doubt that it would provide any
significant environmental benefits. The only thing I am certain
of, with respect to these issues, is that the administration
has not done its homework, as we found the other day, on this
matter.
Fifth, the issue of global climate change must be
addressed. It is my view that everyone should be required to
put an appropriate contribution into the collection box. This
includes the auto industry and all of you gentlemen who are
there at the committee table. Fuel economy regulations have
effectively regulated CO\2\ emissions thus far. However, I
question whether the current system, given all of its flaws and
your well-stated concerns today, remains the right way to go
forward. Gentlemen, I have heard from all of you previously
what will not work. I agree with much of what you have stated
in that regard. What I have not heard, however, is what will
work, how this committee will put together legislation that
will in fact accomplish our national purpose of reducing
imports and reducing the emissions of greenhouse gases here in
the United States.
Frankly, I think the American people are frustrated.
Members of Congress on both sides of the aisle are frustrated.
And, very frankly, my dear friends, I am very much frustrated
myself. I would like to ask you questions about your testimony,
and about the administration's proposals or about bills that
have been introduced with respect to fuel economy standards.
Unfortunately, there isn't time for me to do that, and I would
observe that most of this old debate is pretty stale. The
existing system of regulating fuel economy may no longer be
sufficient to address the needs of this country, so we need
more involvement and your leadership very much, and these are
needed for us to succeed in the difficult work that we have to
undertake under rather considerable time pressure.
So, gentlemen, I ask you, are you willing to work with this
committee to produce mandatory regulations to address the issue
of global climate change? I would appreciate a yes or no
response. Mr. Gettelfinger.
Mr. Gettelfinger. Yes.
Mr. Dingell. Mr. Wagoner.
Mr. Wagoner. Yes.
Mr. Dingell. Mr. Press.
Mr. Press. Yes, sir.
Mr. Dingell. Mr. Mulally.
Mr. Mulally. Yes.
Mr. Dingell. Mr. LaSorda.
Mr. LaSorda. Yes, sir.
Mr. Dingell. Gentlemen, I understand the inclination to
stick with the devil that we all know, but are you willing to
go beyond Corporate Average Fuel Economy standards and consider
new regulatory regimes? Please respond yes or no. Mr.
Gettelfinger.
Mr. Gettelfinger. Yes.
Mr. Dingell. Mr. Wagoner.
Mr. Wagoner. Absolutely, yes.
Mr. Dingell. Mr. Press.
Mr. Press. Yes, we are open to considering any national----
Mr. Dingell. Mr. Mulally.
Mr. Mulally. Yes.
Mr. Dingell. Mr. LaSorda.
Mr. LaSorda. Yes, sir.
Mr. Dingell. Gentlemen, my own dad used to say something
that I thought was pretty useful. He used to say you can't just
sit at your end of the boat and tell the fellow at the other
end of the boat that his end is sinking. Now the question here
is, gentlemen, are you willing to work together amongst
yourselves and with us to get beyond this old-fashioned
thinking of CAFE and make real environmental progress? Mr.
Gettelfinger.
Mr. Gettelfinger. Yes.
Mr. Dingell. Mr. Wagoner.
Mr. Wagoner. Yes.
Mr. Dingell. Mr. Press.
Mr. Press. Definitely, yes.
Mr. Dingell. Mr. Mulally.
Mr. Mulally. Yes.
Mr. Dingell. Mr. LaSorda.
Mr. LaSorda. Absolutely.
Mr. Dingell. Gentlemen, now are you willing to work with
other sectors in the economy to assure that we produce an
effective regulatory regime that fairly distinguishes and
fairly distributes responsibilities and obligations to all
concerned? Mr. Gettelfinger.
Mr. Gettelfinger. Yes.
Mr. Dingell. Mr. Wagoner.
Mr. Wagoner. Yes.
Mr. Dingell. Mr. Press.
Mr. Press. Yes.
Mr. Dingell. Mr. Mulally.
Mr. Mulally. Yes.
Mr. Dingell. Mr. LaSorda.
Mr. LaSorda. Yes.
Mr. Dingell. Are you then willing gentlemen, to consider a
system that regulates the emissions of carbon dioxide from your
vehicles alone or in tandem with carbon content of the fuels?
Mr. Gettelfinger.
Mr. Gettelfinger. Yes.
Mr. Dingell. Mr. Wagoner.
Mr. Wagoner. Yes.
Mr. Dingell. Mr. Press.
Mr. Press. Yes.
Mr. Dingell. Mr. Mulally.
Mr. Mulally. Yes.
Mr. Dingell. Mr. LaSorda.
Mr. LaSorda. Yes.
Mr. Dingell. Gentlemen, I want to commend you for your
testimony. We have a difficult task here before this committee
and that is to write a good, responsible, and balanced piece of
legislation that will serve the broad public interest and
address the concerns that the Nation has and that other
countries have with regard to the questions of greenhouse gas
emissions and the risk that this contains with regard to the
world for climate change and with regard to global warming. I
think that we can assemble here in this committee members of
Congress who will be willing to work beyond the stalemate now
before us to achieve real results in the environmental work
that the American people want done today.
I hope that you will engage in that dialog and be a part of
the solution. Having worked with you before, I know that you
are and I want you to know that I appreciate that. I do observe
that inaction will not work and telling us what doesn't work is
useful but no longer sufficient. With that, gentlemen, so ends
my catechism, and I thank you for your presence and your
assistance to the committee.
Mr. Boucher. Thank you very much, Mr. Dingell. The
gentleman from Michigan, Mr. Upton, is recognized for 5
minutes.
Mr. Upton. Thank you, Mr. Chairman, and I want to associate
myself with a goal of what you indicated. My only question to
you is will it also slice bread?
Mr. Boucher. We are working on that, and we are going to
have a hearing on that subject.
Mr. Upton. I am sure that rises to the top. I want to say
that every American, we all want better fuel economy, and I say
that as a consumer and I say that as a family that is in the
market for a new vehicle as well. It is very important, and I
think for most consumers that is often a bottom line question
that they ask. As we struggle with this issue, I would be
interested to know one of two things, two things from each of
the companies represented here. One is how much is your company
this year spending on research and development on fuel economy?
I am not interested in other things that you are looking at but
just specifically on fuel economy and what that number would be
say over--the collective number of what that is say over the
last 5 or 10 years as well. Mr. Wagoner, a ballpark number.
Mr. Wagoner. Just to give you an idea, we recently approved
projects to convert our four- and five-speed transmissions to
six-speed transmissions to give you an idea. That is a $3
billion investment for us to do something to get you something
between 6 and 8 percent fuel economy.
Mr. Upton. Is that all being done this year?
Mr. Wagoner. It is being spread out over a period of years,
a period of 4 or 5 years, I guess. If you look at the
development of a fuel cell vehicle, that is going to cost well
in excess of a billion dollars to get the first product really
on the road. These are massive dollar commitments so I think
the response to your question if you consider it
comprehensively from the changes to conventional engines and
transmissions to pure R&D and fuel cell or ethanol type fuels
the investments are in billions of dollars on an annual basis
for our company, and I suspect our competitors, as well.
Mr. Upton. Mr. Press?
Mr. Press. Yes, I think, from our perspective, almost all
the dollars that we are spending in R&D, even the new products
we are introducing as an industry, have better mileage and our
focus is to have a better car with better mileage and still
provide good customer satisfaction.
