Europe seethes as U.S. fails to confront climate change

By Michael Northrop

THE European Union, in an effort to deal with global warming, has approved two important measures: a community-wide cap on carbon emissions from fossil fuels and the trading of emissions allowances, both set to begin in 2005. The Bush administration, meanwhile, has said the United States will focus on adaptation to a hotter world with no greenhouse gas reductions of any kind until 2012 and then only through voluntary measures.

Obviously, the EU is far more worried about global warming than is the United States, and a failure to grasp the seriousness of this difference could undo 50 years of close transatlantic relations, eventually fracturing diplomatic and even economic ties.

Europeans' attitudes toward climate change have been colored by stark reality: They have maximized their usable land area, with an average population density eight times greater than that of the United States. This concentration increases the probability of devastation from extreme weather events spawned by global warming -- and the damage already has begun.

The Thames River barrier, for example, built to protect London and central England from storm surges and abnormally high tides, had, until recently, closed an average of two to three times a year. But in the five months from November 2000 to March 2001, engineers had to raise the barrier 23 times to protect London and other areas from flooding.

Eventually, as sea levels rise, the barrier won't be enough. A report released in September calculated that 59,000 square miles -- and 750,000 people -- around London are vulnerable to flooding because they are below high-tide levels, some by as much as 12 feet.

On the continent, summer flooding inundated dozens of major cities including the historic centers of Hamburg and Dresden. In Prague, more than 50,000 people fled as the Vltava River rose, in some cases reaching the second story of buildings in the city's medieval old town. The rain was so intense in parts of Germany that annual average precipitation was reached in only a day or two. Throughout the region people attribute such events to climate change.

The cost of cleanup across Europe from summer flooding could be more than $33 billion, while the loss of tourism and business closings could add billions more to the total. Indeed, damage from unprecedented and chronic flooding of Europe during the 1990s cost $150 billion.

Economic losses from the effects of extreme weather have escalated sharply in recent years, primarily from damage to the continent's infrastructure of rail lines and subways, airports, roads, bridges, canals, ports and telecommunications systems. The German state of Saxony alone has lost 450 miles of roads and 180 bridges to weather damage last summer.

European

adaptation'' strategies costing tens of billions of dollars annually are already at their maximum, and still the winds and rain come, obliterating towns and with them centuries of records, artwork and other treasures. Such events and losses explain why Europeans take global warming so seriously, and why they are so furious at Bush's often-cited beliefs that mandatory reduction of greenhouse gas emissions is not in America's best interests.

Europe's population density removes the option of starting over on higher ground to rebuild lives and livelihoods. To people who have lost so much in such a short period, slowing and stopping global warming, rather than trying to repair the damage, is the only solution that makes sense.

In contrast, the United States, with the exception of densely developed coastal areas and a few inland cities traversed by large rivers, has the luxury of moving to higher ground, rerouting rivers or simply turning up air conditioners to adapt to the effects of climate change. The U.S. Army Corps of Engineers, for example, plans an elaborate system of dams and levees to protect Grand Forks, N.D., which was almost destroyed by flooding in 1997. The project, jointly funded by federal and local government, will cost almost $400 million.

Ultimately, the U.S. decision to adapt to the effects of global warming will prove shortsighted, but for now money and wide open spaces are still abundant. Our closest allies, facing a grimmer future, understand all too well the urgent need to cut carbon emissions.

Michael Northrop directs the global conservation grant-making program at the Rockefeller Brothers Fund and is a fellow at the German Marshall Fund's Trans Atlantic Center in Brussels. He wrote this for the Washington Post.

American carmakers are comfortable with their demographic research that says people don't want cars like this. They reason, with some logic, that if they can't make a business case for it, they won't build it. But Detroit found itself being boxed into a similar logic in the early 1970s when they tried to compete with small Japanese and European cars that ate Motown's lunch that decade. The Big Three saw Japanese carmakers, in particular, start to take their market share, a trend that has continued today to the point that Toyota appears on the verge of becoming the number one passenger car seller in America.

A vital part of America's anti-terrorism strategy is to end U.S. dependence on foreign oil -- but neither the Democrats nor the Republicans seem to be aware of this.

Here is an interesting editorial by Robert Redford; it originally appeared in the Los Angeles Times and is being circulated by www.evworld.com

by Robert Redford

The Bush White House talks tough on military matters in the Middle East while remaining virtually silent about the long-term problem posed by U.S. dependence on fossil fuels. Failing to rein in our dependence on imported oil gives leverage to undemocratic and unstable regimes.

