Interest Fizzles in All-Electric

By John O'Dell

Times Staff Writer

December 14 2002

The auto industry is pulling the plug on the all-electric car.

The present generation of battery-powered electric vehicles, with their limited driving range of about 120 miles before needing a recharge, have lost favor among automakers and regulators. In turn, the dream of a California highway system buzzing with clean electric cars has been put on indefinite hold.

Just this week at the electric-vehicle trade association's annual convention in Hollywood, Fla., carmakers instead were touting hybrid gas-electric vehicles, already sold by Toyota Motor Corp. and Honda Motor Co., as the best answer for the environment.

Meanwhile, hydrogen-fuel-cell vehicles -- the next big technology dream -- still are decades away from mass production.

"The focus now is on hybrid electric cars and then fuel cells," said Mike Schwartz, director of Ford Motor Co.'s Sustainable Mobility Technologies unit. "Hybrids are the interim step that let us use advanced technologies that will be essential for fuel cells when we finally get there."

Last month, General Motors Corp. began bailing out of its $1-billion experiment with its futuristic two-seat EV-1 electric car, calling it a dismal failure.

Though all 950 of GM's electric models made from 1996 to 1999 were leased and there still is a waiting list, the company said the program was not economically feasible.

A few weeks ago GM began reclaiming EV-1 vehicles as leases expired, and the last one will be off California roads by August 2004.

For its part, Ford ended its Think electric car project in the summer because it could not find a market for the two- and four-seat autos.

Even the trade group for all-electric cars is shifting gears. On Wednesday, the Electric Vehicle Assn. of the Americas was re-christened the Electric Drive Transportation Assn. The new name better reflects its mission "of advocating all types of electric transportation technology," said Co-Chairman John Wallace, a former Ford executive who ran the Think car unit.

Like others in the industry, Wallace said the future is in the hydrogen-fuel-cell vehicle.

This technology, now being tested in a few cars in California by Honda and Toyota, relies on a complicated electrochemical process to produce electricity from hydrogen cells on board the vehicle.

But it will take a long time for the auto industry to perfect fuel cells and develop the hydrogen fuel infrastructure needed to make them usable.

"This is a generational pursuit," Wallace said. "It will be our children who make it happen."

In the interim, the California Air Resources Board is preparing once again to revise the zero-pollution-emission vehicle mandate that triggered the electric car movement more than a decade ago.

Because of its severe air quality problems, California is the only state allowed to set up emission requirements that are tougher than those of the federal government. California's pollution rules, in turn, often force automakers to adopt expensive technologies.

But bowing to economic arguments raised by the auto industry, the California air board has repeatedly reduced the scope of its Zero Emission Vehicle Mandate. Years ago, the air board ordered that 4% of all vehicles sold in California must be zero-emission polluters by the 2003 model year.

Later, the board reduced that number to 2% and changed the target date to 2005. Now, the board is considering a proposal from its staff to cut the required sales figure to just 1%.

Automakers already get credit for a variety of advanced-technology and ultra-low-emission vehicles they sell, including low-speed, golf-cart-like contraptions that are limited to 25 miles an hour.

In effect, this means that no new zero-emission vehicles would have to be introduced until 2007, though the auto industry wants to do away with the mandate altogether.

As this battle is played out, automakers are counting on hybrid gas-electric vehicles -- the Toyota Prius, Honda Civic Hybrid and the forthcoming Ford Focus Hybrid sport utility -- to deflect criticism of their environmental policies.

Toyota and Honda expect to sell about 25,000 of these hybrid cars this year and about 44,000 next year. But in California, where 16 million new passenger cars and trucks are sold annually, these hybrids still account for well under 1% of the market.

Toyota's Prius model sells for about $20,000. The company says it is making a small profit on the car, although others in the industry believe Toyota is selling it at a loss.

Hybrid engines switch from electric- to gas-powered to consume less gasoline. In Toyota's system, the car runs in all-electric mode until it hits 20 mph, when the gas engine takes over. The electric motor also assists the small four-cylinder gas engine when power is needed for passing or climbing hills.

Honda's hybrid system uses the four-cylinder gas engine all of the time, with the electric motor providing additional power on demand.

Both vehicles get close to 50 miles a gallon and are rated as super-low-emission vehicles in California.

They are not zero-emission vehicles, however. And Tim Carmichael, executive director of the Los Angeles-based Coalition for Clean Air, says that's frustrating.