We are currently spending about $11 billion a year, or $23
million a day on R&D through the broad range of projects. In
addition, we are working with fuel companies and other partners
to find solutions that will give us global application.
Virtually our whole R&D effort on new products is focused on
how we can improve fuel economy as well as other aspects of the
product.
Mr. Upton. Mr. Mulally.
Mr. Mulally. Yes. Over the last 5 years we spent
approximately $23 billion on product development, and the real
focus there of course are the capability of the vehicles and
the fuel efficiency and the safety to make innovations in each
of those areas.
Mr. Upton. Mr. LaSorda.
Mr. LaSorda. Well, every year on total product development
spending, I will start there just to give you a scale of size,
the Chrysler group alone spend $6 billion on total product
programs, and then if you add Mercedes and our commercial
vehicle division, we are over $9 to $10 billion. On the fuel
economy side, when you look at new diesels, the new world
engine that we put into the--in Michigan we built a new plant.
There will be new plants being built over the next 4 or 5
years. We will be spending in excess of $4 to $5 billion just
in these areas.
Mr. Upton. So you all are spending sizable sums every year.
I know when the administration announced as part of the State
of the Union address that they wanted to increase mileage by 4
percent every year beginning in 2010 for light trucks and 2012
for vehicles they asked for a 4 percent increase. If you were
able to make that target, how much more do you think you would
have to spend? I know Toyota makes that now but at some point
because in the out years it is 4 percent additional. The report
that I had heard was that you thought the response from most of
the industry was that it would be very challenging to make.
What additional dollars would that cost the industry? And I
want to ask one more question after this so if you can go
quickly, go ahead. Mr. Wagoner.
Mr. Wagoner. The administration's estimate for us was in
the $40 billion range. It is my assessment that that is low.
The number would be significantly higher than that.
Mr. Upton. Mr. Press.
Mr. Press. I think it is very difficult without knowing
more to get to a definitive answer but the reality is there may
not be enough money. We have to really take a look at what the
challenge is.
Mr. Mulally. I agree with the previous comments.
Mr. LaSorda. Similar to the group.
Mr. Upton. The three of you met with the President last
fall and you talked, as I recall, you talked about battery
research and development, and I think you had presented a
proposal to the President asking for a ramp up of Federal funds
of over $100 million per year through 2012. The President's
budget for 2008 was released a couple weeks ago. It didn't ask
for $100 million. It asked for $11 million. And I would be
interested to know what your reaction to that is. And it is in
this context, all of you are spending tremendous amounts of
money looking for research, as I look to what we want to get to
in terms of the final answer, I want the Government to be able
to in fact help you as we insist that you hit these targets. If
we do that, I want to make sure that we help you along that way
and at least on the surface of things as I look at this $11
million isn't anywhere close to where we ought to be as you
look at that final goal, but I would like you to say that, not
necessarily me. And I am saying that because I am 12 seconds in
arrears. Mr. Wagoner.
Mr. Wagoner. I fully agree with your assessment, and it is
a shame because these are high leverage opportunities, so we
will get a huge impact if we can get breakthroughs in fuel
cells and batteries, which we believe we can, so we are
disappointed at that number. It is way less than it should be.
Mr. Upton. Mr. Mulally.
Mr. Mulally. Agree.
Mr. LaSorda. Absolutely.
Mr. Upton. Thank you very much. I look forward to working
with you.
Mr. Boucher. Thank you, Mr. Upton. Mr. Markey from
Massachusetts is recognized for 5 minutes.
Mr. Markey. Thank you, Mr. Chairman, very much. Mr.
Mulally, you said that CAFE was not a success. You couldn't be
more wrong, Mr. Mulally. In 1970 we were importing about 20
percent of our oil. It has skyrocketed to 1977 to 46.5 percent
of our oil was imported. The Congress has passed a law, a law
that mandated that there was a doubling of the fuel economy
standards in the United States of America. Over the next
several years there was a decline to only 27 percent of our oil
being imported by 1985, 1986. CAFE was a huge success, Mr.
Mulally, and I think Ford deserves a lot of the credit for
making that work. I think you are making a mistake in taking
credit away from you and Chrysler and General Motors for the
job you did technologically.
But since 1986, Mr. Mulally, with no new improvements in
fuel economy we are now 60 percent dependent upon imported oil.
It has gone up, in other words, 33 percent in the last 20
years. That is a national security crisis. We have 135,000
young men and women over in the Middle East right now. There
are 20,000 more on the way as part of a surge. We cannot allow
that to continue to skyrocket as the auto industry continues
successful to block improvements in fuel economy standards. On
that second issue, the second issue is vehicle miles traveled
that Mr. Wagoner raised. On that issue, vehicle miles traveled
has increased consistently for the last 35 years. The only time
it went down in terms of our total oil consumption was during
the time that the fuel economy standards were hitting our
economy. That is when we broke the cycle because obviously
there are more people and more vehicles but with increased fuel
economy standard we actually imported less oil.
So this question of national security goes to the heart of
this debate and since we import 70 percent of our oil, 60
percent of our oil right now, we have got a crisis on our
hands. Are you saying that, Mr. Mulally, what Ford did back
then was not a success and that what we are asking for you to
do this time is impossible?
Mr. Mulally. I think that what we have done together to
improve fuel economy absolutely has been a success, absolutely.
Mr. Markey. You call CAFE a failure.
Mr. Mulally. My only thought about your second question is
that we are absolutely, all of us, committed to continuous
improvement of fuel efficiency. It is what the customers want,
it is the right thing for the environment, and it is absolutely
the right thing for national security and our reliance on oil.
So we are absolutely in agreement on the objective. I think----
Mr. Markey. Mr. LaSorda, do you think the CAFE was a
failure?
Mr. LaSorda. Well, when you take a look at the charts that
you showed, fuel prices skyrocketed in the 1970's and early
1980's. People consumed less energy and switched to other
segments and that is what happened as well as CAFE.
Mr. Markey. That is your answer. Do you think, Mr. Wagoner,
that CAFE was a failure?
Mr. Wagoner. Yes, sir. Against its stated goals of, and I
am quoting, ``reducing U.S. gasoline consumption and oil
imports'' it wasn't effective. I think for the reason Mr.
LaSorda mentioned, basically consumers make their choices very
heavily influenced by fuel price, so that is why in my
comments, Congressman, I specifically endorsed that the initial
ideas, the reasons behind the desired outcomes of the original
CAFE program are in fact excellent ones and suggest, I think,
very real approaches to move significantly in the right
direction to achieve those objectives.
Mr. Markey. I just can't believe the testimony I am
hearing. The charts demonstrate conclusively that the testimony
you are giving is completely wrong, and I don't know why you
are going to maintain that a drop from 46 percent imports to 27
percent imports at the same time that we have doubled our fuel
economy from 13 to 27 miles per gallon is not something that is
in direct correlation. I find your inability to at least take
credit for what you did so technologically to be troubling to
me. You did the job. America was benefited from that. What we
are asking for you now is to tell us what you can do
technologically going forward when it is hard to do that if you
continue to maintain that there was no success story for our
country from a national security perspective back in the
1980's. I thank you, Mr. Chairman.
Mr. Boucher. Thank you very much, Mr. Markey. The gentleman
from Illinois, Mr. Shimkus, is recognized for 6 minutes.
