Have Carmakers Lost the CO2 Argument?

The U.S. Supreme Court may have sounded the death knell for the large sport-utility vehicle and set theU.S. on a path that will require carmakers to sell smaller, lighter vehicles and vehicles with hybrid and even electric powertrains.

The decision involved a case brought to the court by the State of Massachusetts, which had demanded the U.S. Environmental Protection Agency (EPA) begin regulation of emissions from cars and trucks. The EPA had declined, saying it had no specific authority to regulate so-called greenhouse gasses. The Alliance of Automobile Manufacturers, which represents American, Asian, and European carmakers, had sided with the Bush administration against Massachusetts’ plea for tougher regulations.

The court ruled yesterday, 5-4, that the EPA had the authority to regulate emissions of carbon dioxide and could be sued if it does not.


The court’s decision in the Massachusetts case could have a decisive influence on a thicket of litigation now in process in California where the state legislature, with support from Governor Arnold Schwarzenegger, is attempting to curb emissions of greenhouse gases. Automakers have argued the state of California doesn’t have the authority to regulate carbon dioxide emissions and have gone to court to stop California from imposing its tough new standards.

Carmakers also have argued both publicly and privately that the California CO2 regulations would force them to build smaller vehicles. The downsizing of vehicles would pose special problems for companies such as General Motors, Ford, and DaimlerChrysler, which historically relied on the sale of large vehicles for the bulk of their revenue.

During the 1990s and through the turn of the century, the Detroit companies have adamantly refused to compromise with critics in the environmental community or accept any kind of tighter fuel-economy precisely because they had become so dependent on trucks and SUVs.

The no-compromise policy on tougher regulations, however, seemed to be running on empty in recent months. A host of new bills have been introduced in Congress since January, calling for tougher fuel-economy standards. Even the Bush administration is now calling for tighter regulations that go beyond the targets the carmakers have deemed acceptable.

Part of the pressure reflects the shift from a Republican to a Democratic Congress. But global automakers also face calls for tighter fuel-economy regulations in the European Union and even in China where the standards are actually rather strict.

Executives from the American car companies, which invested almost nothing in fuel-economy improvements during the 1990s and early part of the 2000s, are now scrambling to catch up. Even European car companies such as Porsche are experimenting with electric-hybrid powertrains in the face of mounting pressure to curb emissions.

American auto executives have argued for a long time that politicians don’t understand their business and have bandied the long lead times required to develop new vehicles. Vehicles entering development this year generally won’t be ready until 2010 or 2011 and the following generation of vehicles would likely not appear until 2014 or 2015, when the regulations proposed by the State of California really begin to take hold.

Until the Supreme Court decision was handed down on Monday, automakers believed they had the process under control. The Supreme Court’s decision, however, suggests they have lost it.



Related Articles


Honda Called Greenest Automaker by Bengt Halvorson (4/3/2007)
Honda and Toyota cleanest, DC dirtiest, says group.


EPA Can Regulate CO2, Supremes Say by Marty Padgett (4/2/2007)
Court decides 5-4 that agency has the authority.


Flint: GM’s Big Plug-In Talk by Jerry Flint (3/14/2007)
GM needs to stop talking as if Job One were tomorrow.



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