The Other Bail-Out

While all eyes were fixed on the banking bail-out, a bucketload of publicmoney was quietly sloshed into the pockets of another undeserving cause. Lastweek, George Bush agreed to lend $25bn to US car manufacturers. It’s a softloan, which will cost the government $7.5bn(1). Few people noticed; fewer foughtit. The House of Representatives approved the measure by 370 votes to 58. Thegreat corporate bail-out is spreading like the plague.

It has already crossed the Atlantic. Yesterday European car makers demanded thatthe EU hand them E40bn ($54bn) in cheap loans to match the US subsidy(2). Wherewill the public spending spree end?

The motor companies in both Europe and the US claim they need these loans tohelp them go green. They will invest the money in a new generation ofenvironmental technologies, which will allow them to meet the efficiencystandards their governments are setting. There is more joy in heaven over onesinner who repents … but how strange this green enthusiasm seems, now thatthere’s the smell of public money in the air. For the past ten years the carmanufacturers have driven every useful green initiative into the wall.

In 1998 European car makers promised to show that they could cut theirgreenhouse gases voluntarily. By the end of 2008, they pledged, they wouldreduce the average emissions produced by their cars from 190 grams of carbondioxide per kilometre to 140. How well have they done? By the end of last yearthey had cut average pollution to 158g/km across Europe(3) and 165g/km in theUK(4): they will miss their target by some 40%.

Discerning, only ten years too late, that lobby groups’ promises are worth asmuch as a share in Lehman Brothers, in 2006 the European Commission announcedthat it would set compulsory standards: by 2012 all manufacturers would have toreduce their average CO2 emissions to 120g/km. It looked like progress, untilyou remembered that 120g was the target proposed by the EU in 1994, to be met by2005(5). It was repeatedly delayed by industry lobbying.

Last year the 2012 target fell to the same forces. Angela Merkel, lobbying onbehalf of companies like DaimlerChrysler and BMW, demanded that the EuropeanCommission put the brakes on(6,7). (Ironically it was Merkel, as the idealisticyoung German environment minister, who first proposed the target of 120g by2005(8).) The commission agreed to revise the figure to 130g, and to cover thegap by raising the contribution from biofuels. Since then we’ve seen hardevidence that most biofuels, as well as spreading starvation, produce moregreenhouse gases than petrol(9,10,11), but the policy remains unchanged.

Now the pollutocrats are whinging that they can’t meet the 130g target either.A month ago they persuaded the European Parliament’s industry committee totake up their case: it proposed postponing the target until 2015, reducing thefines if they don’t comply and allowing manufacturers to offseteco-innovations against the target even if these don’t actually reduceemissions(12). These invertebrates, in other words, proposed to grant officialapproval to industry greenwash. Fortunately this scam was rejected two weeks agoby the parliament’s environment committee(13).

In the US, manufacturers have still not reached the standard (an average of 27.5miles per gallon) that they were supposed to have met, under the Energy PolicyConservation Act, by 1985(14). The average car sold in the States today is lessefficient than the 1908 Model T Ford(15,16).

What makes this dithering so frustrating is that to be talking, in 2008, abouttargets of 130 or 120g/km is a bit like discussing whether modern computersshould have ten rows of sliding beads or 100. In 1974 a stripped-down 1959 OpelT-1 managed 377 miles to the US gallon (160km/l)(17), which equates to 15 gramsof CO2 per kilometre(18). There is no technical reason why the maximum limit formass-produced cars shouldn’t be 50g/km.

Nor is there a good commercial reason. A poll by the Newspaper Marketing Agencyshows that 80% of car buyers say economy is now more important to them thanperformance(19). The car industry’s technological failure results entirelyfrom lobbying by the companies now demanding public money to go green. They wantto squeeze every last drop from existing technologies before switching to bettermodels.

Their sabotage of green technology has been both subtle and comprehensive. Thefilm Who Killed The Electric Car? shows how the manufacturers, working with oilcompanies and corrupt officials, sank California’s attempt to change vehicletechnologies(20). Having bumped off battery power, they persuaded the federalgovernment to pour money instead into hydrogen vehicles, aware that thetechnological hurdles are so high that a cheap, mass-produced model might neverbe possible. Electric cars, by contrast, have been ready for the mass market foralmost a century. The $1.2bn that the US government is spending on research anddevelopment for hydrogen cars(21) - like the E2bn pledged to the same quest bythe European Union(22,23) - is a subsidy for avoiding technological change.

Now, after so much procrastination, the car makers have the flaming cheek todemand public money to pursue the policies they have spent fifty years andmillions of dollars crushing. Of course, the "green loans" they aresoliciting are nothing of the kind. Funding better environmental performance issimply an excuse for bailing out another failing industry. As a result of thecredit crunch and high oil prices, new car registrations in the UK fell by 21%last month(24). In the US, sales by the major manufacturers have declined thisyear by between 20 and 35%(25).

