It's About The Air, Guys!

AATA (All About the Air Proposal) to California Air Resources Board

By Elaine Lissner

Ms. Lissner leases a Th!nk city EV and participated in the ReTh!nk protest in San Francisco. She recently attended ARB's public meeting on the fate of California's ZEV mandate. The following is her proposal to the Board.

Statement of disclosure :

(1) I don’t want my electric car taken away.
(2) I paid my $20 or something to the Production EV Drivers Coalition.
(3) Other than that, I don’t represent anybody other than the air-breathers of California.

Big problems with the current staff proposal (sorry, guys!):

- CARB would be requiring that the auto industry spend a certain amount towards cleaner air, rather than rquiring clean air-- in effect, regulating spending, not air quality.

- CARB would be playing God. I know Chairman Lloyd and several other boardmembers like fuel cells. But you know what the problem with playing God is? People expect you to be omniscient, and then they sue you when you aren’t! (Either that, or if you’re lucky, they just publicly humiliate you.)

I submit for your consideration:

  1. To clean up the air, CARB needs to stop getting sued.
  2. To stop getting sued, CARB needs to...

-Simplify, simplify, simplify

-stop making references to fuel efficiency (as Chrysler so kindly pointed out)

-Not start mandating specific technologies, either fuel cells or BEVs or anything else

-Stick like glue to its original mandate, regulating emissions levels

-Not take away anything that has already been given, or the automakers will sue so fast… Besides, it’s not fair.

Core principles:

CARB must regulate emissions, not cost. CARB’s mandate requires it to be realistic about cost. But it must regulate based on desired outcome (emissions), not tell people how much to spend to get there. In effect, the current staff proposal requires automakers to spend a certain amount of money to achieve clean air, rather than just telling them to clean the air a certain amount.

CARB must give credits based on function, not technology. If a car gets you down the road without polluting, it gets you down the road without polluting. The question is "How far will it get me down the road before refueling or recharging?" And "How fast will it get me down the road? Will it just get me around town? Or can I get on the freeway?" And "If I can get on the freeway, will I feel comfortable there when everybody else is doing 75?" If the car is green, CARB shouldn’t care what’s under the hood (or, per above principle, how much the auto manufacturer spent to get it that way). Credits mustn’t be used to play favorites, placing bets on the sexiest technology or the "technology of the future." They must only reflect how well, how far, and how fast a car gets you down the road.

One car, maximum one credit! Less function (e.g. a city car), less credit. The mandate will never be credible if "two percent of the cars sold" doesn’t add up to at least two percent of the cars sold.

No back-door dilution. Extra credits are not just playing favorites, they are also hidden dilution. To be respected, you must do any diluting right up front, in the percentages you require, and not sneak dilution in the back door by giving 8 credits here, 40 credits there. If you sneak dilution in the back door, every complicated formula you use for credits will become a point you’ll have to negotiate with (and defend against) the automakers. It bears repeating: one car, one credit. Less function than a car? (Somebody jokingly called my Th!nk City "half a car.") Less than a credit. One credit must equal at least one vehicle driving down the road! Unrealistic for the automakers to make that many cars? Then face facts and lower the percentage, to 1%, or 0.5%, or 0.1%, or whatever it takes. Choose one thing to defend—a percentage—and then defend it mightily. Don’t let the automakers pick apart every little formula until you have nothing left.

Realities:

CARB has already stated it cannot meet its goals without some zero-emissions vehicles.

The credit glut threatens to put off zero-emission technology for so many years that CARB will not be able to meet its goals.

If 20,000 ZEVs are required several years from now with no ramp-up, the automakers will squawk and/or sue. Plus, the market needs buildup.

The 2001 rules can’t start before model-year 2005 or CARB will get sued.

Conclusion from the above:

The only way for CARB to reach its goals without getting sued is to offer a technology-neutral, emissions-based alternate compliance path that would ramp up ZEV production smoothly.

Nuts and Bolts

Alternative Compliance Path:

No old banked credits allowed. (This means that Toyota and Ford will probably not take this path, preferring to use the banked credits they have built up. I believe Ford is covered through 2009 or so. So when calculating numbers of cars, one could reduce it by 30% or so, but I won’t.)

No new banked credits. Credits expire each model year.