"We've seen a steady erosion of the ZEV program, and our biggest fear now is that the Air Resources Board will try to fix it again to address automakers' concerns," Carmichael said.

By Katharine Mieszkowski

Dec. 16, 2002 | In October, the Bush administration took time out from battling al-Qaida and other evildoers to file an amicus brief in federal court in Fresno, siding with automakers and dealers in a suit against a California regulation requiring car manufacturers to sell "zero-emissions vehicles."

The administration has also been fighting for the extension of offshore oil drilling rights in California coastal waters near Santa Barbara. Never mind that such drilling is so unpopular with voters here that even state Republican politicians outdo themselves trying to prove how fervently they oppose it.

And earlier this year, even as California passed the nation's first anti-greenhouse gas law to fight global warming, the feds declared that the government must continue to study the issue before enacting any policies around it. The auto industry plans to mount a legal challenge to that California law, too.

Even California's bounteous forests are at risk, fear environmentalists, who see new federal plans to allow road-building and "thinning" in the state's national forests (which add up to nearly 10 percent of the entire country's national forests) as a handover to logging interests.

In the air, the water, the forests and on the road, the environment is the battleground for a federal war with California. A Republican administration that believes that industry knows best when it comes to pollution controls is taking on a staunchly Democratic state with some of the toughest environmental regulations in the world.

It's a battle that seemingly pits a libertarian, laissez-faire philosophy against the liberal belief in government intervention -- except for the awkward fact that the Bush administration's own intervention against California's environmental regulations is a classic case of the sort of Big Government meddling conservatives usually deplore. Whatever happened to that Republican Party standby, states' rights?

"The Bush administration talks until they're blue in the face about respecting state authority on environmental issues," says Dean Caputo, an attorney with the National Resources Defense Council, an environmental advocacy group. From drilling for oil in the Arctic National Wildlife Refuge to snowmobiles in Yellowstone, the Bush administration argues that they're only supporting what locals want. But not in California. "Basically their position is, 'we respect state authority, but only when the state agrees with the oil industry,'" says Caputo.

California has long led the nation -- indeed the world -- in environmental regulation, in part because the state has experienced such dramatic problems, visible and tangible to the average voter. Smog and oil spills in California helped galvanize the modern environmental movement and inspire the passage of landmark federal regulations, such as the Clean Air Act, which the Bush administration is now weakening.

California-style government intervention, say environmentalists, has been a success. Although a toxic cocktail of smog-trapping geography, car culture and bulging population means that the Los Angeles area still has some of the worst air in the country, by any measure air in the region has improved dramatically since the state cracked down. In 1977, the region had 121 Stage 1 smog alerts, while since 1999 it has had a total of zero.

Auto industry defenders say that cleaner technologies would have arisen regardless of government mandates, a claim that environmentalists scoff at. But whichever claim is true, one thing is clear: California's role as standard-bearer in the environmental movement is under concerted attack from the U.S. government. On several simultaneous fronts, the Bush administration is asserting federal power on behalf of the automobile and oil industries -- at the expense of the clean air and clean water that Californians have fought for 40 years to improve and protect.

On Jan. 29, 1969, Bob Sollen, a reporter with the Santa Barbara News-Press who covered offshore oil drilling, received an anonymous phone call: "The ocean was boiling around platform A. There had been a blowout," he remembers.

Even after the blowout had been brought under control, the oil continued to seep out of the ocean floor, Sollen says. "The pressure from the blowout fractured the bottom of the ocean all around the platform, so even when you controlled the pressure in the well, the blowout continued, because it was coming out through the cap-rock all around the well."

Sollen says he witnessed oil washing up on shore for many months afterward. At the time, the cleanup technology available was primitive: mostly straw and pitchforks.

The Santa Barbara spill, say environmentalists, turned California against offshore drilling. It also inspired state and federal regulations that require environmental impact statements to this very day. Before the spill, "there was no environmental review of any projects. Agencies had no official way to determine whether or not oil development or a dam project would impact the environment," says Linda Krop, chief council and executive director of the Environmental Defense Center, a public-interest law firm in Santa Barbara. "It's been referred to as the oil spill heard around the world."

And even though most Californians may not remember the 1,000 oil-soaked bird corpses that cleanup workers collected more than 30 years ago, they remember that they're against offshore oil drilling when they go to the polls: "Whenever there's a partisan election, the Republicans and the Democrats try to outdo each other in their opposition to offshore oil activities," says Sollen.

