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A legacy deal for President Obama

A legacy deal for President Obama
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First Published: Sun, Dec 04 2011. 10 48 PM IST

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File photo
Updated: Sun, Dec 04 2011. 10 48 PM IST
In many ways, US President Barack Obama has been a disappointment on energy and the environment. He has been completely missing in action on the climate debate. His decision to block his own Environmental Protection Agency (EPA) from setting new rules to cut smog levels was disappointing. And, while I believe in using the balance sheet of the US government to spur clean-tech research and start-ups, Solyndra was a case of embarrassing excess—precisely what happens when you rely too much on government push, not consumer pull, spurred by price and regulatory signals.
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But, for me, all is forgiven—because Obama came through big-time last month. He backed his EPA administrator Lisa Jackson and department of transportation secretary Ray LaHood in producing a deal with all the top US-based auto makers that will go into effect in 2017 and require annual mileage improvement of 5% for cars, and a little less for light trucks and sports utility vehicles, until 2025—when US auto makers will have to reach a total fleet average of 54.5 miles per gallon (mpg). The current average is 27.5 mpg. This deal will help US cars and trucks approach the mileage levels of Europe and Japan and spur innovation in power trains, aerodynamics, batteries, electric cars and steel and aluminium that will make cars lighter.
EPA and the transportation department estimate that these new innovations will gradually add about $2,000 to the cost of an average vehicle by 2025 and will save more than $6,000 in petrol purchases over the life of that car—savings that will go into the rest of the economy. The new vehicles sold over the life of the programme—including its first phase between 2012 and 2016—are expected to save a total of four billion barrels of oil and prevent 2 billion tonnes of greenhouse gas pollution.
This is a big deal—a legacy deal for Obama that will make a significant, long-term contribution to America’s energy, environmental, health and national security agendas.
The compromise was worked out between EPA and the transportation department with General Motors, Ford, Chrysler, Toyota, Honda, Nissan, BMW and six other major car companies. It was announced on 16 November and came about largely because once the Supreme Court ruled that carbon dioxide was a pollutant—and once California made clear that it and several other states were going to impose their own improved auto emission standards, if the federal government didn’t—the major auto companies saw the handwriting on the wall and entered into talks with the Obama administration on a deal that will transform the industry.
The Global Automakers trade association, which endorsed the deal because it gives the industry long-term regulatory certainty to do research and invest, called the Obama plan a “comprehensive and harmonized national approach to reducing greenhouse gas emissions and improve fuel economy...while providing manufacturers the needed flexibility and lead time to design and build advanced technology vehicles.”
Naturally, the EPA-haters hate the deal. They focus on the increase in vehicle costs that will phase in over 13 years—and ignore the net savings to consumers, plus the national security, innovation, jobs, climate and health benefits. These critics are the same “conservatives for Opec”who, after Congress agreed in 1975 on a 10-year programme to raise the fleet average mileage of US cars from 15 mpg to 27.5 mpg, got together not only to halt mileage improvements in US vehicles during the Reagan administration, but also to roll them back. This helped to drastically slow US auto mileage innovation and ultimately helped to bankrupt the US auto industry and make sure the US remained addicted to oil.
Of course, today’s GOP, whose energy policy was best described by Lisa Jackson as “too dirty to fail”—i.e., we can’t close any polluting power plants or impose cleaner air rules as it might cost jobs—is fighting a last-ditch effort to scuttle the deal. Representative Darrell Issa of California and chairman of the House oversight committee, is leading the charge to kill it. What a thing to be proud of.
2011/The New York Times
Thomas L. Friedman is a columnist for The New York Times
Edited excerpts. Comments are welcome at otherviews@livemint.com
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First Published: Sun, Dec 04 2011. 10 48 PM IST