Unambitious Targets

In the last week or so, the administration has come out with two energy-related plans that merit a few comments here. President Bush's proposal to halt the growth of US greenhouse gas emissions by 2025 has generally been greeted as too little, too late, particularly overseas. With the Intergovernmental Panel on Climate Change having called in their latest report for significant global cuts in emissions by mid-century, a freeze within 20 years seems a slow start, at best, particularly since Mr. Bush's approach would concentrate on a few sectors, rather than the entire economy. But has anyone noticed that US emissions have already ceased growing? Similarly, the implementation plans for the higher Corporate Average Fuel Economy standard that came out of the 2007 Energy Bill, and which the Secretary of Transportation called "historically ambitious" look less so, when compared to the fuel economy of the current new car fleet.

US emissions of the greenhouse gases (GHGs) implicated in climate change have grown significantly over the last couple of decades. Compared to the Kyoto Protocol's baseline year of 1990, we now emit 14% more. Yet from 2001 to 2006, net US emissions--sources minus sinks--have been essentially flat. Slight rises in 2004 and 2005 were offset by a drop in 2006, leaving us with a net of 6.17 billion metric tons per year of CO2-equivalent emissions. That's still too much, but it's a far cry from the projections of a 35% increase over 1990 levels that I used to see when I tracked this issue for Texaco. And while the EPA hasn't reported 2007 data yet, it's hard to imagine that they would reflect much of a jump, given the increases in energy prices we saw last year. So if US emissions have already stalled, and high energy prices appear likely to keep a lid on them for at least the next year or two, then the prospect of beginning to reduce them seems much more realistic than if they were still growing by 1-2% per year. What could we accomplish by 2025, from our actual starting point of a five-year plateau? I'm not sure, but that seems like a better question to be asking, than how to keep them flat for another 17 years.

Turning to CAFE, the proposed timetable for implementing the 35 mpg standard that was signed into law last December would raise the overall fuel economy of the new car fleet, including SUVs, to 27.8 mpg by the 2011 model year and to 31.6 mpg by 2015. In particular, the average for new passenger cars would have to rise from the current 27.5 mpg annual target to 31.2 mpg by 2011 and to 35.7 by 2015. That sounds quite aggressive, until you realize that the data from the National Highway Traffic Safety Administration, under whose authority the CAFE program falls, show that the 2007 model average passenger car fleet already gets 31.3 mpg. For that matter, based on the sales mix reflected in NHSTA's January 2008 CAFE report, the combined 2007 new car fleet delivered an average of 27.2 mpg. With SUV sales having fallen back below 50% from their 2004 high of 53%, it's a reasonable bet that the shifting sales mix alone would allow the fleet to achieve the 2011 goal without any changes in vehicle performance. In that context, the 2015 milestone goal of 31.6 mpg overall looks more like a 2% per year average improvement over the next seven model years, rather than the 4.5% cited by Secretary Peters.

The conservatism embodied in the new CAFE timeline is at least more understandable than that for GHGs. Designing more efficient car models won't be accomplished overnight, and then factories must be retooled to build them. A standard that pushed too hard at the front end would merely result in larger fines for manufacturers, or a bigger shift to imports. What is less understandable is the hoopla the timeline has generated. Perhaps this is aimed at shaping the expectations of consumers. After all, unless they alter their buying habits to prefer higher fuel economy to ever-higher horsepower, CAFE will merely be an accounting system with a relatively weak enforcement mechanism, rather than a serious means of reducing the annual fuel consumption of America's 240 million automobiles.