Scorning offshore drilling is so mainstream here that even the Republican candidate for governor, Bill Simon, used the issue to try to paint the incumbent Democrat, Gray Davis, as soft on the environment in Simon's failed attempt to win the governorship this year. Simon argued that Davis hadn't been sufficiently protective of the coast, because he'd failed to stop existing oil leases.

"Opposition to offshore drilling has become almost like kissing babies for California politicians," says Bill Magavern, a senior lobbyist for the Sierra Club.

"But President Bush still wants to produce more oil, open up more platforms off the California coast," says Sollen.

At issue is the extension of 36 leases for offshore drilling in 324 square miles off the coast of Santa Barbara and San Luis Obispo. The state of California and environmental groups have sued to stop the extension, taking the position that it should not have been granted without local approval. But when a court upheld California's position, the Bush administration appealed.

The Bush administration's position in California, it's worth noting, is in sharp contrast to its policy in Florida. Bush has pledged $235 million to buy out similar leases in the coastal waters of Gov. Jeb Bush's Florida. But Bush owes nothing to California, a state that not only went for Gore in 2000, but even eschewed the so-called Bush effect that dominated this year's elections in other states, electing Democrats to the state's highest offices from governor to treasurer.

On Dec. 2, a federal appeals court in San Francisco blocked the extension of the leases again. In a unanimous decision, three justices ruled that the state of California can review the potential environmental impact on the coastline, before the federal Department of the Interior can extend existing leases.

A triumphant Gov. Gray Davis said: "The court's ruling is essentially a big stop sign to Washington. They should take the hint and halt further attempts to exploit California's spectacular coastal resources. Today's decision is a victory for all Californians, the environment, and states' rights."

On Dec. 12, the same court struck another blow against the Bush administration when it reinstated the Clinton administration's ban on road construction in almost 60 million acres of national forest, a ban intended to block logging, mining and oil-drilling.

But the rulings do not mean that California is winning the war. The Ninth Circuit Court of Appeals has long been criticized by conservatives as excessively liberal (although it could be argued that upholding a state's jurisdiction over the federal government is a classic conservative position.)

The Department of the Interior has not yet decided if it will appeal the court's ruling on oil drilling off the California Coast to the Supreme Court, but if it does, it may find the weather there more to its liking.

And even if the ruling stands, the Bush administration could still invoke a federal override provision in the environmental law that protects the coast, and go ahead and extend the oil leases anyway.

In Los Angeles in the '50s, "pollution was so bad, you'd blow your nose and it would be black," says Ed Camarena, an engineer who's served on the board of the South Coast Air Quality Management District, which now enforces air quality regulations in the area. The San Francisco Bay Area had cleaner air, but as recently as the '60s, elementary schools were known to close down because smog made it hard for children to breathe.

That smog inspired a legacy of emissions regulations in California that spread nationally and forced major changes in how the automotive industry did its business. The 1990 so-called Zero Emissions Vehicle Mandate was merely the latest in a long string of measures aimed at improving the air.

The ZEV mandate requires automakers to market cars powered by electricity or alternative fuels, like hydrogen. But while California has the right to set emissions standards, it cannot require automakers to produce cars that get better mileage than that required by the feds. So automakers filed suit, arguing that the mandate conflicts with the federal government's sole right to regulate fuel economy. (On Dec. 12, the Bush administration slightly increased those standards, for the first time in six years. But environmentalists charged that the change was a token one.)

The Bush administration filed a brief siding with the automakers, and a federal court agreed, preventing the California Air Resources Board from enforcing the mandate in 2003. In early December, the board held workshops soliciting public comment for rewriting the regulation.

"Federal regulations govern fuel economy. You cannot have states passing their own fuel economy laws," says Eron Shosteck, a spokesperson for the Alliance of Automobile Manufacturers.

The implications of the decision go beyond how many zero-emissions vehicles California will see on its roads next year. California has long been ahead of the rest of the nation when it comes to pollution controls. Its historic smog problems mean that the state is allowed to have more-stringent pollution controls than are federally required. That's because the state leapt into the air-quality regulation game before the federal government stepped in.

As early as 1959, California passed legislation ordering the state Department of Public Health to develop air quality standards and set emissions controls on motor vehicles. By the mid-'60s, when the federal government was developing air quality legislation for the nation, culminating in the Clean Air Act of 1970, California's rules were already in place.

