Energy Bill Finagling Semi-Outed: Federal Loan Guarantees for Detroit

Robert Farago
by Robert Farago

The majority of this morning's New York Times article on the auto-oriented provisions of the new energy bill profiles the industry's posturing, infighting and kvetching over higher Corporate Average Fuel Economy (CAFE) standards. To wit, “'We’re not whiners,' Dominique Thormann, a senior vice president at Nissan North America, said in Washington during a lunch with reporters on Wednesday, in a thinly veiled jab at competitors that originally fought fuel economy increases." Breeze through this politically correct interpretation– transplants ready to rumble, domestics foot (not to say knuckle) draggers, Toyota playing both side down the middle– and Michelle Maynard finally reveals some of the more important "details." For example, we learn that the bill offers federal loan guarantees to "help auto companies that invest in factories that are at least 20 years old to build vehicles with advanced technology." Hey! Guess what? The General will [theoretically] build the new Chevrolet Volt plug-in electric hybrid at a Detroit factory that opened in the early '80s. No word on the new "footprint-based" CAFE calculations– which make a mockery of fleet-wide fuel economy averages– or ethanol credits– capable of transforming a gas-sucking SUV into a high mileage green machine (in regulatory terms).

Robert Farago
Robert Farago

More by Robert Farago

Join the conversation
4 of 7 comments
  • Landcrusher Landcrusher on Dec 07, 2007

    I hope the prez told them no loans. What kind of BS is that? My garage is over twenty years old, can I get a low interest loan to build a car in it?

  • Jthorner Jthorner on Dec 07, 2007
    " ... or ethanol credits– capable of transforming a gas-sucking SUV into a high mileage green machine (in regulatory terms). " While I agree that the E85 CAFE credit is crazy, it isn't as egregious as many seem to think. From the source: "For model years 1993 through 2004, the maximum allowable credit toward a manufacturer's average fuel economy is 1.2 miles per gallon (mpg). The statute then provides that the Department of Transportation (through NHTSA) must either extend the incentive program for dual fueled vehicles beyond the 2004 model year or issue a Federal Register notice justifying termination of the program. The statute limits any extension to no more than four model years and the amount of credit during any such extension to 0.9 mpg per manufacturer."
  • AuricTech AuricTech on Dec 07, 2007

    This Planet Gore blog post (part of National Review Online) has an interesting point about the CAFE legislation currently before Congress:

    Underreported is the fact that the new mandate looks quite a bit different than the old, 1970-era mandate. Specifically, it protects Detroit automakers by making the 35 mpg mandate an “industry-wide” average rather than a “manufacturer fleet” average. As a result, automakers like GM – whose sales of less-fuel efficient trucks make up a larger part of their product than, say, Honda – will likely only have to meet a 32 mpg standard for all its vehicles (once NHTSA writes the final rules). Honda, meanwhile, will likely have to meet something like a a 37 mpg standard (leading to the potentiality perverse consequence of Honda paying federal fines even if its vehicle average exceeds 35 mpg!).
  • Jkross22 Jkross22 on Dec 07, 2007

    The less efficient the government is, the better it is for consumers. With each iteration of this bill, it seems to stray further away from the goal - consuming less gasoline. At the end of this drama, the bill will look like Swiss cheese anyway. This is all just an exercise in futility and spraying perfume on a turd.