Mr. Shimkus. Thank you, Mr. Chairman. So much to ask, so
little time, but it is great to have you all here. In respect
to Mr. Markey's chart, I think there is one thing there was the
change in speed limits too that there was a major effect. And
coming from Illinois, I always hate the debate on Europe, let
me tell you, because I lived in Europe for 3 years. You can
drive across Europe in about 7 hours. You can't get through the
State of Illinois in 7 hours. So these comparisons with Europe
or Japan, if you want to talk about how long it takes to drive
across Japan, we are a big country that likes to go places and
we are going to drive those places.
And when this gets down to a local consumer level that is
going to be a big issue. First of all, a couple questions. Mr.
Gettelfinger, how many people do you represent?
Mr. Gettelfinger. I think active workers would be somewhere
in the neighborhood of 500,000.
Mr. Shimkus. Mr. Wagoner, how many do you employ?
Mr. Wagoner. Globally 285,000, in the U.S. about 125,000.
Mr. Shimkus. Yes, let us stay with the U.S. Mr. Press.
Mr. Press. In the United States we have 34,000.
Mr. Shimkus. Thirty-four thousand. Mr. Mulally.
Mr. Mulally. Approximately 100,000.
Mr. Shimkus. Thank you. Mr. LaSorda.
Mr. LaSorda. About 65,000.
Mr. Shimkus. How many of those have what you would consider
good paying jobs?
Mr. Gettelfinger. I would say they are good paying jobs.
Mr. Shimkus. You bargained for them, right? Go on down the
line, please.
Mr. Wagoner. I would say 100 percent are good paying jobs.
Mr. Press. Every one.
Mr. Mulally. Every one.
Mr. LaSorda. Every one, yes.
Mr. Shimkus. Health care benefits.
Mr. Gettelfinger. Very good.
Mr. Wagoner. Good.
Mr. Press. I think probably among the richest in the
country.
Mr. Mulally. Great.
Mr. LaSorda. Excellent.
Mr. Shimkus. Thank you. Thank you for providing our
constituents good paying jobs with health care benefits. We are
not here to be up on you. I am here to say thank you, and we
want to keep you a vibrant part of our economy. I have great
respect, and he knows this as the chairman of this committee,
and we want to make sure when he says he wants to bargain in
good faith and make sure that you are still a vibrant part of
our economy, I take him at his word. I am still a skeptic, but
I trust Mr. Boucher and hopefully we will do the least harm
through this process. I like Ranking Member Upton's also
questions on research and development because I was going to go
in that direction also.
How many of your R&D dollars, Mr. Gettelfinger, you don't
have to answer this, do not pay off, what percentage?
Mr. Wagoner. From GM's side we certainly don't bat about
1,000 on that. I think it depends a little bit how you cut it.
Mr. Shimkus. The bottom line is when you R&D there is
sometimes that it doesn't pay off and you have got millions of
dollars out there for no return.
Mr. Wagoner. Right, but what we try to do is the up front
R&D isn't the expensive part. It is bringing stuff into
production so we really try to look at a lot of options up
front so a lot of the real basic research frankly doesn't work
out. It is not huge dollars. The issue is picking the right
ones to get in production.
Mr. Shimkus. And if I can get everybody. Mr. Press.
Mr. Press. I would agree. The reality is we probably learn
from those failures too, and so it does move forward and the
dollars do help.
Mr. Shimkus. Mr. Mulally.
Mr. Mulally. I think a key element of your question is the
fact that we really do--we really cannot bet on what the single
one technology is going to be that is going to help us achieve
our mutual objectives, and so we have continued to invest in
multiple technologies because we know it is going to be a
basket of solutions which is another important piece, I think.
Mr. Shimkus. Thank you. Mr. LaSorda.
Mr. LaSorda. Congressman, when you take a look at what has
evolved in this industry, we have moved more to joint research
and development projects than doing them on our own as well
just to try to minimize risk and bring in more technical
science from the different companies. I stated earlier, our
hybrid technology is a joint venture with BMW, General Motors,
and Mercedes, and we have a fuel cell venture with Ford Motor
Company. You are going to see more and more of that because of
that very question you asked.
Mr. Shimkus. Thank you. I have had a chance to do--I am on
the hydrogen vehicles, the van that was out, and I can't
remember whose it was but it was $100 million. I tell kids
about this. I drove a hydrogen van. It had good pickup. We went
on the interstate and it is only at $100 million right now, the
cost to buy that van. So obviously we want to get there and it
costs a lot of money, and you ought to be congratulated for
that for the money that you are putting in right now. I am a
big flex fuel guy, you all know that. I had an Explorer,
Taurus, and now I have a Jeep Grand Cherokee, 22 filling
stations. What are you doing about the compression ratio so
that we get miles per gallon competitive with gasoline? Anyone?
Mr. Mulally. There is about a 20 percent drop off.
Mr. Wagoner. Yes, the energy density of ethanol is less so
the fact is there is always going to be some shortfall but we
have been working on the gasoline for 100 years and the ethanol
for a much shorter period of time. We will be able to improve
it.
Mr. Shimkus. And I am going to stop with you because it is
kind of the same answer, but as long as we have ethanol 85 at
20 cents, 30 cents less a gallon it is a wash and it works out
well for me. Mr. Press, flexible fuel, when are you guys going
to get on board?
Mr. Press. We have announced our first flex fuel vehicle
will be in 2009, and we are considering beyond that other
products in the future including hybrid flex fuel.
Mr. Shimkus. We went to welcome it to the community. You
can see now that everyone has embraced it. It has been a long
haul. We appreciate the leadership that the automobile
industry, especially Ford on the 85 corridor, which has been
great for Illinois and Missouri and it has helped push at the
retail level, and we have seen great success. My time has
expired. Thank you, Mr. Chairman.
Mr. Boucher. Thank you very much, Mr. Shimkus. The
gentleman from Pennsylvania, Mr. Doyle, is recognized for 5
minutes.
Mr. Doyle. Mr. Chairman, thank you, and you have set some
lofty goals for our committee. I want you to know that you have
my commitment that we are going to work together to achieve
those goals so I think we can do that. I want to share a lot of
what Mr. Dingell said. I think the way we are going to achieve
this is maybe thinking differently than how we thought about it
in the past, to start to think outside the box and it just
seems to me that the answer here is technology and initially
with hybrid and flex fuel vehicles eventually with fuel cells.
I want to commend Toyota. I have to tell you, I only buy
American cars but you are to be congratulated because you are
buying cars that Americans want to drive, and you are able to
meet standards that just aren't being met by some of your
competitors here in America, and you got six hybrid cars.
Now having said that, I have a Ford Escape hybrid, and I
bought one of the first ones off the line. I was glad to
finally see an American car company make one I could buy, and
you should be making more of them and Americans want to drive
these cars. And I want to tell you, I haven't done anything to
that Fort Escape hybrid but put gas in it and very little gas
in it, and it runs perfect and I have never had a problem with
it. And I just don't understand why you don't have a lot more
of these kinds of cars on the road. Americans do like to drive
them. And it is frustrating for those of us that want to see
American car manufacturers compete in this market that Toyota
and other companies like them seem to get what you guys haven't
got in the past and they are way ahead of you on some of this.
