Who will buy this stuff?"
President Bill Clinton's quip at a recent White House Conference on Global Warming referring to ultra fuel-efficient cars under development by the Partnership for New Generation Vehicles (PNGV) sums up one of the basic fears automakers have about global warming talks.
The PNGV project is an industry-government partnership fueled not by consumer demand, but government environmental altruism and future regulatory pressure.
If the U.S. takes a leadership role this winter in agreeing to limit emissions of carbon dioxide (CO2) to fight the still-nebulous specter of global warming that industry and labor fear, it will give developing nations an economic advantage through lower pollution-control costs.
And if, as feared, the U.S. uses regulations like the Corporate Average Fuel Economy (CAFE) rules to fight the war against warming, automakers will be under even stronger pressure to develop vehicles that no one wants to buy.
It's likely no accident that the anticipated "son-of-Expedition" Chevy Suburban beater from Ford Motor Co. is expected to weigh in excess of 8,500 lbs. (3,860 kg). At that size, the truck can avoid CAFE requirements and has to meet less-stringent emission requirements.
Ever larger trucks are hardly the goal of current U.S. automotive policy, but when the U.S. market is hungry for ever-beefier sport-brutes and consumers barely bat an eye at the current crop of fuel-efficient cars, automakers are caught in a regulatory/market demand suicide squeeze.
Already it appears automakers will have trouble continuing to meet truck CAFE fuel economy limits and still satisfy the truck appetite. Tighter standards to control global warming likely would mean compliance nightmares and millions in fines - or the costly production of alternative fuel vehicles that the automakers give away at a loss to gain regulatory blessings.
Chrysler Corp. and Ford both will build more than 100,000 vehicles for '98 that can burn both gasoline and an alternative fuel. The automakers will swallow most of the costs for the bi-fuel systems but in exchange gain some credits to help them gain CAFE graces even if motorists never put a drop of alternative fuel in the vehicles. Exploiting loopholes and adding weight to trucks are hardly the most cost-effective ways to meet policy goals.
But the alternative, a sustained and ongoing hike in fuel taxes, seems politically unlikely.
Executives in both domestic and transplant automakers have called for gas taxes, but lobbyists admit they aren't spending much money pushing the idea in the glaring reality of the 1998 Congressional elections and voter anti-tax sentiment.
So the burning question is what will Mr. Clinton do when he meets with world leaders this December in Kyoto, Japan, to discuss a global warming treaty? A preliminary meeting in Bonn, Germany, in late October likely cleared up some of the questions, but Mr. Clinton has appeared to change his mind several times on the issue, so nothing is certain.
While it's not likely Mr. Clinton will go as far as binding the U.S. to reduce CO2 emissions 10%-15% below 1990 levels as some groups have called for, the latest expectations at press time were that he would entertain a plan to reduce greenhouse gases to equal 1990 levels by 2010.
European nations are calling for aggressive reductions as high as 15% from 1990 levels and even Japan, the host nation, is calling for some retreat from 1990 levels. Japan is seen as in a difficult position, wanting to save face by ensuring that some sort of an agreement is reached in Kyoto.
But with the treaty expected to exempt developing nations, it will face a tough road in the U.S. on both sides of the political aisle. Republicans oppose the agreement on behalf of industry, and many of Mr. Clinton's fellow Democrats are equally vitriolic on behalf of labor. The U.S. Senate already overwhelmingly approved a non-binding motion opposing any global warming treaty that doesn't include developing nations.
Expectations within the auto industry are mixed.
A substantive agreement isn't likely because the parties are so far apart, says Gregory J. Dana, vice president and technical director of the Association of International Automobile Manufacturers. Mr. Dana was among nearly 100 emissions experts gathered recently at a Corporate Future Group conference in Atlanta, GA.
Europe, developing nations, Japan and even various groups within the U.S. government are coming at the issue from widely divergent viewpoints just a few months before a major summit. "These things usually are worked out well in advance and then just approved at the final meeting. It seems likely there's not enough momentum to carry this through right now," he says.
