Auto Bailout Should Link to Fuel Economy Boost

Congress should link any financial assistance to U.S. automakers to vehicle performance standards that strengthen the industry, cut U.S. oil dependence, and help prevent the worst consequences of global warming, experts at the Union of Concerned Scientists (UCS) said today.

Industry representatives are expected to testify before the Senate Banking Committee today and the House Financial Services Committee tomorrow regarding financial assistance. Last December Congress approved $25 billion in loans to help the auto industry build vehicles that exceed new, more stringent fuel economy standards. Now some members of Congress want to provide a second $25 billion in loans to General Motors, Ford and Chrysler. UCS experts maintain that any assistance to automakers should be tied to better performance.

"Congress has an opportunity to make the auto industry stronger by adopting a rescue plan that helps it build vehicles consumers want and wean the country off of oil," said Eli Hopson, Washington representative for UCS's Clean Vehicle Program.

UCS is urging Congress to require any automaker that receives further financial assistance to improve the average fuel economy of their vehicle fleets by 4 percent per year, a goal President-elect Barack Obama endorsed in his "New Energy for America" plan. Such a fuel economy improvement would be roughly equivalent to California's tailpipe standard for global warming pollution. That standard, which was blocked by the Bush administration, would require a 30-percent global warming pollution reduction from passenger vehicles by 2016.

"Automakers have been a major cause of our global warming and oil addiction problem. They now have the opportunity to be a major part of the solution. Greener cars can help put the industry back in the black," Hopson said.

The broader economy would profit as well. Helping the auto industry put more fuel efficient vehicles in their showrooms would strengthen the economy by cutting gasoline consumption, allowing consumers to spend more on other goods and services.

Over the last 20 years, taxpayers have provided automakers billions of dollars to develop advanced technology vehicles. In each case, automakers developed prototypes but never made the cars commercially available. Instead, automakers focused on boosting power rather than fuel efficiency. Moreover, they spent millions of dollars on lobbyists and lawyers to fight laws that would require cars to consume less gasoline and emit less pollution. As a result, the Big Three lost market share, shed jobs and were ill-prepared to cope with volatile oil prices and an economic downturn.

"As the saying goes, those who do not learn from history are doomed to repeat it," Hopson said. "We can't afford a doomed auto industry. If American taxpayers are going to support the automakers they deserve a return on their investment. Congress should require automakers to produce the cleaner cars that are key to their future success."