Politics & Policy

Global Warming Goes Corporate

Automakers surrender to cap and trade.

Detroit, Michigan – Scapegoated, tired, and cornered by the global-warming witch-hunt, automakers this spring became the first U.S. industry to back a national cap-and-trade program for carbon — but, in doing so, opened a dangerous new chapter in environmental regulation that could have serious consequences to the nation’s economic health. An April 26 board meeting here of the Alliance of Automobile Manufacturers (AAM), the chief lobbying group for America’s nine major automakers, cemented the industry’s strategy as it enters a period of crucial hearings before Senate and House committees on climate change.

In a bow to Al Gore — the Cotton Mather of the climate mob — Ford CEO Alan Mulally declared that the climate debate “has passed. I firmly believe we are at an inflection point in the world’s history as it relates to climate change and energy security.”

Mulally couched his stance as customer-driven, predicting that it is “going to be one of the most important considerations to the customers that buy our product.” But Ford’s own consumer marketing finds climate change well down buyers’ list of concerns.

In fact, what is driving the industry’s embrace of climate change is a political consideration: the new Democratic Congress. With a zealous Democratic leadership hell-bent on fast-tracking climate legislation, auto companies have abandoned any hope of influencing the global-warming debate and are scrambling to get ahead of the regulatory parade.

The auto industry has judged that we are in a new phase of the climate game: an internecine fight pitting industry against industry in an attempt to turn climate legislation to their advantage.

“If you aren’t at the table, you are on the menu,” says AAM’s new president, Dave McCurdy. A former Democratic Congressmen from Oklahoma who owns a hybrid and once voted for a BTU tax, McCurdy is an unlikely choice to represent Big Auto. But automakers fear time is running out, and they are betting two Democrats — McCurdy and aging auto champion Rep. John Dingell of Michigan — can talk sense to a Democratic majority. Representing the only industry that is carbon regulated (by way of federal fuel efficiency laws), McCurdy recognizes that Filet of Auto is the menu’s sole item.

The strategy confirms the influence of what George Will calls the “the media-entertainment-environmental complex” and its unprecedented effort to indoctrinate Americans about global warming. Top climatologists hotly debate what we know of climate change and economic reports by the Copenhagen Consensus, the Pew Center for Climate Change, and others conclude that even the draconian Kyoto Protocol would have no discernable effect on global climate.

But the experts haven’t won a gold statuette. “This is an issue because Al Gore gets an Oscar,” says McCurdy. Only steep gas taxes have historically had an impact on energy consumption. But while 80 percent of Americans in recent polls echo Gore’s climate hysteria, equally large numbers reject increased taxes as a solution.

How then to “do something” about an issue without stirring a public backlash? Last week, the Senate Commerce Committee — backed by a pandering President Bush — voted to hike existing mpg mandates by four percent a year, an arbitrary number that would force huge costs on vehicle manufacture. Standard & Poor’s Ratings Services issued a report warning “the proposed regulations pose a real risk to global automakers’ financial performance, particularly as some are already under pressure from razor-thin margins.”

Enter Dingell, the AAM, and their embrace of a cap-and-trade system that would distribute the emissions burden across all U.S. industries. Significantly, a just-released Congressional Budget Office report concludes that cap-and-trade would help shield autos from economic pain, shifting damage to the coal and oil sectors. The CBO study further predicts such regulation would slow economic growth — particularly impacting “poorer households.” The scheme mirrors efforts undertaken by Europe to meet Kyoto targets that London’s Financial Times found to be riddled with waste and trades that “yield few if any environmental benefits.”

Washington experts like Marlo Lewis of the Competitive Enterprise Institute say the automakers’ strategy has two big flaws. First, the strategy may be futile. Due to the complexity of cap and trade legislation, Lewis argues, legislators find “mandates (like mileage standards) more feasible.” But even if the automakers strategy succeeds, it opens the U.S economy to unprecedented regulation by Washington. Automakers, says Lewis, seem “to believe in the ‘Captain Hook strategy’: Feed the alligator my left hand and he won’t come after the rest of me.”

General Electric provides a cautionary tale. Seeing an opportunity to advance its nuclear and wind technologies, GE long ago broke from business orthodoxy on climate and embrace carbon caps. Now, however, GE finds itself “on the menu” once more as Australia and Canada (and soon California) have banned one of its key products — the incandescent light bulb.

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