Wednesday, April 6, 2005

Automakers go green in Canada, curbing emissions

Pact with government could lead to cars that are smaller, more fuel-efficient and perhaps more costly.

By Jeff Plungis and Eric Mayne / The Detroit News

Pressure to be green Canada is the latest country to negotiate a tougher fuel-economy agreement with automakers. The growing global pressure to build cleaner cars is likely to further squeeze Detroit's automakers, who rely on less fuel-efficient SUVs and pickups for profits. Should the U.S. join the push for greater fuel economy or go more slowly to protect the auto industry? Demand fewer emissions Stay the course; let the market decide Get results and comments Comment on this story Send this story to a friend Get Home Delivery

WINDSOR, Ontario -- Canada and major automakers signed a pact Tuesday that is expected to lead to more fuel-efficient cars and trucks as part of the country's effort to combat emissions linked to global warming.

The move could lead to smaller, more expensive cars in Canada. But environmentalists say the deal will save consumers money at the pump and predict it will spur efforts to improve fuel economy in the U.S.

The painstakingly negotiated compact was described as voluntary. But automakers did not come to the signing table Tuesday without heavy pressure from the Canadian government.

Carbon dioxide -- a leading cause of global warming, scientists say -- is produced when fuel such as gasoline is burned.

The Canadian deal calls for carbon dioxide and other gas emissions linked to global warming to be cut by 5.3 megatons by 2010. That means Canada's entire fleet of cars and trucks will produce about 6 percent fewer greenhouse gases in five years than if no action were taken.

Government officials said the the pact will help promote technologies vital to Canada's success in the coming century.

"At the end of the day, we will have a cleaner country and a more competitive country," said Canada Environment Minister Stephane Dion. "This must be done because the countries that will continue to oppose the environment and the economy will stay behind."

The greenhouse gas savings are on the scale of regulations in California that automakers are challenging in court. as too strenuous and an infringement on federal authority. "Canadians will now have greater choice of efficient, low-emitting cars in the very near future," said John Bennett, senior policy adviser with the Sierra Club of Canada.

The agreement to limit greenhouse gas emissions adds to a growing list of governments pressing automakers to build more efficient cars and trucks.

The European Union and Japan negotiated tougher fuel-economy agreements with automakers years ago. China adopted its first fuel-economy regulations last year. California, New York and other states want to curb greenhouse gas emissions, a move that would force automakers to build more fuel-efficient models.

The notable exception is the U.S. government. Congress has opted in recent years to exclude more stringent fuel-economy improvements from a national energy plan. Under a 2003 Bush administration rule, a company's light truck lineup sold in the United States will be required to achieve average fuel economy of 22.2 miles per gallon by 2007, up from 20.7 mpg in 2004.

The growing global pressure to build cleaner cars is likely to further squeeze Detroit's automakers, which rely on less fuel-efficient SUVs and pickups for profits. Those vehicles are falling out of favor with consumers as gas prices soar well above $2 a gallon.

Carbon dioxide is created when fuel such as gasoline, coal or wood is burned. To reduce carbon dioxide emissions, automakers would have to boost fuel economy.

In Canada, automakers plan to install more expensive technologies to boost fuel economy and, at the same time, reduce vehicle size where possible and change the types of vehicles they offer. Canadians already buy a greater proportion of small vehicles than U.S. motorists.

Automakers -- including Detroit's Big Three -- said Tuesday they will sell enough fuel-efficient vehicles to reduce the country's global warming emissions, mostly carbon dioxide, by 5.9 percent by 2010.

Instead of producing an estimated 90.5 megatons of greenhouse gas emissions by 2010, cars and light trucks will produce 85.2 megatons, if the agreement plays out as expected.

"We're not asking industry to do more than what's fair," said John Efford, Canada's Minister of Natural Resources. "Individual Canadians will also have an important role, and I think that's something we need to promote. Proper maintenance, sticking to the speed limit and keeping fuel efficiency in mind when shopping for a new vehicle all helps."

The Canadian agreement follows moves in California to reduce car and truck emissions to combat global warming.

To meet the 2010 Canadian target, the average fuel economy of vehicles will have to climb by about 25 percent over 2005 vehicles, said Jason Mark, director of the Union of Concerned Scientists Clean Vehicles Program.

The improvements expected in Canada are on the scale of what regulators have proposed in California. Canada's emissions targets for 2010 are near what the California Air Resources Board has proposed for 2011 or 2012, he said.

In order to monitor the auto industry's progress, the Canadian agreement calls for a joint government-industry committee to conduct an annual review. The agreement calls for interim goals before it expires in 2010: 2.4 megatons fewer emissions in 2007, 3.0 megatons in 2008 and 3.9 megatons in 2009.

In Washington, the Alliance of Automobile Manufacturers said the Canadian agreement was consistent with the industry's strategy in the United States.

The industry has pledged to reduce the "intensity" of greenhouse gases from its manufacturing facilities 10 percent by 2012.

"Automakers are investing billions of dollars to develop and introduce new fuel-efficient automobiles," said Frederick Webber, president and CEO of the alliance. "Alliance members will continue to work with the federal government as it proposes new light truck standards for model years 2007 and beyond."

But in California, where regulators have proposed to reduce greenhouse gas emissions 30 percent by 2016, automakers have sued to stop the plan. The car companies have said the California targets can only be met through improved fuel economy, and because of its impact on the economy and on safety, fuel economy standards can only be set by the federal government.

While the case plays out in court, a bloc of states, including New York, Massachusetts and Washington, have moved to adopt the California rules.

Canada, with a population of 32.5 million, is slightly smaller than California, with 35.5 million people. California's auto market is also larger, with 2 million annual sales as opposed to 1.6 million in Canada.

The United States, with a population of 295 million, is expected to see annual auto sales of close to 17 million this year.

But if all the states considering the California rules were to adopt them, more than one-third of North America would be under stringent clean-car regulations, even without action from Congress or the Bush administration.

Daniel Becker, director of the Sierra Club's global warming program in Washington, D.C., predicts the automakers' moves in Canada will make it hard for them to argue in court that the California regulations are burdensome.

"The reality is that the global warming program is a serious one," Becker said. "Other countries are taking it seriously, and many states are taking it seriously. It would behoove the auto industry to deal with this constructively."

Eron Shosteck, a spokesman for the Alliance of Automobile Manufacturers, said the auto industry has never disputed that technology exists to make cars more fuel-efficient.

"What we've said is that these technologies are expensive," Shosteck said. "Automakers are making these technologies available, and consumers should have the opportunity to choose them if they wish."

You can reach Jeff Plungis at (202) 906-8204 or jplungis@detnews.com.