Having said that I think it is technology that is going to
do it, in fact, I think some people are concerned if we were to
raise CAFE standards annually by 4 percent that a lot of people
feel you may start pulling away from your research from the
next generation type of vehicles to focus more on how you can
improve the combustion engine to meet this 4 percent. I am
wondering how accurate you believe that kind of an argument is.
And what I really want to get to because we are talking about
solutions, not want doesn't work but what can work. What would
be the single most significant incentive that the Government
could provide through the tax code or any other thing to help
push this envelope of technology forward? What are the
obstacles in the law that you think need to be amended to
encourage more advances in the technology? And I am talking
about helping you to roll out and deploy these technologies
sooner rather than later.
We know hydrogen fuel cells are way down the road, but the
sooner we get there the better, and what can we do to encourage
more of these bridge technologies until we get the hydrogen,
what can we do to help you do that? And I will just let you
each take a turn, just go down the line.
Mr. Wagoner. Thank you. First of all, Congressman, I would
like to point out we at GM will have four hybrid vehicles
introduced this year. We introduced a couple last year, and we
will have 12 on the road in 2008 so we will be glad to be in
that game, and we share enthusiasm for the importance of
technology. If we could ask the Congress for three things I
think in the area of ethanol we need radically ramped up
distribution of ethanol, and it has been sticky. It has been
hard to break through, kind of 1,000 fueling stations out of
170,000 offering it, so any ideas or help on how to get all
these people who now bought the E-85 flex fuel capable vehicles
given the opportunity to use ethanol would be a huge help.
The second area, as was discussed by Congressman Upton,
advanced battery research. We see a battery that will work and
do a lot of the stuff that you are talking about down the road.
There is some work that still needs to be done and other
countries are moving much faster. And then, third, I would say
generally continuing incentives for consumers as the Congress
has passed in the area of hybrids to help defray the fact that
they do cost more at this stage are three things that I would
suggest.
Mr. Press. Thank you for that question. First of all, the
tax incentive really helps. You have to create the environment
for new technology. About 80 percent of the customers that buy
a hybrid buy it because of the fuel economy. The biggest reason
they choose not to buy a hybrid, about 45 percent, is the cost.
And the reality is if we get economies of scale we get lower
cost for our suppliers and we can increase the volume and
really bring the cost down substantially. And a lot of these
technologies are like the old batteries in our cell phones you
used to carry around on your shoulder. Now these new
technologies in hybrids are like a small cell phone. They are
getting miniaturized. The same thing for transitioning or
manufacturing costs to assist in domestic production of these
products. Any way to reduce the cost difference and improve
carbon-based fuel advantages and ethanol would be a very big
advantage.
Another key is education. We need to bring the consumers
into this to understand the scope of the problem and get them
to be part of the solution.
Mr. Mullaly. I would add especially on the hybrids the
available of batteries, which is our limiting factor right now.
And, for example, we don't have a domestic, a United States
source for the batteries in the hybrids.
Mr. Doyle. Where do you get them?
Mr. Mullaly. Right now we get them from Japan. And you
heard the collaboration that we all have going on on batteries,
not only today's batteries but also lithium ion batteries,
which clearly can be part of the future so getting an available
U.S. source will help us but we are actually committed to the
hybrid and the technology. Going back, I would like to just----
Mr. Boucher. Mr. Mulally, unfortunately the gentleman's
time has expired.
Mr. Doyle. That is exactly what I was going to say.
Mr. Boucher. Thank you very much, Mr. Doyle. The gentleman
from Michigan, Mr. Rogers, is recognized for 5 minutes.
Mr. Rogers. Thank you, Mr. Chairman. I had some great
advice from a member of this committee who is a long and
distinguished member here, Mr. Dingell, who told me when I
first got here when you are suppering with the devil make sure
you have a very long spoon, which is great advice, Mr. Dingell.
I appreciate it. I was a little surprised to hear you all
acquiesce so quickly to as it was termed a regulatory regime. I
own a small business and that scares me to death, just the
words in and of itself. And I sometimes wonder if we are not
coming at this thing a little bit backwards. Did anyone tell
you to get into the lithium battery business for research and
development? Did the Government tell you to do that? Did the
Government tell you to develop a flex fuel vehicle? Is there
any rule that you know of that that--anybody? No.
Did the Government tell you to work on hydrogen fuel
vehicles? Was there some Government mandate that told Chrysler
or Ford or Toyota that you are aware of? You did that on your
own, did you not? Why did you do that?
Mr. Wagoner. From our side, I think that consumer concerns
about environmental issues, the availability of energy, the
constant ups and downs in oil prices suggested to us that
eventually we were going to need to come up with a better
answer than the traditional one, so frankly having gone through
a lot of them that we knew were going to be higher cost and
require customer trade offs like our EV1 in California in the
mid-1990's, we said, hey, what is something that can really
work, and so we put a lot of efforts behind the couple areas
you mentioned.
Mr. Rogers. Wasn't the EV1 really in reaction to a mandate
in the State of California for 10 percent electric cars at that
time so you tried to fill that market void, didn't you?
Mr. Wagoner. Well, to be perfectly honest, I wasn't here at
the time so I can't give you the blow by blow but I can tell
you unfortunately that obviously from a business perspective
the battery technology wasn't ready so it didn't work. We
learned something from it but it didn't work.
Mr. Rogers. I guess my point here is that we all have
agreed, including all the companies here before us today, we
want to do something about CO\2\ emissions. That is a good
outcome. We want to do something about buying oil from
overseas. That is a good outcome if we can lessen our
dependency on foreign oil. You have taken steps because the
market is driving you that way already. You are investing
literally billions of dollars over the course of time into
these products. Back in World War II, we asked the car
companies to help us out to build tanks and artillery tubes,
and you all stepped up to the plate.
There is a place in my district where they went from
building trucks to artillery shells in 8 weeks to meet the
demand for World War II. That is pretty impressive. So my
argument is maybe instead of telling you and creating this big
government regulatory regime to try and mandate and tell you
exactly how to do it, won't you have to have people who are
trying to figure out what that regulatory scheme is and how
that fits into your development schedule and what that means
for projects that you will and will not work on, is that right?
I mean that is just the way it works now, does it not? Is that
correct? I don't want to put words in your mouth. Is that
right?
Mr. Wagoner. Yes.
Mr. Rogers. So what if we came up with a way to provide you
a different kind of incentive and say, listen, here is the
problem in America. We don't want to buy foreign oil anymore if
we can avoid it, and we want to cut our CO\2\ emissions. That
would be great. And we also want a car that somebody would put
in their driveway and want to buy, right? That would be really
good too, wouldn't it? So what if we let all the intellectual
capital that you all have come to those conclusions?
I am a big ethanol guy. I drive an ethanol vehicle. It is
great. I love it. It is like giving a good salute to Iranian
Ayatollah every time I step on the gas. I enjoy it a lot. Is
there a better way, can we provide capital in some way either
through the free market process that would allow you to spend
money on research and development and help us get out of this
problem and help you develop a car that Americans want to buy?
Mr. Wagoner?
Mr. Wagoner. Yes, I think so. I think the things we talked
about today to the extent that we can consent to production
distribution of ethanol the Government could play a big role in
helping to reduce the oil imports. Helping with battery
research would be a big help. I just want to comment,
Congressman Rogers, you talked about us sort of being willing
to be regulated. I think you know and everyone on the committee
knows, we have been heavily regulated under CAFE for 30 years
unlike a lot of other parts of the energy consuming economy in
the U.S., and our goal would be to have a--if we are going to
be regulated let us regulate in the direction that actually
solves the issues that are on the table which, as you
highlight, oil imports, emissions, things of that sort.