The feds let California keep its own, tougher standards, which other states are permitted to adopt as well, effectively creating two sets of requirements.

In 1990, California gave automakers a regulatory push toward promising new clean-fuel technologies by demanding that 2 percent of all vehicles offered for sale in the state be zero-emission by 1998, 5 percent by 2000 and 10 percent in 2003. The Zero Emissions Vehicle Mandate has been in dispute ever since.

As the electric-car experiment fizzled, and carmakers litigated against the regulation, the requirement was scaled back, with the current mandate requiring that by 2003, 2 percent of all new vehicles offered for sale in the state be zero-emission, and another 2 percent be "advanced technology partial ZEVs," such as "hybrid" electric/gas vehicles.

Ironically, it was this concession, designed to help the automakers meet zero-emissions vehicle requirements, that led to the court problems for those regulations.

The auto industry argued that mandating hybrids -- since they burn traditional fuel -- amounted to a regulation of fuel economy, and the Bush administration felt so strongly about the issue that it filed a brief agreeing.

Despite the injunction preventing the state from enforcing the mandate in 2003, California isn't backing down.

"We haven't just surrendered and said OK," says Richard Varenchik, a spokesman for the state's Air Resources Board, noting that the state is working on revising the regulation to bring it back to the board early next year.

But automakers also plan to use the same argument to challenge California's groundbreaking greenhouse gas regulation, which hasn't even been codified yet.

In July of 2002 California passed the nation's first greenhouse gas legislation, A.B. 1493, which will require automakers to meet carbon pollution standards for new cars in 2009. The auto industry says that it plans to use that same federal vs. states' rights argument to fight California's legislation, although the rules have yet to be written. The regulations are to be finalized by the Air Resources Board in 2005 and would apply to consumer vehicles by 2009.

"Again, this legislation concerns fuel economy, which is under the purview of the federal government," says Steve Douglas of the Alliance of Automobile Manufacturers.

Even where California is explicitly permitted under the Clean Air Act to have stricter standards than the rest of the nation, regulators fear that the Bush administration is out to thwart them, if only with endless red tape.

On Nov. 22, the Bush administration announced that it was easing clean air controls, allowing utilities, refineries and manufacturers to avoid expensive antipollution controls when they modernize old, dirty plants. In doing so, the Environmental Protection Agency decreed that states will now have to prove their rules are "as effective" as the new EPA rules.

"It was a strong signal from the administration that they were going to circumscribe the ability of states to decline to adopt these new rules," says John Walke, an attorney for the National Resources Defense Council.

For regulators, this means getting caught up in an administrative morass of trying to prove that every single one of their regulations is in fact more stringent than the federal counterpart.

Varenchik of the Air Resources Board says that's already happening: "Recently, we've found that the EPA tends to be really picky when we're doing those separate rules. You may look at the whole rule and say: 'It's a no-brainer. The California rule is much tougher than the EPA rule.' They'll get down to an almost sentence-by-sentence comparison, and say: 'Hey, this one paragraph doesn't seem as tough.' They can throw it out, hold it up, ask you to rewrite the whole thing, and go through it again."

Bush vs. California is more than just a reprisal for the state's not going his way in 2002 -- it's a showdown to determine which direction the nation goes for the foreseeable future in regard to environmental policy. For decades, conventional wisdom has held that California is a kind of "early adopter" state -- trends that start here spread to the rest of the country and even further. Enacting strong laws to protect the environment is one of the examples of California's leadership that many Californians hold most dear.

Now those laws are under attack. And with control of both the House and the Senate, the Bush administration is well positioned to make its assault do lasting damage, not just to California's air and water, but to the very idea that ordinary people, instead of well-heeled campaign contributors, have the right to decide what their environment looks like.

Katharine Mieszkowski km@salon.com is a senior writer for Salon Technology.
http://www.nytimes.com/2002/12/15/business/yourmoney/15VIEW.html

Sunday, December 15, 2002 NYT Business Section Economic View:

By TOM REDBURN

WHICH events of recent days are likely to have the most significant long-term impact on American business and the economy?

To my mind, it was not the Bush administration's new team of economic policy makers, who dominated the headlines last week. Nor the efforts to clean up Wall Street. And not the buildup of troops to fight a war in Iraq, either.

No, my money is on the barely noticed introduction by Honda and Toyota of a handful of experimental fuel cell vehicles to be tested by the State of California.

