Monday, September 27, 2004

California Dreaming?
Friday's papers carried the news that California's Air Resources Board had approved rules to reduce the emissions of greenhouse gases from cars sold in the state by 2016. While this doesn't come as a surprise, it will have serious implications for the global auto industry and be hotly contested. As I've indicated previously (see my posting of 6/14/04) I think that state-by-state responses are the wrong way to respond to climate change, but I suppose they are a logical consequence of the administration's unwillingness to move ahead nationally on this issue.

It is also perplexing that the state would have set an easier standard for SUVs than cars, since the potential savings in the former is so much greater. Reductions in SUV emissions should also be easier to achieve, since they offer more scope for weight reduction, smaller engines and improvements in four- and all-wheel-drive transmissions, as well as higher technology approaches such as hybridization. Some of these changes might also begin to address these vehicles' disproportionate collision hazard, which has forced some passenger car makers to invest in costly countermeasures.

Right, wrong or indifferent, the auto industry will have to develop plans to meet this challenge, even as they gear up to fight it. California constitutes 10% of the US car market, and though carmakers have been producing separate California and 49-state models for years, changes in California affect the entire industry. In addition, a number of other states have taken to following California's regulatory framework, and this influence has spread abroad, too, to places like Korea.

The best outcome would be a set of EPA guidelines that gave states some leeway within a defined range of greenhouse gas reductions but provided the auto industry with clarity and reduced uncertainty about the targets it must meet. The worst outcome would mirror the current situation on the fuel side, where a Balkan complexity of state regulations has made a hash of the highly efficient and resilient gasoline distribution system.

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