Mr. Rogers. Just quickly, if we came up with a Federal loan
guarantee that was very specific to research and development on
alternative fuels, and you decide what that is, you decide what
the market is, would you be interested in something like that
that allowed you to make those decisions and maybe reduced the
cost of your loan?
Mr. Wagoner. Sure, because our own situation is such that
our credit rating is low and while we have a lot of capital in
the business we need a lot of capital investment so anything
that could support in that direction would be appreciated.
Mr. Rogers. Mr. Mulally.
Mr. Mulally. Yes. That would be great.
Mr. LaSorda. Yes.
Mr. Boucher. Thank you very much, Mr. Rogers. The
gentlewoman from Wisconsin, Ms. Baldwin, is recognized for 5
minutes.
Ms. Baldwin. Thank you, Mr. Chairman. I mentioned in my
opening that the automobile sector is not only in the best
position to improve the fuel economy of its vehicles but also
to reduce the greenhouse gas emissions in the day-to-day
manufacturing operations, and manufacturing automobiles is
clearly an energy intensive enterprise. So as one of the
largest industries in the United States, you are in a position
to lead by example, and I wonder if you could each briefly
address the steps you are taking to increase energy efficiency
in your plants across the United States. I am hoping I will get
a chance for a second question so if you can briefly respond to
that, that would be great.
Mr. Wagoner. Yes. You are familiar, we have a plant in your
district, I think.
Ms. Baldwin. Just next door.
Mr. Wagoner. We put, let me say, a broad-based target
across all of our manufacturing facilities in North America. We
exceeded the target. We reduced 23 percent between 2000 and
2005. We set another target of 17 percent between 2006 and 2010
so we can have a 40 percent reduction over that time period,
and that we are employing every single imaginable thing you can
do from getting people to turn off lights to buying more energy
efficient equipment. You name it. It is micro stuff that adds
up to big numbers.
Ms. Baldwin. Mr. Press.
Mr. Press. Since 2000 we have had a 30 percent reduction
per vehicle produced. We have very aggressive plans going
forward on a preventive basis, and this goes all the way to
zero landfill. We just finished a new plant in San Antonio,
Texas where the energy cost per unit is about a third less than
anything we have ever built before in the new plant. New plants
allow us to do that and we will continue these efforts.
Ms. Baldwin. Mr. Mulally.
Mr. Mulally. We also have improved I think a little over 15
percent in the last few years, and we have a target to improve
each year continuously. And we also joined the Chicago Climate
Exchange where we can trade the carbon also. It is very
important to our business, and it is good business.
Ms. Baldwin. And this is also through multi-faceted
strategies or anything in particular to get that 15 percent?
Mr. Mulally. Just looking at every part of the operation on
generating and using power.
Ms. Baldwin. Mr. LaSorda.
Mr. LaSorda. Yes. Since 2002, our plants reduced about 20
percent. We used outside, experts as well in the energy
business who are running our power plants with us and it is a
mindset to get every employee--and, by the way, costs of energy
have gone up so much it is a natural fixed cost reduction. We
have to focus on taking it down. So it is combined, both.
Ms. Baldwin. Thank you. Mr. Wagoner, you noted the plant
that is just adjacent to my district in Jamesville. While the
plant is located just across the district border, I know that
many of the 2,600 employees who work in that plant are
constituents of mine and we are very proud of the work that
they do, which includes producing about half of GM's 400,000 E-
85 flex fuel vehicles in 2006. I want to touch on just a little
more detail on what Mr. Doyle raised in his questioning about
the challenges faced by owners of flex fuel vehicles in terms
of the fueling stations that have been slow to get behind the
growth of the availability of these vehicles, and what steps
are GM and the other automotive manufacturers doing to
encourage the development of the infrastructure for delivery of
E-85 to the consumer. Are you working with the oil companies?
Are you working with the industry and what steps should you be
taking, what steps should we be taking to move this forward?
Mr. Wagoner. Excellent question because it has perplexed us
to a certain extent. We have worked with several of the oil
companies. I think to be honest our biggest success has been
working with some of the so-called big box retailers, Meijers,
for example, and working with them on specific programs to
convert some of their fueling pumps over to ethanol. It is a
slow process. We are talking with some of the other major
retailers to do the same. And I think it is critical that we
get over this because eventually people are going to either not
use the E-85 capability or lose interest in this great
opportunity that we have if we are not able to push that more
aggressively.
I know there are incentives to offer current gas station
operators, tax credit to convert. I don't know if the level of
that is adequate to actually induce people to do so.
Mr. Mulally. I might just add to Rick's comment that it is
really tough for us to help move that infrastructure along as
you know because we are not in that business, but we will
continue to go out of our way to make sure that everybody knows
the value of the alternative fuels and the benefit to all of
us. And as far as the business proposition that they are
dealing with, I think some encouragement and some help and some
incentives to put in that infrastructure is absolutely going to
be needed.
Ms. Baldwin. One last comment. I understand anecdotally
that many people who are purchasers of flex fuel vehicles may
not be aware of that attribute so in terms of your education,
consumer education of the consumer to make them demand this
service of their local fuel stations is certainly a helpful
component.
Mr. Boucher. Thank you very much, Ms. Baldwin. The
gentleman from Oklahoma, Mr. Sullivan, for 6 minutes.
Mr. Sullivan. Thank you, Mr. Chairman. I would like to
thank all the panelists for being here today. I know that you
face a lot of challenging times right now in the auto industry,
and I think you are doing a good job. I think you will get
through it all because you guys are bright men, you got good
teams. I think that the innovation and the technology is very
exciting. Mr. Wagoner, I bought a Suburban, one of those flex
fuels, I haven't been able to put ethanol in it though in
Oklahoma. I can't find a place to put ethanol in it. I would
have to drive to Kansas, I think, to do it, but I might do that
some day.
But one of the neatest things, one of the technological
features of it I think that is pretty cool is it operates on a
V4 to V8, and that is a neat technology too that saves a lot of
fuel. I love that. I think too I would like to refer to my
colleague from Michigan, what he said, is that you are doing
these things already. You are getting into this. No one is
making you do it. It is really kind of you have a constituency
of a market like we have a constituency of voters. We like to
do what they want because we want to get reelected. You want to
do what you want to do so you can sell more cars.
I think if people wanted purple cars you would probably
make those if you saw in your data that they wanted them. And
so I think it is really market driven. You guys are doing a
good job in that, and the technology is really neat and I
commend you for it. But I would like to refer to another issue
that no one has really talked about, and it is about safety.
And when you achieve the technology to get to certain arbitrary
standards that some people over here might want to do, you
would have to maybe downsize in weight and other maybe
aerodynamics and things that might jeopardize safety. And I
just want to ask could automobile or highway safety be
jeopardized if the Congress decides to set these arbitrary cap
A levels and the companies have to consider downsizing or down
weighting vehicles in order to produce a fleet of vehicles that
will comply?
Mr. Wagoner. History would suggest that, yes, that is a
risk. We obviously do everything we can to mitigate that risk.