Gold category (ZEV):

These numbers start from what is absolutely possible now, so they can’t be said to be pulled out of a hat. For example, in calendar year 2002 (about 2/3 of a model-year), Toyota placed 300-some cars; Ford brought 200-some city cars to California, did no advertising, and ran out in six months. William Korthof tells me that fleets need about another 600 cars per year just to sustain their programs. (Fleets generally have long lead-times and were not able to participate in Toyota’s brief 2002 offering.) So 1500 vehicles in two model years should be no sweat and would actually be less per year than what the public plus fleets demanded in 2002.

  • 0.15% (about 1500 cars based on about 1 million per year) any type of ZERO emission vehicle (no tailpipe!) in model year 2004 or 2005
  • 0.3% ( about 3,000 cars) in model year 2006
  • 0.6% (about 6,000 cars) in model year 2007
  • 1.2% (about 12,000 cars) in model year 2008
  • back to the full 2% in each model year 2009-2011
  • 3% in each model year 2012-2014
  • 4% in each model year 2015 and subsequent

Silver category (ILEV):

  • Again, must be emissions-defined, not mandate any specific technology, to avoid getting sued (or betting on the wrong technology).
  • ILEV emissions level. (A nice side-benefit will be the consistency with commuter-lane rules.)
  • 2% in each model year 2005-2008 (about 20,000 cars)
  • 3% in each model year 2009-2014

  • 4% in each model year 2015 and subsequent

Bronze category (PAV):

  • Same concept as silver, except the emissions cutoff should be accomplishable by what are currently called PZEVs. Hybrids would also fall in this category until/ unless they’re clean enough to meet ILEV requirements. This category would be known as "Partial Allowance Vehicles" (PAV). The terms "PZEV" and "AT-PZEV" would be abolished, since calling anything "partial-zero" is an oxymoron and strains the mandate’s credibility.
  • 6% each model year 2005 through 2018 and subsequent

Credit Calculation:

  • 1.0 credit for 65 mph-capable, 100 mile range, refuel or recharge within 25 minutes
  • 0.85 credit for 65 mph-capable, 100 mile range (new car, or MOA car newly offered for sale and sold)
  • 0.75 credit for 55mph-capable, 50 mile range (new car, or MOA car newly offered for sale and sold)
  • 0.1 credit for 25mph-capable, 25 mile range

Assumptions:

- Numbers required across the auto industry, such as 250 or 500 cars, are going to be a giant pain in the rear to administer fairly. It’s better to stick with the original idea, percentages per automaker.

- Because of the success of the lawsuits, and because the CARB and staff then re-opened everything rather than just fixing the legal issues, CARB is now seen as vulnerable to pressure. Therefore, when given a multi-year timeframe in which to do something, most domestic automakers will wait until the last year and then cry "It’s not realistic!" or sue.

- CARB will erode its credibility if it plays fast and loose with terminology. I’m sorry, there is no such thing as a "partial zero emissions" technology! Either it’s zero or it’s not zero. If it’s not zero, it’s low, or ultra-low, or whatever you want to call it, but not partial-zero or the insidious "near-zero." Similarly, if you put anything with a tailpipe in the gold ("zero emissions") category, the public is going to laugh. Can you imagine the headline?

"CARB Chairman Challenged to Breathe From Tailpipe of 'Zero-Emissions' Vehicle"

- Continuing the previous thought, it would be against your mandate (clean up the air), and patently unfair, to highly reward a plug-in hybrid with "gold" membership if it’s dirtier than Honda’s CNG technology ("silver"). Honda would be justifiably upset, maybe enough to drop their unfailingly polite manner.

- In the alternative compliance path, CARB must get rid of all the gaming of credits. Just like categories (gold, silver, bronze) are to be based on emissions, not cost or technology to get there, credits must be based on function (highway-capable or not, quick-refueling, etc.), not cost or technology to get there. It should be as close to "one credit, one car" as possible. If you credit for spending money rather than accomplishing a goal, you reward automakers for pursuing cost-inefficient strategies. An example: you wouldn’t give a teenager $200 and say "you must spend this money to buy yourself jeans and a shirt." The child could do it, by going to Neiman Marcus. But the more economically-efficient thing to say is "Here’s $200 to spend on jeans and a shirt, and whatever you don’t spend you can keep." Then the child goes to Old Navy, spends $60, and puts the remaining $140 to more productive uses (like CDs, burgers, and concert tickets!).