Wasteful consumption of fossil fuels creates political liabilities overseas, air pollution at home and global warming. The rate at which the United States burns fossil fuels has made our country a leading contributor to global warming.

The Bush administration's energy policy to date -- a military garrison in the Middle East and drilling for more oil in the Arctic and other fragile habitats -- is costly, dangerous and self- defeating.

Despite the absence of leadership on energy security in Washington, some local efforts are paying off. Last year, San Francisco voters overwhelmingly approved a $100-million bond initiative to pay for solar panels, wind power and energy efficiency for public buildings. The measure was supported not only by the environmental community but also by the Chamber of Commerce, labor unions and the American Lung Assn.

San Francisco's first solar project, a $5.2-million energy- efficiency upgrade at the Moscone Convention Center, was dedicated last month. What's the straight economic benefit of this particular project? Plenty. The upgrades and the panels combined will cut energy consumption in the building by as much as 38%, and the project will pay for itself from energy savings. The net savings to taxpayers after debt service is subtracted are projected to be more than $200,000 a year.

American rooftops can be the Persian Gulf of solar energy. After Australia, no developed nation on Earth gets more annual sunlight than the United States. In addition, wind is now the fastest-growing energy source worldwide and one of the cheapest. But wind and solar power generate less than 2% of U.S. power. We can do better.

We can increase auto fuel economy standards to 40 miles per gallon. The technology to achieve that goal exists now. Phasing in that standard by 2012 would save 15 times more oil than Alaska's Arctic National Wildlife Refuge is likely to produce over 50 years. We could also give tax rebates for existing hybrid gas-electric vehicles that get as much as 60 mpg, and invest in mass transit.

These measures would keep energy dollars in the American economy, reduce air pollution and create jobs at home.

The benefits of switching to a mostly pollution-free economy would be considerable, and the costs of failing to do so would be steep. Prolonging our dependence on fossil fuels would guarantee homeland insecurity. If you are worried about getting oil from an unstable Persian Gulf, consider the alternatives: Indonesia, Nigeria, Uzbekistan.

If we want energy security, then we have to reduce our appetite for fossil fuels. There's no other way. Other issues may crowd the headlines, but this is our fundamental challenge.

Big challenges require bold action and leadership. To get the United States off fossil fuels in this uneasy national climate of terrorism and conflict in the Persian Gulf, we must treat the issue with the urgency and persistence it deserves. The measure of our success will be the condition in which we leave the world for the next generation.

Weaning our nation from fossil fuels should be understood as the most patriotic policy to which we can commit ourselves.

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Robert Redford is an actor, director, entrepreneur and environmentalist.

Source: PR Newswire [Dec 19, 2002]

OSLO December 19, 2002 – Ford Motor Company today announced that it has entered into a 'letter of intent' to sell Think Nordic - the specialist manufacturer of urban battery electric vehicles - to Kamkorp Microelectronics of Switzerland, preserving 100 jobs at its Aurskog, Norway, plant.

The proposed sale of TH!NK follows an announcement in August 2002 that Ford planned to cease investment in battery electric vehicles and would instead concentrate its development resources on fuel cell and hybrid technologies.

Ford of Europe Vice President of European sales operations, Ingvar Sviggum, said: "We are now hopeful that this is just the result we have all worked hard to achieve. We promised the workforce we would do everything possible to maintain the business as a going concern and to protect jobs.

"We also felt a duty towards the community of Aurskog and the Norwegian authorities, who have been supportive throughout."

The prospective new owners of the company plan to continue development and production of battery electric vehicles and would be granted the right to use the "TH!NK" and "city" brand names as part of the agreement, which was not Ford's original intention.
"In the end, it was the jobs of the workforce and the health of the Aurskog community that took priority," said Sviggum, "and Ford believed that this was a small price to pay."

KamKorp European Business Development Director, Bernd Winkler, added: "We are delighted to have this opportunity. There is a 10-year history of EV production in Norway, and the workforce at Aurskog has unrivalled experience and expertise in this specialist area. Ford has kept this tradition alive, and now we are thrilled to be negotiating to take it over. It's a wonderful Christmas present for all of us."

Ford Motor Company acquired TH!NK in 1999 when it was trading under the PIVCO name, and the new City vehicle was launched the same year. The TH!NK name was used by Ford as the umbrella brand for all of its zero-emissions products and technology.