We have added a lot of safety equipment on vehicles but I think
the historical data speaks for itself that it does bring that
risk along with it.
Mr. Press. I may have a little different viewpoint from the
standpoint that technology may allow you to achieve safety and
emissions improvements, like a hybrid system applied to a
vehicle but it is an extra cost and it does take extra
engineering. It depends and it has to be carefully considered
when any rule is made the impact it would have on safety and
then how we execute it. It has to be open and available so we
can maintain safety and reduce the fuel consumption.
Mr. Mulally. Clearly, it is absolutely a key component and
one reason we have been very supportive of NHTSA doing that
evaluation and helping us get the maximum feasible levels is
that they take into account the technology, he economics of
doing it, and the safety. I think that has served us very well,
especially the last program was a light truck program. It took
into account all those considerations because there are real
issues. They are doing a good job at it.
Mr. LaSorda. When we design a car, we start with obviously
something the consumer wants, and then we want to make it safe
because they need to be safe. Of course, the fuel economy, the
aero, these are all factors that we take into consideration
almost 4 years in advance before it hits the road. Some people
think we can make a car in a couple of months. These take a lot
of time and a lot of effort including new technology on
materials that could be used for safety and fuel economy for
weight reduction.
Mr. Sullivan. Don't you think that engineers and others are
more suited to make these decisions than career politicians,
and probably better than us as well. OK. Also, another thing I
would like to focus on is these batteries. I think that is a
very neat innovation. I am interested in hearing more about
that. It means battery advancements that may be--advancements
that may be needed to allow your companies to consider
producing plug in hybrid vehicles, what more do we need to
learn to have usable battery packs, and how soon do you think
we might be able to get there where you see them all over the
place, and the batteries are smaller and weigh less and cost
effective.
Mr. Wagoner. The challenge is--I mean the chemistry is
focused in on this so-called lithium ion model for batteries.
It has been very successful in smaller applications. There is
actually a company in California that is going to be offering
in the next couple of years the opportunity to buy a vehicle
that is powered by these small batteries. The problem is there
is like 6,900 of them to power the car, so that is as you can
imagine pretty expensive. So what we need to do is find a way
to be able to get a more efficient application of this battery
technology. How fast can that be done, I can't give you an
answer for sure but I think if we get on it and put all our
muscle behind it, it is more like a 5-year time frame than a
25-year time frame. It is something that we made a huge amount
of progress in this battery technology in 5 years, and we are
using the technology and your cell phone or whatever, so there
is a lot of hope that we can scale that up and get the cost
down.
Mr. Press. Obviously, the battery is a limiting factor
right now. If you took a Prius and made it a plug-in vehicle,
the trunk would literally be full of batteries due to the
technology, but that doesn't mean that in the future that we
won't be able to achieve a great deal of reduction in cost and
weight and efficiency and safety of batteries. These are issues
we are all working on very diligently at this time. In terms of
the time, it really depends on how this whole process plays out
and the kind of support there is and the focus and the amount
of energy required from an electrical vehicle perspective. If
that is stimulated then it becomes faster.
Mr. Boucher. Thank you, Mr. Sullivan. The gentleman's time
has expired.
Mr. Sullivan. Thank you very much.
Mr. Boucher. The Chair now recognizes the gentleman from
Texas, Mr. Burgess, for 6 minutes.
Mr. Burgess. Thank you, Mr. Chairman. I want to thank the
panel. This has been a very informative afternoon. I really
enjoyed all of the testimony. You have heard from every person
up here who drives a hybrid and who drives a flex fuel vehicle.
I drive a hybrid. I believe in the technology. But, Mr. Press,
I have to ask you, someone I think mentioned that we can't
predict the time line or the duration of the technology or how
quickly the technology can come to market. You have had the
hybrid in process for 10 years, did you tell us, and 10 years
ago did people think they had to hit a home run with that?
Mr. Press. Ten years ago when we introduced the Prius, gas
was $1 a gallon, and it was a long range project. We really
wanted to start learning and getting some experience from it.
What has happened is we have advanced much quicker than we
thought. We have been able to bring a second generation and
soon a third generation version which has lower weight, lower
cost, and a lot more performance, and it has progressed quite
well.
Mr. Burgess. But at some point in the future we know that
the price of oil is cyclical and we may again see oil come down
dramatically from where it is today. Do you see that as
impacting your business model with the future changes to the
hybrid?
Mr. Press. From the standpoint of the market if you
considered creating demand and sow into the market, no. We need
to start marketing the products. We have to make hybrids
attractive. We have to make them cost effective and make sure
that there is an education of what the advantages are, and we
and we can help create a mainstream hybrid market and that is--
--
Mr. Burgess. Can I just interrupt for a minute because we
got this vote, how long did it take you to develop that
technology when you made the commitment that we were going to
do this? How long did that go from bench to the assembly line?
Mr. Press. The development of the program itself was about
a 7-year project where we got into production. The concept of a
hybrid though goes all the way back to the 1900's and this
technology we have been working on for a very long time.
Mr. Burgess. That 7-year interval, was any of that research
and development funded by the Government?
Mr. Press. No, sir.
Mr. Burgess. So that was all just done under your own
initiative?
Mr. Press. Yes.
Mr. Burgess. And I appreciate you doing it. Mr. Mulally, I
actually too was waiting for a Ford Escape hybrid but you only
sold them on the east and west coast, and being in middle
America I had to rely on Mr. Press for a hybrid, but it serves
a purpose. It gives me a good deal of moral superiority when I
drive, and I like that.
Now, unfortunately Mr. Markey is gone with his charts. When
I take a look back to the 1970's and a mental image of the CAFE
standards, and what I envision is the Yugo, and I really don't
want to see us go back there. I guess, Mr. Gettelfinger, at the
time I left, I am most concerned about the constituency that
you represent. These other fine gentlemen are all going to be
OK one way or the other regardless of whether it is corn or
whether it is hybrid or electricity or lightning bolts. They
are going to be OK.
But the constituency that you represent is probably more at
risk when you hear, and everyone is gone from the other side,
but we heard terms like a 80 percent reduction in carbon
emissions by 2050. Does that startle you when you hear talk
like that?
Mr. Gettelfinger. Well, not necessarily because if you look
back over time and then move forward to today there has been a
lot of change in the industry. What is of concern though is a
loss of jobs in this country.
Mr. Burgess. Absolutely. And you have already heard that
the batteries are only made in Japan.
Mr. Gettelfinger. That is correct. And that is the one
difference I have here with Mr. Wagoner a while ago on the
consumer credit because what we are really doing is we are
subsidizing then the product that is made overseas. And as
everybody here has testified, if you take one of these products
that has got the power train brought in from Japan you drop the
content of that vehicle from perhaps 80 percent down to 55. And
so, yes, that is a concern, and we tried to address that in our
testimony because we are losing a lot of jobs in this country
and we are not replacing them either.
Mr. Burgess. Correct, and if I may, when you couple that
with the fact that the wages are good, the health benefits are
significant, and the retirement benefits are significant, and a
lot of that can be overcome by outsourcing overseas that is of
concern to me because you individually represent a constituency
that is as large as all of the other gentlemen at the table
combined if I did my math right as we were going through the
employment numbers. And I just wonder if we have talked about
people thinking outside the box. I just wonder if you should be
thinking of using the power or equity that you have in
collective bargaining to work with your partners to your left
at the table there to insure that they do.
