Pollution Politics
Detroit and California feud over air rules
If California Gov. Arnold Schwarzenegger's Hummer gets regulated out of existence, he'll have his own administration to thank.
Most Americans have never heard of the California Air Resources Board, which regulates air quality in the Golden State. But a recent rule passed by the board, known as CARB, could become the biggest test of America's dedication to large, powerful vehicles since the oil embargo of the 1970s. The new rule would require automakers to phase in major improvements in gas mileage for vehicles sold in California, which in effect would extend to the whole country, given the state's marketplace heft. The potential ramifications are so dramatic that earlier this month, a coalition of foreign and domestic automakers sued to block the change. "It could be a watershed case," predicts David Cole of the Center for Automotive Research in Ann Arbor, Mich. "We're talking about billions of dollars."
Reducing CO2. The new rules don't directly dictate mileage standards. Instead, they require vehicles sold in California to gradually emit less pollutants. They include carbon dioxide--one of the greenhouse gases that contribute to global warming--with a 30 percent reduction due by 2016. But that's essentially a backdoor way of dictating a 30 percent improvement in fuel economy. Since a gallon of gas emits the same amount of CO (2) no matter what, there's only one way to reduce tailpipe emissions: Get more miles out of that gallon and burn less fuel overall.
Despite efficient new vehicles like the Toyota Prius and other gasoline-electric hybrids, a major uptick in the overall fuel efficiency of the U.S. fleet is a tall order. The automakers have met most of California's other emissions rules by carefully tuning the same cars sold elsewhere or by strapping on filters or other gizmos. But cars can't be retrofitted for higher mileage. They have to be designed and built from scratch. "It's technically possible" to do that, says Dieter Zetsche, CEO of Chrysler. But the tradeoffs, he predicts, would be dire: Carmakers would have to strip off features like air conditioning and power windows, or shrink cars to the puny size of those sold in Europe, where gasoline is far more expensive. The cost to consumers could range from about $1,000 per vehicle--CARB's estimate--to more than $3,000 per car, the auto industry's claim.
Despite the cost, any direct payback to Californians will be hard to measure. Carbon dioxide is not a pollutant per se, and it doesn't cause smog. Like other greenhouse gases, it drifts high into the ozone layer, where it is trapped and warms the atmosphere. Only about one third of the world's CO (2) emissions come from cars, and just 3 percent of the world's cars are sold in the Golden State. "You can save all the CO (2) you want in California," gripes an industry lobbyist, "and it's not going to matter in California."
Hybrids. CARB's chairman, a bespectacled chemist named Alan Lloyd, is unapologetic. "It's very appropriate for California to set the lead on greenhouse gases," he says. Even though CARB has enacted the toughest emissions rules in the nation--to deal with California's famed smog--the industry has come up with solutions virtually every time, he notes. The recent announcement that General Motors and DaimlerChrysler are teaming up to develop advanced hybrids may be another such crash course in environmentally friendly technology. And the new rule, Lloyd points out, was required by 2002 legislation supported both by Democrat Gray Davis, then the governor, and by Schwarzenegger, a Republican.
Such broad-based support could signal trouble for the automakers--even though their case against CARB is considered strong. In their legal pleadings, industry lawyers plan to argue that CARB is exceeding its authority by regulating gas mileage, which is a federal prerogative. But at some point, public opinion might outweigh legal ones. "We may not want to face down the governor," confides one exec. He predicts CARB may try to cut a side deal with one of the "doves" in the industry--Toyota or Ford, both of which already offer hybrids--that could weaken the leverage of other manufacturers like GM, Chrysler, and Nissan. And even if the automakers prevail, other environmental speed bumps await them. "CARB's pressure underscores an unstoppable trend toward higher fuel economy and lower emissions," says Merrill Lynch auto analyst John Casesa. The Governator's Hummer might be endangered no matter what.
This story appears in the December 27, 2004 print edition of U.S. News & World Report.
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