Greening the Big Three Bailout

Ford Escape Hybrid
Photo of the Ford Escape Hybrid, which Ford CEO Alan Mulally drove to DC from Detroit, by Ford Motor Company from Flickr.

Yesterday, the “Big Three” U.S. automakers — General Motors Corp., Ford Motor Co. and Chrysler — got a second chance at asking Congress for a bailout after their initial attempt got shot down last month.

In their final push for a rescue package, the auto companies have stressed an emphasis on fuel efficiency. There are three major questions to consider:

  • First, will all this talk of green really convince Congress to help these companies avoid going into the red? (House Speaker Nancy Pelosi says she wants to see a new plan “worthy of the support that the taxpayers will invest in it.”)
  • Next, if these companies do receive government aid, will they seriously implement the fuel-efficiency standards they tout in their revised business plans? (Or will they just burn through federal money like they’ve already done with their own cash?)
  • Finally, once they make the shift to electric and hybrid vehicles, will they truly be viable in the global auto market? (Last month, U.S. vehicle sales have already dipped to the lowest in more than 25 years.)


Auto expert Jim Motavalli, blogger for the New York Times and The Daily Green, insists that the bailout should include a “green makeover,” according to his recent analysis for Yale Environment 360.

“As Washington weighs whether to provide some form of assistance,” he writes, “some of the best ideas for saving Detroit are coming from environmental groups that would like to see any bailout or loan package coupled with a green realignment of the industry. Although the Big Three may regard that as a poison pill, it has the virtue of actually putting the automakers in line with the emerging market.”

He continues: “These reforms could include a commitment to producing competitive small cars as well as hybrids, plug-ins and clean diesels; an industry-wide focus on fuel efficiency and reduced emissions; and an end to litigious opposition to environmental regulation.”

Treehugger nicely sums up Motavalli’s main arguments. Readers chimed in with additional comments and recommendations, with some people suggesting that the free market should just let the Big Three die and allow room for innovative, environmentally responsible companies to take over.

But it doesn’t look like these companies will give up any time soon. They have already made a strong case for sustainability by inserting green pre-conditions into their bailout proposals, and House Speaker Nancy Pelosi maintains that “bankruptcy is not an option.”

FORD HIGHLIGHTS HYBRIDS, ELECTRICS

Ford Motor Co., which requested a $9 billion line of credit, submitted a company business plan yesterday to the Senate Banking Committee, outlining some of its goals, including a “Sustainability and Electrification Strategy,” which begins with the increased production of its fuel-saving EcoBoost engines in 2009, followed by more hybrids, plug-in hybrids and battery electric vehicles on the market by 2012. The all-electric vehicles include a commercial van for use by 2010 and a sedan in 2011. The plan also calls for for a $14 million investment in advanced technologies to improve vehicle fuel efficiency over the next seven years. (To read a more thorough summary of the plan, check out a recent post on AutoBlogGreen.)

In a eco-friendly and (perhasps) symbolic gesture, Ford CEO Alan Mullally chose to drive a Ford Escape Hybrid for his road trip to Washington, and General Motors CEO Rick Wagoner arrived in a Chevrolet Malibu Hybrid Sedan. (Here’s a comparison of the two cars from Conde Nast Portfolio. Apparently, Mullally had the sweeter ride.) This week’s mode of transport contrasted sharply with their previous trip to Capitol Hill via luxurious corporate jets.

GM FIGHTS FOR FLEX FUEL, HYDROGEN

GM, like Ford, has stressed a plan (read the PDF here) to move towards more fuel-efficient vehicles, requesting as much as $18 billion in federal loans over the next year.

Climate Progress criticizes GM’s devotion to hydrogen cars and corn ethanol, saying that hydrogen is a “waste” of money, and that “corn ethanol remains the worst energy policy idea of the past two decades with very limited potential to replace significantly more imported oil.”

The silver lining in GM’s plan, according to Climate Progress, is the planned launch of the plug-in hybrid Chevy Volt, which can go up to 40 miles on a single electric charge, due on the market in two years. By 2012, GM says it will offer a total of 15 hybrid models, like the VUE Two-Mode hybrid, and the Silverado and Sierra hybrids, which will debut in 2009. (Read a full summary of the company plan at AutoBlog.)

In comparing Ford and GM’s new plans, Climate Progress says that Ford has the “shrewder” vision:

“Bottom Line: Ford Motor company goes into bailout negotiations with a much healthier balance sheet. And based on their restructuring plans, I wouldn’t be surprised if Ford ends up more successful in the long term.”

CHRYSLER CALLS FOR ELECTRIC-DRIVE

Chrysler is requesting a $7 billion “bridge loan” by the end of the year. (Read the official plan at AutoBlog.) In a section titled, “Providing Cars and Trucks People Want to Buy,” the company states it will launch 24 major products through 2012, including various types of hybrid electric-drive vehicles. It will introduce the first full function electric-drive car in 2010. Also, the company says it is “on target” for 50% of its fleet will be flex fuel capable by 2012.

NO SINGLE SOLUTION

While it’s encouraging to see that Detroit is finally getting on board the green bandwagon, it’s important to note that fuel efficiency cannot be viewed as a cure-all solution to environmental and transportation problems.

EMBARQ’s Lee Schipper wrote a report last year, stating the following:

Fuel economy technology, while important, isn’t the only factor that explains differences in tested or on-road fuel economy when comparing vehicle efficiency and transport emissions in different countries. Fuels, technology, and driver behavior also play significant roles in how much fuel is used. As long as the upward spiral of car weight and power offsets much of the impact of more efficient technology on fuel efficiency, fuel economy will not improve much in the future. And as long as the numbers of cars and the distances cars are driven keep creeping up, technology alone will have a difficult time offsetting all of these trends to lower fuel use and CO2 emissions from this important sector.

Read a press release about his analysis here.

So no matter what happens with the Big Three, car companies around the world will need to start thinking about making their vehicles smaller and reducing miles traveled, which will require the cooperation of governments, communities and corporations. This bailout is just the beginning of the solution.

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  • http://www.tricitiespennypincher.com Stacey McClure

    Here’s a good fix. Instead of giving money directly to the car companies, Give about 10k to all of the welfare recipients who use the “I don’t have a car” excuse for not working. Stipulate that the check is only payable to a car dealership for the purchase of a new car. Stipulate further that they must keep the car for 7 years and must now find a job and get the heck off welfare! The Government saves by not having to pay the welfare and the auto industry gets money the old fashioned way, they earn it!!!

  • Adrian

    The main environmental isssue with cars is not their fuel efficiency but the land-use patterns they require. Even a mythical “zero-emissions” car would be an environmental disaster if used to the extent that Americans currently drive.

    There is no such thing as a green car.

  • http://www.setenergy.org Dennis Markatos-Soriano

    Nice post-
    The good news is people are driving less with the vehicles they have – sending US oil consumption down more than 5% in 2008 and driving an overall GHG emissions cut of ~2.5% this year. EIA data suggest a further emission drop in 2009. Now it’s our job to plan the future when emissions fall even when the economy is growing quickly (kicking low-carbon energy sources into a higher gear). See details of the ’08 emissions drop at
    http://setenergy.org/2008/11/13/a-banner-year-for-us-climate-research-sees-sharp-emissions-drop/

    And if you find SET’s daily blog at http://www.setenergy.org on energy and climate developments useful, please add it to your links list.
    Onwards to sustainability,
    Dennis