Don't rely on us. You see how we are going to fight about
CAFE standards. Don't rely on us to do that job for you. I
would say it is incumbent upon the union to use their power or
collective bargaining to go to General Motors, to go to Ford,
and see what can be achieved together to make these products
deliverable and achievable within our natural life time because
there is a very popular television show that begins in about an
hour that talks about the war on the middle class, and I would
submit to you that the CAFE standards and that the carbon
tailpipe emission standards may well represent the new war on
the middle class, and unfortunately it will be your
constituency that suffers the greatest.
Mr. Gettelfinger. It would depend on how it is designed and
put into place. But again everybody at this table, NUMMI, the
GM-Toyota joint venture and with all these folks here at the
table that are represented here, we work with the companies. In
fact, we go through presentations like with Mr. Wagoner, we
just had a presentation on what they are doing as far as
advance technology vehicles, Mr. Mulally, as well as Mr.
LaSorda, so we do try to stay on top of that. Because in the
final analysis everybody to my left is in good shape
financially. If the jobs go away the impact on the community or
whatever they are going to be all right. But we deal with the
day-to-day worlds of the people that have lost their jobs and
they have got nowhere to go. And so we do have a very big
interest in that, and that is why we have pointed out the
University of Michigan study that said as far as advanced
technology vehicles, we should give incentives to everybody
here to produce those products in this country, but also to
help move the needle forward quicker as far as technology goes
by incentivizing.
Mr. Burgess. And I couldn't agree with you more. I know the
committee will work with you. I would just say you can't tell
when a carbon monoxide molecule comes out of the tailpipe
whether it originated from fossil fuel or part of the carbon
cycle for corn but every one of those carbon dioxide molecules
has a union label on it. Thank you, Mr. Chairman, I will yield
back.
Mr. Boucher. Thank you. The gentleman's time has expired. I
am pleased to recognize now the ranking member of our
subcommittee, the gentleman from Illinois, Mr. Hastert.
Mr. Hastert. I thank the chairman. The energy policy act
that we passed at the last Congress among other things
encourages the development and use of E-85 fuel. Exploiting
America's domestic agriculture resource to achieve energy
security and provide jobs for Americans, I think is of utmost
national importance. Mr. Wagoner, what is General Motors doing
to promote the use of E-85 flex fuel vehicles?
Mr. Wagoner. First and foremost, Congressman, we are
obviously radically expanding the number of vehicles and the
types of vehicles we offer this option on, first and foremost.
Second of all, we are spending a lot of money educating
consumers about it. We have run a big marketing campaign, Live
Green, Go Yellow. We have actually put different color gas caps
on our E-85 vehicles so people are reminded every time they go
to a fuel station that they have the capability to use flex
fuel. And finally I was mentioning earlier that we worked with
some of the big retailers to encourage, help them offer ethanol
distribution, which I think is at this particular moment having
adequate stations for consumers to use on a convenient basis is
probably the biggest bottleneck we see in the system although
there could be others.
Mr. Hastert. As you know, there is somebody that got their
fingers around the hose and the stopping ability--you know, if
you build automobiles that is fine. People buy them and expect
to be able to use E-85 but if you have to drive 40 or 50 miles
to get the fuel that is a difficult situation to be able to
crack. Underwriter Laboratories, UL, has been working to
certify E-85 fuel dispensers since last summer. This is just to
certify. In the meantime, big box retailers as you say are
delaying the roll out of additional E-85 pumps around the
country pending UL certification.
This represents thousands of refueling stations across the
country. How does this impact the sale of flex fuel vehicles,
and is your company working with UL to try to expedite this
process?
Mr. Wagoner. I am aware of one very specific large case
where that is exactly the issue that you cite that we could
significantly increase the number of fueling stations but they
don't want to proceed this retailer unless there is
clarification of this issue. It is a liability issue. So we are
frankly continuing to produce and continuing to talk about the
benefits of flex fuel but behind the scenes obviously our own
people in R&D have offered to and to the best of my knowledge
are continuing to work with UL to understand what the issues
are that are leading them to withhold that approval, and we
continue to be available to try to work through those. We
obviously have a lot of experience in this in places like
Brazil so we know it can work.
Mr. Hastert. The U.S. Air Force uses it. The military uses
it. Brazil has used it. I don't know what the hang up is, and
we have used E-85 in engines for a long time. As a matter of
fact, Mr. Mulally, I have been told that UL doesn't even have
enough information about the effects of E-85 on fuel tanks and
pumps. I think the original Model T was capable of running on
ethanol, is that correct?
Mr. Mulally. Absolutely, because Henry Ford also cared
about farming too and so he was the first one--actually the
first Model T ran on ethanol. They had a long time to take a
look at it.
Mr. Hastert. Mr. Mulally, I assume that before your company
began producing flex fuel vehicles you did significant testing
on the effects of E-85 on fuel tanks and other components
within the car, I assume, is that correct?
Mr. Mulally. Absolutely.
Mr. Hastert. Have you shared this data with UL?
Mr. Mulally. Maybe I better get back to you on that
specifically. I am sure we have because we have been like all
of us a real proponent of moving towards flex vehicles.
Mr. Hastert. Well, I am reminded that we have a vote that
we have to get to. I really appreciate this panel. I am sorry
that I got pulled off on another meeting for part of your
testimony. You are a major producer of what Americans are proud
of and use every day. The automobile is part of our way of
life. We need to know how to adapt it and what we have to do to
meet requirements and make, quite frankly, our environment
healthier. But there are ways to do it. We appreciate your
testimony and look forward to working with you. Thank you very
much.
Mr. Boucher. Thank you very much, Mr. Hastert. The
gentleman from Mississippi has arrived, and, Mr. Pickering, we
have 2 minutes left to cast our votes on the floor. However, I
note that 348 Members have not voted yet so I have a feeling
that this one is going to remain open for a little while, but I
would ask the gentleman to be as expeditious as he can with his
5 minutes of questions.
Mr. Pickering. Mr. Chairman, I will be very brief, and I
will use my time basically just to make a few comments and so
then we can adjourn and end this good day. But I thank all the
leaders of the American automotive industry and manufacturers.
And I want to personally welcome Mr. Press with Toyota. He is
now our Tupelo honey. The birthplace of Elvis Presley will now
be the birthplace of many cars, we hope, flex fuel cars, new
hybrid cars, fuel cell cars. And the American spirit and the
American car go together. It does represent and symbolize
freedom.
I do not think mandates, CAFE mandates, are the best way to
go. I think research and opportunities develop technological
solutions and incentives for people to find a way to solve our
problems on security, on fuel independence, and on
environmental issues is the best way. I appreciate what you all
are doing and look forward to working with you as we go forward
in this process.
Mr. Boucher. Thank you very much, Mr. Pickering. I want to
express appreciation on behalf of the committee to all of our
witnesses. You have spent a long afternoon with us today. I
know each of you is very busy, and we do appreciate your time
and the very valuable information that you have shared with us.
I also want to say thank you for your commitment to work with
us as we undertake the major challenge of drafting a greenhouse
gas emission bill. We will be consulting closely with you and
those with whom you work, and we very much appreciate your
cooperation. That being said, the hearing stands adjourned.