- In a way, the alternative compliance path is not really alternative-- it must be absolutely realistic and lawsuit-proof on its own. This is because the 2001 rules are vulnerable to attack, so this alternative compliance path must offer an alternative that is beyond reproach.

- CARB members must eliminate the word "goal" from their vocabulary. This is about requirements, not goals. Boardmembers, don’t let the automakers think you’re weak—that they can do anything less than what is demanded of them. Californians have waited long enough! This new proposal is all based on proven technology. Make clear that the only way this may get revised in the future is to make it more stringent!

Details, in case you’re still reading:

You’ve heard the expression "The devil’s in the details." Well, I think in this case, the key is really the core principles (about emissions vs. cost and function vs. technology). But here are some details that if not attended to, could still derail things or have unintended consequences. (Remember the NEV fiasco?)

SUV loophole must be closed in both compliance options. If not, probably nobody will choose the alternative compliance path.

Need to make sure, for fairness, that credits can be used in lower categories too.

Leased vehicles must have a purchase option (open lease) or they don’t count.

Action item for staff: Figure out whether my NEV multiplier is realistic. Will it keep the market alive while not providing a loophole? What’s the incremental cost on a NEV, and how does it compare to the incremental cost on a city car or full-function car?

Not get into the hydrogen infrastructure business. Talk about opening a can of worms! Talk about playing god and placing bets on a particular technology!

Not get into the demonstration transit corridor business. See above about the can of worms. It’s a great idea, Supervisor DeSaulnier, but it’s too complicated for CARB. CARB’s role should be to do one thing: force the automakers to build the vehicles that your transit corridor will use.

As Commissioner McKinnon states, firm numbers for the future are key.

No expert review panel. It sends a message of weakness. If you follow the above suggestions, every one of the three categories contains proven technology options at rapidly-dropping prices. Besides, we’re only talking about 10% of total cars sold. Remember catalytic converters, which added perhaps $1,000 (I’m guessing here) in today’s terms to the price of every car on the road? At a certain point, some of the costs of driving need to be reflected in the price of the autos rather than in the state’s hospital budget. And guess what, automakers: as long as it’s fair across automakers, that’s just a part of doing business in our state.

Penalties must be substantial, and reflect that a weasely manufacturer avoids big bucks in R and D and line setup. I suggest (just guessing here) $50,000 per car. Penalties can go into a fund to give consumers tax breaks on their purchases.

Help Ford get around DOT crushing of Th!nk City cars, if Ford wants.

Economic impact on automakers—$$ and cents analysis (putting this in context):

Of course, CARB’s primary focus should be on the economic impact of air pollution on California’s public health and economy. But CARB is also required to consider the impact on automakers, and to be realistic. Plus, it’s easier to defend a proposal when you have some sense of its impact. Here are some calculations to put things in context.

For simplicity, we’ll assume the automakers subsidize the incremental cost of clean-air vehicles and add the cost to the other 90% of cars sold. We’ll use incremental cost numbers from the staff report. We’ll say automakers choose the cheapest way to meet the requirements (if they want to build fuel cells instead of BEVs, that’s their problem). This is going to be a rough estimate, but here goes:

For 2005:

0.15% ZEVs (about 1,500) divided by 0.75 credits for a city car = 2000 city cars, at $8,000 incremental cost per city car totals $16 million (about the cost of two super-mansions in Silicon Valley)

2% ILEVs (20,000) at incremental cost of $1700 = $34 million (four mansions)

6% PAVs (60,000) at incremental cost of $100 = $6 million (one mansion)

Total comes to $56 million, spread over the other 90% of cars equals $62 per car.

Let’s do 2009, with a nice modest 20% reduction in incremental "gold" and "silver" costs:

2% ZEVs (about 20,000) divided by 0.75 credits for a city car = about 26,670 city cars, at $6,400 incremental cost per city car totals $128 million (about the cost of 16 super-mansions in Silicon Valley)

3% ILEVs (30,000) at incremental cost of $1360 = $40.8 million (five mansions)

6% PAVs (60,000) at incremental cost of $100 = $6 million (one mansion)

Total comes to $175 million, spread over the other 89% of cars equals $197 per car, still well below a catalytic converter, I believe.