There is no need to spend a penny of public money on greening the motorindustry. As a recent report by the House of Commons environmental auditcommittee shows, you could achieve the same outcome by creating a biggerdifferential between vehicle tax bands: it proposes that people buying the leastefficient cars should pay around £2000 more per year than those buying the mostefficient(26). This would kill the market for gas guzzlers and force theindustry to make the changes it has long resisted.

But the government has taken all the flak a good tax policy would have generatedfor very little gain. Its controversial new vehicle tax banding will save a mere0.16 million tonnes of CO2 per year(27): a drop in the acidifying ocean. Atscarcely greater political cost it could have hammered emissions and generatedmuch of the money it needs to revolutionise public transport. Again there hasbeen a historical slide: between 1920 and 1948 cars were taxed at £1 perhorsepower(28): in real terms (and in some cases in nominal terms(29)) a farhigher rate for gas guzzlers than today’s.

But subsidies are what governments pay when regulation doesn’t happen. If youdon’t have the guts to force companies to do something, you must bribe theminstead. It’s a fair guess that European car makers will still fail to meettheir environmental targets, even if they get the money they’re demanding. Thegreenest thing governments could do is to allow these foot-dragging,planet-eating spongers to go under.

www.monbiot.com

References:

1. Bernard Simon, 25th September 2008. House clears $25bn for carmakers. FinancialTimes.

2. ACEA (the European Automobile Manufacturers Association), 6th October 2008.European auto industry calls on EU to help sustain changeover to low-emissioncar fleet. 

3. European Federation for Transport and Environment, August 2008. ReducingCO2 Emissions from New Cars: A Study of Major Car Manufacturers’ Progress in2007.

4. Low Carbon Vehicle Partnership, 18th March 2008. AverageUK new car CO2 emissions fell 1.4% in 2007. 

5. European Federation for Transport and Environment, 26th August 2008. BMWleaps ahead on new car CO2 emissions, others still stalling.

6. George Parker and Andrew Bounds, 31st January 2007. Brussels climbdown on caremissions. Financial Times.

7. European Commission, 7th February 2007. Commission plans legislativeframework to ensure the EU meets its target for cutting CO2 emissions from cars.Pressrelease. 

8. European Federation for Transport and Environment, 26th August 2008, ibid.

9. Joseph Fargione, Jason Hill, David Tilman, Stephen Polasky, Peter Hawthorne,7th February 2008. Land Clearing and the Biofuel Carbon Debt. Science. Doi10.1126/science.1152747.

10. Timothy Searchinger, Ralph Heimlich, R. A. Houghton, Fengxia Dong, AmaniElobeid, Jacinto Fabiosa, Simla Tokgoz, Dermot Hayes, Tun-Hsiang Yu, 7thFebruary 2008. Use of U.S. Croplands for Biofuels Increases Greenhouse GasesThrough Emissions from Land Use Change . Science. Doi 10.1126/science.1151861.

11. PJ Crutzen, AR Mosier, KA Smith and W Winiwarter, 1 August 2007. N2O releasefrom agro-biofuel production negates global warming reduction by replacingfossil fuels. AtmosphericChemistry and Physics Discussions 7, pp11191–11205. 

12. European Federation for Transport and Environment, 16th September 2008. MEPs’call for ‘phased’ CO2 limits amounts to a postponement, IEEP study shows.

13. European Federation for Transport and Environment, 25th September 2008. MEPsstand up for fuel-efficient cars.

14. Kathy Gill, 28th April 2006. CAFE (Fuel Efficiency) Standardsfor Passenger Cars and Light Trucks. 

15. The estimatedaverage fuel efficiency for cars, including SUVs and pickups, in the US in2008 is 20.8 mpg. 

16. In 1908 the Ford Model T ran at 25mpg. Detroit News, 4th June 2003, cited byWantto Know, 11th July 2005. 

17. See http://www.treehugger.com

18. According to Audi, 100km/lequates to 23.8gCO2/km.

19. Low Carbon Vehicle Partnership, 27th September 2008. Surveyshows more buyers want low emission cars.

20. http://www.whokilledtheelectriccar.com/

21. Office of Science and Technology Policy, Executive Office of the President,no date given. Hydrogen Fuel Initiative. Researchand Development Funding in the President’s 2007 Budget.

22. No author, 16th August 2003. The clean green energy dream. New Scientist:Energy Special – Hydrogen.

23. The allocation for the current Framework Programme is E470m. European Union,10th October 2007. The Fuel Cells and Hydrogen Joint Technology
Initiative. Pressrelease. 

24. BBC Online, 6th October 2008. Newcar registrations fall by 21%. 

25. Suzy Jagger, 2nd October 2008. US carmakers forced to wait for $25bn‘green’ loan. The Times.

26. House of Commons Environmental Audit Committee, 4th August 2008. VehicleExcise Duty as an environmental tax. 

27. ibid.

28. ibid.

29. Thetop standard rate of vehicle excise duty from 2010 will be £455. TheMercedes-Benz SL is 604hp; the Lamborghini Murcielago is 640.