Following the rapid evolution of fuel cell and hybrid technologies, Ford made a strategic decision to withdraw from battery electric vehicle production.

By TAMSIN CARLISLE Staff Reporter of THE WALL STREET JOURNAL December 23, 2002

With countries around the world aiming to cut greenhouse-gas emissions, one would think things would be looking up for a company on the verge of commercializing a nonpolluting car engine.

Instead, Ballard Power Systems Inc. is chopping 400 employees, or nearly 30% of its work force, cutting development spending and seeking buyers for parts of its business. Even by Ballard's own reckoning, profitability is still five years off, which means it has to conserve cash, develop other revenue streams and persuade investors to stay the course until its engine technology becomes commercially viable.

In theory, prospects are encouraging for the Burnaby, British Columbia, company, which has pioneered development of fuel cells for car engines since 1983. Ballard is close to the commercial launch of a zero-emissions car in partnership with major auto makers such as Ford Motor Co. and DaimlerChrysler AG. The new class of cars would be powered by fuel cells, a technology for producing electricity from oxygen and hydrogen that has most famously been used in spacecraft.

Giving added credence to the idea of fuel cells, Honda Motor Co. and Toyota Motor Corp. each said this month that they are putting a handful of fuel-cell-powered test cars on the road in California. The Honda models will use Ballard's technology.

But for all their clean-air attributes, fuel-cell cars won't appeal to consumers until the price comes into line with those of other automobiles. In California, the test vehicles will be leased to government entities -- the University of California and the City of Los Angeles -- at rates as high as $10,000 a month.

As it works to bring down the costs of the technology, Ballard has to make its cash go the extra mile. Earlier this month, Ballard's two biggest shareholders, Ford and DaimlerChrysler, agreed to provide $97 million over five years to fund continued development of fuel-cell engines. Only $28 million of that would come from equity financing, which would raise the auto makers' combined Ballard stake to no more than 46% from 40%.

The deal with Ford and DaimlerChrysler briefly boosted Ballard's flagging share price, but the stock retrenched when the company promptly announced a deal valued at 156 million Canadian dollars ($100.5 million) with underwriters to issue 7.7 million new shares.

In 4 p.m. trading on the Nasdaq Stock Market Thursday, Ballard shares were down three cents each at $11.26. The company's market capitalization stands at about $1.2 billion, down from a peak of about $12 billion in early 2000 before the technology bubble burst.

At the same time, the company is developing a line of mini power-generators based on fuel-cell technology. Sales of these products could take off in the next couple of years, says Ballard's president, Dennis Campbell, who was hired in July to oversee Ballard's transition to commercial production, and is slated to succeed Firoz Rasul as chief executive officer on March 31.

The only commercial product so far to incorporate a Ballard power module is an emergency back-up power generator marketed by Coleman Powermate, a unit of American Household Inc., formerly Sunbeam Corp. But the generator costs at least twice as much to buy as rival products that don't use fuel cells. Mr. Campbell says the company is developing technology to halve the power module's cost by 2004.

In an interview, Mr. Campbell, who has held a range of management posts in automotive, power-generation and manufacturing businesses, including Ford and Cummins Engine Co., said Ballard plans to purchase more components for fuel-cell engines from newly emerging suppliers, instead of developing most components itself.

Jarret Carson, an analyst with RBC Dain Rauscher Wessels in Austin, Texas, believes that fuel-cell vehicles will eventually find a mass market. But he doesn't see auto makers increasing their orders for fuel-cell engines to hundreds from tens of units until at least 2005, and to thousands of units until 2009.

For Ballard, that is a long way to go.

-- Jeffrey Ball contributed to this article.

Write to Tamsin Carlisle at tamsin.carlisle@wsj.com1

December 23, 2002

By JEFFREY BALL and NORIHIKO SHIROUZU

Staff Reporters of THE WALL STREET JOURNAL December 23, 2002

General Motors Corp. and Toyota Motor Corp. are gearing up to produce hybrid gasoline-and-electric versions of sport-utility vehicles and pickup trucks, giving fuel-saving hybrid technologies a big push toward the mainstream market.

At the annual Detroit auto show next month, Toyota and GM will announce plans to introduce hybrid versions of several of their bigger vehicles. GM, the world's biggest auto maker, intends to roll out hybrid systems as optional equipment across much of its lineup between 2004 and the end of the decade, according to an official familiar with the plans. Toyota will disclose plans to launch hybrid versions of its Lexus RX330 luxury SUV and its Toyota Highlander SUV before the middle of the decade.

