By Jennifer Granholm, San Jose Mercury News
This month, federal agencies held three public hearings around the country, including one in San Francisco this week, on a proposed rule to increase corporate fuel efficiency (CAFÉ) standards to 54.5 miles per gallon by 2025. When finalized in the summer, this strong national standard will save families in California and across the country thousands of dollars at the pump over a vehicle’s lifetime, reduce U.S. dependence on foreign oil and help to significantly reduce harmful carbon emissions. The standard will strengthen our nation’s security and empower American businesses and workers to compete in the 21st century.
As a former governor of Michigan, with Detroit as the home of the U.S. auto industry, I know that the right public policy can catalyze private sector investment and job creation. Policies such as increasing fuel efficiency standards are an example of how we can attract new investment in the auto industry and showcase the ability of American workers and businesses to lead the world in the development of advanced technologies.
Just as American businesses developed a new computer industry, they can lead in advanced technology vehicles, a significant segment of the lucrative global clean energy race.
The economic promise in clean energy has not gone unnoticed. The Pew Charitable Trusts found that global private sector investment grew to $243 billion in 2010, a 630 percent increase from 2004. Renowned venture capitalist John Doerr calls clean energy “the mother of all markets.” The largest U.S. manufacturing firms, from General Motors and General Electric to United Technologies and Dow Chemical, are racing to develop technologies that produce cleaner energy or make existing fuel more efficient.
This hasn’t always been the case in Detroit, where carmakers historically have resisted raising CAFÉ standards, arguing it was too expensive and would put people out of work. Michigan’s representatives in Congress backed the automakers, as did labor, management and members of both political parties.
This long-standing opposition is what made President Barack Obama’s 2009 announced agreement on the latest proposal so noteworthy. At the recent hearing in Detroit, comments from labor, industry and members of Congress were overwhelmingly positive. To quote Bob King, of the United Auto Workers, “the proposed rules will reduce the pollution that contributes to climate change, significantly reduce America’s dependence on foreign oil and save American families money at the pump. They will also create jobs in the auto industry and throughout the economy.”
Business leaders are not investing in clean technologies out of patriotic duty or a desire to save the planet. They want to make money. The competition to win in this clean energy race is fierce.
Policies that push industry to innovate, such as the new fuel standard, promise to drive billions into research and development of new technologies. I have seen firsthand the incredible effect public policy had in allowing the auto industry to invest in electric transportation. Thousands of new jobs have already been created in Michigan building the lithium ion battery. Electric vehicles are more efficient than internal combustion engines, so they will help manufacturers meet the new standards.
In addition to creating jobs and reducing fuel costs for consumers, higher efficiency standards will spur economic development by allowing individuals and businesses to invest their savings elsewhere. Iran’s posturing in the Strait of Hormuz has prompted analysts to predict that gas prices will rise to close to $4 or even $5 a gallon this year.
Action to blunt the effects of high gasoline prices cannot come quickly enough. Federal agencies need to finalize the strong new fuel efficiency rules.