While all eyes were fixed on the banking bailout, a bucketload of public money was quietly sloshed into the pockets of another undeserving cause. Last week, US President George W. Bush agreed to lend US$25 billion to US car manufacturers. It’s a soft loan, which will cost the government US$7.5 billion. Few people noticed; fewer fought it. The House of Representatives approved the measure by 370 votes to 58. The great corporate bailout is spreading like the plague.
It has already crossed the Atlantic. On Monday, European carmakers demanded that the EU hand them 40 billion euros (US$55 billion) in cheap loans to match the US subsidy. Where will the public spending spree end?
The motor companies in both Europe and the US claim they need these loans to help them go green. They will invest the money in a new generation of environmental technologies, which will allow them to meet the efficiency standards their governments are setting. There is more joy in heaven over one sinner who repents ... but how strange this green enthusiasm seems, now that there’s the smell of public money in the air. For the past 10 years the car manufacturers have driven every useful green initiative into the wall.
ILLUSTRATION: MOUNTAIN PEOPLE
In 1998 European carmakers promised to show that they could cut their greenhouse gases voluntarily. By the end of this year, they pledged, they would reduce the average emissions produced by their cars from 190g of carbon dioxide per kilometer to 140g.
How well have they done? By the end of last year they had cut average pollution to 158g per kilometer across Europe and 165g kilometer in the UK: they will miss their target by some 40 percent.
Discerning, only 10 years too late, that lobby groups’ promises are worth as much as a share in Lehman Brothers, in 2006 the European Commission announced that it would set compulsory standards: By 2012 all manufacturers would have to reduce their average carbon dioxide emissions to 120g per kilometer. It looked like progress, until you remembered that 120g was the target proposed by the EU in 1994, to be met by 2005. It was repeatedly delayed by industry lobbying.
Last year the 2012 target fell to the same forces. German Chancellor Angela Merkel, lobbying on behalf of companies such as DaimlerChrysler and BMW, demanded that the European Commission put the brakes on. (Ironically it was Merkel, as the idealistic young German environment minister, who had first proposed the target of 120g per kilometer by 2005.) The commission agreed to revise the figure to 130g, and to cover the gap by raising the contribution from biofuels. Since then we’ve seen hard evidence that most biofuels, as well as spreading starvation, produce more greenhouse gases than gasoline; but the policy remains unchanged.
Now the pollutocrats are whining that they can’t meet the 130g target either. A month ago they persuaded the European Parliament’s industry committee to take up their case: It proposed postponing the target until 2015, reducing the fines if they don’t comply, and allowing manufacturers to offset eco-innovations against the target even if these don’t actually reduce emissions. These invertebrates, in other words, proposed to grant official approval to industry greenwash. Fortunately this scam was rejected two weeks ago by the parliament’s environment committee.
In the US, manufacturers have still not reached the standard average of 12km per liter that they were supposed to have met, under the Energy Policy Conservation Act, by 1985. The average car sold in the US today is less efficient than the 1908 Model T Ford.
What makes this dithering so frustrating is that to be talking now about targets of 130g or 120g per kilogram is a bit like discussing whether modern computers should have 10 rows of sliding beads or 100. In 1974 a stripped-down 1959 Opel T-1 managed 160km per liter, which equates to 15g of carbon dioxide per kilometer.
There is no technical reason why the maximum limit for mass-produced cars shouldn’t be 50g per kilometer. Nor is there a good commercial reason.
A poll by the Newspaper Marketing Agency shows that 80 percent of car buyers say economy is now more important to them than performance. The car industry’s technological failure results entirely from lobbying by the companies now demanding public money to go green. They want to squeeze every last drop from existing technologies before switching to better models.
Their sabotage of green technology has been both subtle and comprehensive. The film Who Killed The Electric Car? shows how the manufacturers, working with oil companies and corrupt officials, sank California’s attempt to change vehicle technologies. Having bumped off battery power, they persuaded the federal government to pour money instead into hydrogen vehicles, aware that the technological hurdles are so high that a cheap, mass-produced model might never be possible. Electric cars, by contrast, have been ready for the mass market for almost a century.
The US$1.2 billion that the US government is spending on research and development for hydrogen cars — like the 2 billion euros pledged to the same quest by the EU — is a subsidy for avoiding technological change.
Now, after so much procrastination, the carmakers have the flaming cheek to demand public money to pursue the policies they have spent 50 years and millions of dollars crushing. Of course, the “green loans” they are soliciting are nothing of the kind. Funding better environmental performance is simply an excuse for bailing out another failing industry. As a result of the credit crunch and high oil prices, new car registrations in the UK fell by 21 percent last month. In the US, sales by the major manufacturers have declined this year by between 20 percent and 35 percent.
There is no need to spend a penny of public money on greening the motor industry. As a recent report by the House of Commons environmental audit committee shows, you could achieve the same outcome by creating a bigger differential between vehicle tax bands: it proposes that people buying the least efficient cars should pay around £2,000 (US$3,460) more per year than those buying the most efficient. This would kill the market for gas guzzlers and force the industry to make the changes it has long resisted.
But the government has taken all the flak a good tax policy would have generated for very little gain. Its controversial new vehicle tax banding will save a mere 0.16 million tonnes of carbon dioxide per year: a drop in the acidifying ocean. At scarcely greater political cost it could have hammered emissions and generated much of the money it needs to revolutionize public transport. Again there has been a great historical slide: between 1920 and 1948 cars were taxed at P1 per horsepower: in real terms (and in some cases in nominal terms) a far higher rate for gas guzzlers than today’s.
But subsidies are what governments pay when regulation doesn’t happen. If you don’t have the guts to force companies to do something, you must bribe them instead. It’s a fair guess that European carmakers will still fail to meet their environmental targets, even if they get the money they’re demanding. The greenest thing governments could do is to allow these foot-dragging, planet-eating spongers to go under.
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