Thursday, June 7, 2007

Detroit's carmakers expect fuel rule boost

They hope CAFE increases are responsible


(DENNIS COOK/Associated Press)

Chrysler Group CEO Tom LaSorda, left, Ford CEO Alan Mulally, leaning forward, and General Motors Chairman and CEO Rick Wagoner discuss problems facing the auto industry Wednesday in Washington, D.C. They declined to back a particular fuel economy proposal.

WASHINGTON -- Detroit automakers reluctantly accepted the likelihood of higher federal fuel economy standards from Congress this year but declined to endorse a specific proposal Wednesday, saying any increase should be responsible.

General Motors Corp. Chairman and Chief Executive Rick Wagoner and Ford Motor Co. Chief Executive Alan Mulally said any increase in the federal Corporate Average Fuel Economy system should come only as part of a package of incentives for alternative fuels and other technologies that stood a better chance of reducing U.S. consumption of gasoline.

With some lawmakers in both chambers calling for even tougher standards than those under consideration, industry executives emphasized they were committed to making more efficient vehicles regardless of the debate's outcome, but didn't want to be hit with goals that could add sizable costs to vehicles they already struggle to make profits on.

"My sense is there will be increases in CAFE," Wagoner said after a summit on problems facing domestic automakers sponsored by Michigan Sen. Debbie Stabenow for her Democratic colleagues. "We hope there are responsible levels that don't disadvantage the domestic industry."

The debate has only intensified as Senate Democrats plan to bring a proposal to the Senate floor as soon as Friday that would require new vehicles to average 35 miles per gallon by 2020, a target the entire industry has called unworkable. Proposals backed by Michigan lawmakers in the House and Senate would set a standard of 36 m.p.g. for cars and 30 m.p.g. for trucks over a longer time frame, or roughly 32.5 m.p.g. overall.

But House Speaker Nancy Pelosi, D-Calif., said late Tuesday she would oppose a draft bill from Rep. John Dingell's House Energy and Commerce Committee that, in addition to setting the lower fuel economy standards, would bar the U.S. Environmental Protection Agency, California and other states from regulating the fuel efficiency of cars and trucks.

Neither Wagoner nor Mulally would explicitly endorse the 36 and 30 target, but both, along with Chrysler Group Chief Executive Tom LaSorda, told lawmakers they wanted to have a voice in the debate rather than oppose any proposed increase.

"We want to get to a reasonable plan going forward, one that makes progress that's doable," Mulally said after a meeting in the Senate. The 36 and 30 target is "really, really a stretch."

The three executives spent much of the day meeting House and Senate leaders from both parties, along with Michigan's congressional delegation, with fuel economy dominating the talks. LaSorda left the summit early because of illness and wasn't available to comment on fuel economy.

While the Senate Democratic bill contains some provisions the industry supports, the alternatives would go much further, from requiring more ethanol-capable vehicles and alternative-fuel filling stations to setting up grant programs for converting old factories.

Wagoner told the dozen Senate Democrats at the summit that if all automakers followed the pledge of Detroit's companies to make half of their new models ethanol-capable by 2012, the country could eventually save 37 billion gallons of gasoline a year -- about four times more fuel than the Senate CAFE proposal.

A couple of senators pressed the executives to support higher standards, with Sen. Byron Dorgan, D-N.D., saying the industry had "lost the issue." Senate Majority Leader Harry Reid of Nevada said he believed the auto industry was supportive of an increase in fuel economy standards.

"Whether it's enough, we'll find out, but at least it's a start," Reid said.

Michigan Sen. Carl Levin said several senators were working on an alternative to the Senate proposal that would likely be introduced next week. The 36 and 30 target in the alternatives "is a stretch, but something that we may have to go with," but a 35 m.p.g. combined standard "is not achievable."

The debate will shift today to the House, where a subcommittee of Dingell's House Energy and Commerce panel will take testimony on its draft. Pelosi's opposition reflects the intensity of California officials who have been fighting with the industry since 2003 to regulate fuel economy as part of their battle against greenhouse gas emissions.

A U.S. Supreme Court ruling in April gave the EPA that power, and California officials are pressing for a waiver from the agency that would let their efforts proceed.

"Any proposal that affects California's landmark efforts to reduce greenhouse gas emissions or eliminate the EPA's authority to regulate greenhouse gas emissions will not have my support," Pelosi said in a statement.

The two clashed earlier this year over Pelosi's move to launch a separate environmental committee, and Dingell has fiercely guarded the bill-writing power of his committee. Dingell -- who wrote both the federal fuel economy and clean air laws in the 1970s -- said while he would work with Pelosi to address her concerns about the draft, the recent Supreme Court ruling allowing the EPA to set fuel economy standards threatened to create a morass of regulation that would choke off the auto industry.

"My question is: Do you want to produce cars? Do you want to have jobs?" Dingell said after a meeting with the auto executives.

"We are returning ... to a system that will work rather than a lot of enthusiasts running around and creating problems."

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