The possibility of running cars on fuel cells has been heavily promoted in business circles in recent years, and for good reason. Imagine a global economy no longer dependent on oil and the internal combustion engine. Fuel cells, because they produce energy from pure hydrogen rather than from petroleum, emit only water and heat as waste, potentially generating power without burning fossil fuels.

By making it possible to shift from petroleum to other primary energy sources, fuel cells could ease the threat of global warming without taking away the freedom and mobility that Americans and Europeans take for granted — and the rest of the world is determined to get for itself. China and India, with more than one-third of the world's population, could sustain rapid growth for decades without choking the sky with pollutants and climate-damaging carbon dioxide.

But this vision of a truly sustainable economic future is far from inevitable. The technological challenges to building a commercially successful fuel cell vehicle are overwhelming. And who would supply them? Recasting the entire petroleum-based infrastructure to produce and deliver hydrogen safely to hundreds of millions of such vehicles presents a classic chicken-and-egg problem of immense proportions.

Every major automaker and oil company has a hydrogen or fuel cell research effort under way; supporters say they recognize that fossil fuels can't last forever. Environmentalists carp that industry is simply trying to preserve the status quo and avoid more immediate steps to improve the fuel efficiency of conventional automobiles.

In a generally positive article on the efforts of General Motors to reinvent the automobile, Wired magazine noted that Rick Wagoner, G.M.'s chief executive, likes to call the fuel cell car "the holy grail," but that the description "may be a truer assessment than he intends." After all, as David Redstone, editor of Hydrogen & Fuel Cell Investor, a newsletter, told the magazine: "The holy grail is something you spend your entire life looking for. The whole point is that you never find it."

No one knows for sure whether a hydrogen economy is a possible dream.

"The oil companies and automakers are not doing this because they want to kill it," said Steven Taub, an expert on alternative fuels at Cambridge Energy Research Associates in Cambridge, Mass. "But they are not doing this because they know it's the future, either. They're doing it because they don't know whether or not it's the future."

It's worth the risk to find out.

Bolstered by modest support from the government and a new commitment from the Bush administration, American automakers and other companies are already investing in fuel cell research. But an effort to put tens, if not hundreds of thousands, of vehicles on the road within a decade, which many analysts regard as feasible, would require a substantial commitment from Washington to help jump-start the market and support the investment in a supply infrastructure.

THIS shouldn't mean giving up on less ambitious efforts, as both the White House and the auto industry have done in abandoning the research program to build a very fuel-efficient car using existing technology. If nothing else, as an insurance policy to avoid being usurped again by Japanese automakers, Detroit should also be investing more in fuel-efficient hybrid electric-gasoline vehicles like the Toyota Prius.

True, big federal programs like the Interstate System of highways, the development of the Internet and the creation of the semiconductor chip (which grew out of the space program) have gone out of fashion. But even in an era in which markets have rightly assumed a much greater role in allocating resources, government commitment is needed to set ambitious goals in crucial areas.

And when the nation is preparing to spend at least $100 billion to liberate Iraq from Saddam Hussein and much more to maintain stability in the Persian Gulf, nothing is more crucial than investing a fraction of that sum to help liberate the world economy from its addiction to Middle East oil.
http://www.caranddriver.com/xp/Caranddriver/dai/2002/december/20021210_dai_ford.xml

The Daily Auto Insider December 10, 2002

Ford Kills Escape Hybrid

Ford has decided not to build a hybrid version of the Escape small SUV, reports the Associated Press.

Ford had been considering building the hybrid Escape at its Ohio Assembly Plant in Avon Lake, a Cleveland suburb, alongside the regular Escape, which will go into production there in the summer.

Ford made a big deal earlier this year of the hybrid Escape, touting it as a 40 mpg answer to the gas guzzling SUV. The vehicle was to use a small electric motor to power it during initial start-up and when extra power is needed for passing or hill climbs. Prabhakar Patil, chief engineer for the vehicle, said, "[It] will offer the same functionality and performance as the conventional product."

But as sales of the regular Escape have dropped 14.4 percent in the first 11 months of the year, according to J.D. Power and Associates, and a plant in Missouri that builds the Escape not working at full capacity, it didn't make sense to build hybrids in Avon Lake, said Roman Krygier Jr., Ford's group vice president for manufacturing and quality. "Demand has dropped off. That was the reason," he said.
http://www.bayarea.com/mld/mercurynews/news/opinion/4764682.htm

Posted on Wed, Dec. 18, 2002