[Whereupon, at 4:50 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Statement of Thomas W. LaSorda
Mr. Chairman and Members of the Committee, thank you for
inviting me to testify before you on the subject of climate
change. DaimlerChrysler is committed to developing new,
advanced technologies, which minimize the effects our products
and processes have on global climate and the environment in
general. We recognize that climate change and national security
are serious concerns that require all of us--individuals,
industry and government--to take actions to help reduce our
dependence on oil and emissions of CO\2\. And, we have already
taken actions to do so.
DaimlerChrysler has long been committed to reducing
petroleum consumption and emissions of greenhouse gases of its
motor vehicles.
We have produced more than 1.5 million flexible
fuel vehicles (FFVs)--vehicles capable of running on E-85--in
spite of the limited availability of E85 fuel to consumers.
That is more than 10 percent of our production over the past
nine years, a higher percentage than any other manufacturer. We
stand ready to make, by 2012, 50 percent of our production as
either FFVs or vehicles capable of running on biodiesel.
DaimlerChrysler offers seven clean-diesel models
this year--providing improved fuel economy of 30 percent and
greenhouse gas reductions of 20 percent. As we announced at the
Washington Auto Show in January, our new heavy-duty Dodge Ram
diesel meets the stringent, 50-state, 2010 emission standards
TODAY. And, we are actively pushing for the adoption of a
national standard for B20 biodiesel fuel to speed its adoption
in the marketplace.
We are partners in a global alliance in hybrid
development with GM and BMW in developing a new hybrid system
that we expect will leapfrog the competition. The first
Chrysler Group product--the Dodge Durango--will be on sale in
2008.
DaimlerChrysler is a leader in producing hybrid
diesel-electric buses through our Orion transit bus brand. We
also have the only demonstration fleet of plug-in hybrids in
service--our Dodge Sprinter vans.
As you may not know, we are the world's leader in
fuel cell vehicle production, with more than 100 vehicles--
ranging from small passenger cars to city transit buses--in
worldwide operation today. Thirty-two of these are in the U.S.
We are putting significant resources into developing these new
types of propulsion with the objective of significantly
reducing greenhouse gases.
And we continue to put advanced technology into
our gasoline engine vehicles. Last year we introduced a new
World Engine for our 4-cylinder cars and trucks, along with a
new fuel-efficient continuously variable transmission.
Just last month we announced a $3 billion
powertrain investment. This investment will include the
development and production of:
A significantly more fuel efficient V-6 engine
family; and
New cutting-edge transmissions that improve fuel
economy by an additional 5-10 percent alone.
Plus, we will double the production capacity of
our 30 plus mpg 4-cylinder engine plant in Michigan to 840,000
units per year.
All in all, these investments will further secure
tens of thousands of U.S. jobs associated with the engineering
and manufacturing of the vehicles that will benefit from these
new technologies.
We're also addressing our product mix. Earlier
this year, we announced a 40-plus mpg ``Smart'' city car that
will arrive in the U.S. early next year.
I've focused on what we are doing, from a technology
perspective, to reduce petroleum consumption--and, since they
are directly related, greenhouse gases. But I need to mention
one more item in this vein. For those who advocate 4 percent
annual CAFE increases over the next 10 years--which translates
to a 50 percent fuel economy increase--we know how to do that,
too.
In fact, we already do it--in Europe. The U.S. combined
fleet averages 24-25 mpg, and in Europe the fleet averages 36
mpg. That's a 50 percent difference.
Why is there a huge disparity between our fleets there and
here? After all, we are the same companies in Europe that we
are in the U.S., with access to similar technologies. The
difference is the European approach to energy and greenhouse
gas policies. They've made some tough political choices.
They've highly taxed gasoline, making the price three times
higher than in the U.S., and they have incentives on diesel
fuel. As a result of these policies, fuel economy is always
high on a customer's list, and not just when there's a spike in
fuel prices.
Through policies which affect consumer demand, the mix of
vehicles sold in Europe is radically different than here--about
60 percent compacts or smaller, compared to about 15 percent
here; and about 50 percent of passenger vehicles are diesel
powered.
There's no magic at work here. A gas-engine mid-size car in
Europe gets the same mileage as a gas-engine mid-size car in
the U.S. It's just that customers demand a very different mix
of vehicles in Europe.
The European model, while far from perfect, is based on
policies that leverage demand and market forces, not on
policies that fight them.
However, in the U.S., our policies have historically
addressed the supply side--light-duty vehicle fuel-economy
standards. But, consider how a 50-percent fuel-economy
improvement relates to new vehicle technology alone. If all the
new vehicles sold in the U.S. 10 years from now were hybrids or
diesels--something that no one really believes is feasible--
fuel economy would improve by only 25-30 percent.
U.S. policymakers must adopt a new and unique formula that
fits here. DaimlerChrysler supports a three-pronged,
comprehensive approach to climate change and energy security;
one that includes a combination of:
vehicle efficiency improvements;
the expanded use of alternative fuels--such as
ethanol and biodiesel; and,
the harnessing of market forces to help drive
consumer demand.
We all need to be very clear on one point--new vehicle
efficiency improvements alone will never result in the overall
decline in petroleum consumption and greenhouse gas emissions
we need. The demand for fuel will continue to grow, as more
drivers enter the market and vehicles are driven longer
distances.
There are more than 230 million light-duty vehicles
currently in use today in the U.S. which travel nearly 3
trillion miles. That is nearly 13,000 miles traveled by each
vehicle, each year--an increase of about 30 percent since 1985.
Thus, greenhouse gases and the demand for petroleum will not be
offset by only addressing efficiency improvements among the 16-
17 million new vehicles that enter the U.S. market each year.
In order to decrease total greenhouse gas emissions and
petroleum consumption, we need to accelerate the adoption of
alternative fuels such as E85 and bio-diesel, which will affect
a greater proportion of the population of light duty vehicles.
And by the way, while travel is growing in the U.S., it
will grow exponentially as China and India increase the global
automotive market dramatically. The combined Indian and Chinese
existing car fleet will almost triple during the next 10 years
to about 90 million vehicles, while the U.S. fleet is forecast
to grow 25 percent.
To address this increase in demand, we need a comprehensive
approach that addresses energy use and greenhouse gas emissions
from all sectors of the U.S. economy, and encourages the most
efficient reductions in energy use. Our approach should not
just address the supply of energy-efficient products, but also
spur demand for them, while establishing reasonable time-tables
for compliance and realistic levels of reductions.
Although it should go without saying, I'll say it anyway:
This effort needs to be national in scope. We need to avoid an
unacceptable and inefficient patchwork of inconsistent Federal,
State, and local approaches. In fact, to truly be effective in
curbing greenhouse gases, we need a global solution.
On the vehicle efficiency side, we at DaimlerChrysler
recognize the need for action. And we're taking it. Every day,
our engineers are working to reduce greenhouse gases and
petroleum consumption. We absolutely will be part of the
solution and we will accelerate our efforts. We also support
reforming the CAFE program to base it on vehicle attributes and
pledge to continue to work with NHTSA to establish maximum
feasible levels of fuel economy--levels that are based on sound
science and that recognize the limits of technology, cost, and
consumer demand.
But again, if we intend to make meaningful progress in
reducing petroleum consumption in this country, in addition to
vehicle technology improvements, we look to the Federal
Government to establish policies that address consumer demand
and bend the bias of transportation fuels toward lower carbon
alternatives.
Thank you and I look forward to answering your questions.
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