A survey of 24 conference attendees, while hardly scientific, found only 16.7% of the emissions leaders and regulators expect a binding, short-term agreement by 2010 to come out of Kyoto. In fact, 62.5% say they would be more likely to expect a non-binding agreement with future talks, and only 20.8% predict even a binding agreement with long-term goals beyond 2010.
Mr. Dana says it would be folly to compare the Kyoto meeting to the Montreal gathering that resulted in a global agreement to ban ozone-damaging compounds.
In that case there was more of a consensus that an ozone hole existed and a much closer agreement on how to deal with it.
So how is global warming different?
About the only point of agreement is that there is more CO2 in the atmosphere now than in the past century and human activities will increase the levels even more if not controlled.
The impact of the increased CO2 remains a point of bitter contention.
The majority of the scientific community accepts global warming as a concept. Greenhouse gasses like CO2 and water vapor trap sunlight reflected off the Earth's surface and send it back as heat. The more greenhouse gases, the larger the heating impact. Since greenhouse gases can last as long as 200 years in the atmosphere, today's decisions will be with us for a while.
But how much CO2 is enough to matter still hangs in the scientific balance.
Scientists who support Mr. Clinton's call for global warming controls claim clear evidence that the planet has heated up nearly 1ŸF during the industrial revolution because of human activities and will heat up more if the emissions are not controlled.
Significant warming could melt ice caps, erode coastal areas and alter weather patterns, potentially causing famine and disease and other worldwide problems.
But opponents counter that recent satellite data suggests the warming trends might be the result of unreliable ground readings, not actual temperature increases. U.S. industry would rather wait until the data are clearer and then rely on more advanced future technology to deal with the issue if necessary.
On one side are the folks who bristle that anyone would take any action that could hurt the U.S. financially before we really know what's going on, says James K. Hammitt, associate professor in the Department of Health Policy and Management Center for Risk Analysis.
But the other side counters with an equally reasonable question of how we dare emit any more of the chemicals if it might be capable of killing us, he says.
Such extreme positions are typical of such regulatory/scientific disputes where the risk is murky, Mr. Hammitt says. In most cases, neither extreme action nor inaction is the best course.
"We make decisions all the time in uncertainty. Probability and severity are both considered," he says, pointing to the choice to wear a seatbelt while driving, but not crash helmets.
A middle-road response to global warming, taking less drastic and less expensive interim steps while better scientific consensus is formed on the issue and then following up with aggressive steps later, if necessary, when technological advances will make the measure cheaper, Mr. Hammitt says.
The ammunition for caution has been coming rapid-fire from economists over the last few years.
The barrage of studies also suggest significant job losses and a resulting $240 billion in increased trade deficits as jobs shift to developing nations without greenhouse restrictions.
But Mr. Hammitt cautions against too much stock in gloom and doom predictions that rely on economic models that may be no more reliable than the models used to predict global warming.
When the U.S. decided to limit sulfur dioxide emissions, industry sources suggested it would cost $400-$600 a ton to control SO2. The actual figures are tracking at about $65-$95 a ton as the program is enforced, he says.
But even with the uncertainty, Mr. Clinton has backed himself into a corner, to some degree, and has to do something in Kyoto, says Charles B. Kitz, director of Environmental and Energy Planning for Chrysler.
And while Clinton Administration officials have privately assured automakers they aren't discussing CAFE as a way to meet greenhouse gas requirements, Mr. Kitz says that's likely only because they really haven't discussed any of the options seriously.
"They're not going to tick off the public with rationing. They aren't going to go for a gas tax. CAFE looks more and more likely in that scenario," he says.
Meanwhile the greenhouse-friendly, fuel-efficient small cars gather cobwebs in dealer showrooms as Ford struggles to meet demand for hulking Expeditions and Navigators. And around the corner, gas prices in the U.S. continue to fall.
