Will U.S. Policy Drive Green-Car Tech Away?

[pagebreak:Will U.S. Policy Drive Green-Car Tech Away?] The U.S. Environmental Protection Agency has finalized its rejection of a waiver that would have let California impose stricter regulations on greenhouse-gas emissions from vehicles.

A notice from EPA Administrator Stephen Johnson on Friday canceled the state’s plans to enforce a law, passed in 2002, calling for a 30-percent reduction in tailpipe emissions by 2016. Eighteen other states also had been considering following the same law, if California had received the waiver.

Johnson had said he would deny the waiver in December, a move that sparked another lawsuit from California, Congressional hearings and an angry letter from 19 union presidents representing more than 10,000 EPA employees (see EPA Rejects California Vehicle-Emission Standards, EPA ’Sabotaged’ California, Brown Says, California Sues EPA for Greener Vehicles, Emissions Technologies Could Benefit From Regulation Battle and Judge Upholds California Auto-Emission Law).

According to The Los Angeles Times, EPA staff members had recommended approving the waiver, writing in a memo that there was "no legal or technical justification" for the agency to deny it.

The EPA document released Friday repeated the agency’s stance that global warming isn’t local in nature and that California’s conditions aren’t "compelling and extraordinary" enough to justify a waiver (see Associated Press story).

Greentech advocates say the decision highlights the trend of U.S. policies falling further behind other countries’ efforts to reduce greenhouse-gas emissions from cars, in spite of a bill signed in December that raised U.S. fuel-economy standards for the first time in more than 30 years (see President Signs Energy Bill, Senate Rejects Incentives to Pass Energy Bill, Senate Sends Energy Bill Back to Beginning, House Passes Energy Bill, Will Greentech Get Anything from the Energy Bill? and Renewable Tax Credit and Portfolio Standard Could Get Cut From Energy Bill).

"CAFE standards--people are jumping up and down," San Francisco Mayor Gavin Newsom said in a speech last week, referring to the fuel-economy standards requiring vehicles to average 35 miles per gallon by 2020. "Give me a break.… In five or six years, maybe we’ll catch up with China."

Case in point: China is considering charging traffic-congestion fees on some of its busiest roads, according to state-run news agency Xinhua. London already has a similar congestion fee.

While the United States certainly has given birth to some new green-vehicle technologies--think Tesla Motors’ flashy electric sports car, for one--many of the alternative vehicle startups have come out of Europe, which has far stricter standards.

Steven Vehicles, a U.K.-based electric-vehicle startup, announced two cars Saturday, according to Green Car Congress.

In the meantime, U.S. companies such as Project Better Place, which plans to set up a network of electric-vehicle charging stations, is targeting outside markets. Project Better Place--which last month said it would set up an electric-vehicle charging network in Israel--told The Economist it plans to announce another agreement with a national government in the next few months (via Earth2Tech).

Meanwhile, Reno, Nev.-based Altair Nanotechnologies ((NSDQ: ALTI), which is developing batteries for electric vehicles, has ousted its CEO (see Green Light post).

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So will the newest, coolest green cars continue to roll out on streets outside the United States?

Eric Fedewa, vice president of global powertrain forecasts at CSM Worldwide, suggests it’s a possibility.

"Primarily, the technology we see overseas has been legislated into existence because of the fuel tax," he said, referring to higher taxes on fuel in Europe. "That’s why we’re seeing higher technology levels in foreign markets. More or less, the reason why we see so much technology in other markets--in Japan, in Europe--[is] because the energy cost is so much higher than here.

Different countries have approached the legislation in different ways, he said, adding that China’s government could simply mandate the technology it wants to have.

"Legislation, in a lot of cases, creates the atmosphere where the vehicle manufacturers can provide solutions," he said. "My view is the automotive industry is full of smart people, and if legislators say, ’Here’s the new standard,’ the engineering departments will step up and come up with the solutions. I view legislation as a good thing. But it’s going to be a little expensive for the vehicle manufacturers to change their products to comply."

Still, even without stricter legislation, energy prices could soon help drive greener cars to the United States, Fedewa said.

"Let’s start with $4-a-gallon gas. I think everybody is reaching the consensus that that’s where we’re headed, because energy supplies are limited and people really want to drive more.… I think as our energy price increases, we’re going to see a lot more technology come into this market because consumers are going to be willing to pay more for that."

Fedewa said CSM Global thinks consumers will begin to consider fuel economy in their car-buying decisions once the energy cost grows to roughly 2 to 3 percent of their disposable income.

"We’re just about there now," he said. "Hybrids and diesels become more attractive. I think we’re going to see more of that in this market because the price of fuel is not going to go down significantly."