Objections and Responses:

Objection: "But we don’t believe in electric cars! Been there, done that! We believe in hydrogen!"

Response: Well, too bad, because this is about clean air, not about what you believe in. If you really can’t stand the idea of having your company associated with electric cars, if you really think they have cooties and are eight-track cassettes, then buy some credits from somebody who is willing to put pollution-free cars on the road, and chalk it up as a cost of doing business. And if you want to spend a million dollars per car to accomplish the same thing, we’re happy for you, but do it on your own dime.

Objection: "You’re forcing us to build something we don’t believe in!"

Response: No, we’re not. This is a free market. Buy some credits from somebody else and quit complaining.

Objection: "This will distract us and dilute our efforts to build fuel cells."

Response: Oh, please. Does your effort to build the new Civic distract from your effort to build the new Passport? Does building the Thunderbird distract from building the Expedition? It seems awfully modest to claim you can’t pursue two complementary technologies at once.

Objection: "It’s too expensive to both do fuel cell research and make electric cars."

Repsonse: If it’s really more than you can handle, you’re free to pick one path. And if you’re (hello, Ford) really near bankruptcy anyway, you probably shouldn’t be spending millions of dollars on a technology like fuel cells that you admit is more than a decade from widespread use. Maybe you should be putting your Th!nk City cars back on the road and leaving the glamorous stuff to companies that aren’t about to go bankrupt.

Objection: "This will harm poor Californians and Californians of color by making cars more unaffordable."

Response: Oh, please. You’re telling me poor Californians would rather have asthma than pay a couple dollars more a month on their car payments? The poorest Californians can’t afford cars anyway. Go home, and don’t come back until you come back with a better argument. Oh, by the way, please don’t insult my intelligence again by implying poor Californians are synonymous with Californians of color.

Good news you can tell the automakers:

To Ford: Look, we didn’t make you build any extra fuel cell cars! In fact, you’re not going to have to do anything in the gold category for a long time if you choose not to take the alternate compliance path, what with all your banked credits from the Ford Ranger (plus Th!nk City and Th!nk Neighbor). And since gold credits can of course be used in lower categories, you may not have to do anything at all for a while.

To Honda: Finally, you’ll get some respect for making super-clean CNG vehicles! Guess what: you’re going to have the market cornered on what’s going to be the cheapest way of satisfying the silver requirements. Other automakers will be lining up to buy your credits. And you’re well-positioned with the Civic and Insight to meet bronze requirements. You can buy some gold credits from Ford, make exactly the number of fuel cell vehicles YOU want, and laugh all the way to the bank.

To GM: If you act quickly, you can avoid any immediate burden in the gold category by putting the EV1-s back on the road. We’d like to be able to give you more good news, but we have to be fair to car companies that actually made a good-faith effort. Maybe you shouldn’t sue us next time.

To Toyota: Looks like you’re sitting pretty. With all your credits from the RAV4 EV , you may choose not to even take the alternate compliance path. But if you do, all you have to do is fire back up the RAV4 assembly line. Based on your 2002 sales, you’ll easily be able to sell enough of them to meet your gold requirements, and probably fill in some of your silver requirement too. (Heck, you won’t even have to spend money on new ads, since RAV4s still feature prominently in your advertising!) Or you may find it more cost-effective to buy some silver credits from Honda. You’re well-positioned to meet bronze requirements with the Prius. And you can make as few or as many fuel cell cars as you want to—you got through this process without being forced to make any extra at $1 million apiece. Nice guys really do finish first.

To Daimler Chrysler: Ever heard the term "corporate citizenship?" Toyota and Honda have, and even Ford thinks it sounds vaguely familiar. Get with it. By the way, see you in court.

Issues /concerns I haven’t addressed:

How do electric motorcycles, and one-seater vehicles such as the Sparrow, fit into all of this? Not at all, I suppose.

I don’t know much about where the 10% figure originally came from. But I just wonder whether it’s still the most logical approach. Not that I’d like this, but has anyone considered saying that 50% or 80% or 90% of all cars must meet certain minimum emissions standards, SULEV for example? How does the SUV loophole affect all of this? Will CARB’s closure of the SUV loophole prevent a situation in which five years from now there will be about two cars left on the road and all the rest will be SUVs?

Times Article Viewed: 5690
Published: 05-Apr-2003

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