GM aims to use an array of technologies to offer hybrid systems as an option on an increasing number of its vehicles. One of them is the relatively simple hybrid system in store for its pickups. The company's goal is to be ready to build as many hybrids as U.S. consumers will buy, but not to be saddled with so many that it has to sell them at a loss, according to a person familiar with GM's plans.

The hybrid versions of Toyota's SUVs will derive from Toyota's hybrid Estima minivan. The Estima was launched in Japan in 2001 and isn't sold in the U.S. Toyota President Fujio Cho said earlier this year the car maker hopes by mid-decade to sell 300,000 hybrids a year around the world, most of them in the U.S. To fulfill that goal, Mr. Cho said in a recent interview Toyota will offer a hybrid version of the RX330 SUV, among other larger light trucks and cars. Aside from the RX330 and the Highlander, Toyota is "considering" developing hybrid versions of the Camry, one of America's best-selling midsize family cars, and the full-size Tundra pickup truck, said another Toyota official who declined to be named.

The plans from Toyota and GM mark the biggest sign yet that auto makers believe hybrids have the potential to become more than a niche technology. Because SUVs, pickups and minivans tend to be more fuel-thirsty than passenger cars, their popularity has pushed down the average fuel economy of the entire new U.S. fleet to the lowest level -- about 21 miles per gallon -- in two decades. That has begun to spark a political backlash amid mounting concerns over global warming and U.S. reliance on foreign oil.

Currently, the only models of the futuristic fuel-efficient gasoline-and-electric vehicles on sale in the U.S. are small cars from Honda Motor Co. and Toyota. But over the next few years, most major auto makers plan to roll out in the U.S. hybrid versions of their SUVs or pickup trucks.

Ford Motor Co. has already announced plans to launch a gasoline-and-electric version of its popular Ford Escape small SUV late next year. Ford says the hybrid Escape will go between 35 and 40 miles on a gallon of gasoline, and should be available in dealer showrooms by early 2004.

Honda, which sells a hybrid two-seat car called the Insight and a hybrid version of its four-door Civic compact car, also is considering expanding its hybrid offerings. Though the company says it hasn't made up its mind on how it might do so, one executive said Honda will likely roll out hybrid SUVs and minivans over the next few years as it redesigns its Odyssey minivan and its Acura MDX and Honda Pilot SUVs, all of which are engineered on similar under-the-skin designs.

Both GM and DaimlerChrysler AG's Chrysler unit have said they plan to start selling hybrid versions of their full-size pickup trucks. The electric-boost systems proposed for these models could deliver an approximate 10% improvement in fuel economy compared with conventional motors. GM plans to start selling its hybrid pickup by late 2003 or 2004; Chrysler, by late 2003.

Write to Jeffrey Ball at jeffrey.ball@wsj.com1 and Norihiko Shirouzu at norihiko.shirouzu@wsj.com2

By JOSEPH B. WHITE

• Send comments about Eyes on the Road to Joe at joseph.white@wsj.com2

December 23, 2002

DETROIT -- There are a few days left in the old year, but as far as the auto industry is concerned 2002 is history, and it's 2003 right now. As I write this, offices and factories at the Big Three auto makers are emptying for the long winter's holiday break. Overseas, European and Japanese industry leaders are slowing down, and probably grousing about having to schlep to chilly Detroit in early January for the mammoth North American International Auto Show.

It's impossible to know what the future will bring, particularly these days. But based on what industry executives have had to say in the waning weeks of 2002, here are a few things for car buffs and potential car buyers to watch out for in the New Year.

Deals

But the signals from GM are clear: They'd like to retire the Zero.

Paul Ballew, GM's chief market analyst, told reporters the other day that the zero-percent deal "ran its play" and now GM is "moving into the next phase."

GM would like consumers to discover that new GM cars and trucks are so superior to the competition that they will gladly pay something close to full price to own them. Ford and Chrysler have similar aspirations, and won't hesitate to follow GM's lead if GM sends Mr. Zero to the showers.

But just as basketball couldn't seem to live for long without Mr. Jordan's crowd-drawing gifts, so it may be that the U.S. domestic brands will have to bring Mr. Zero back off the bench sooner than they'd like -- should they even get up the nerve to sit him down. The few times that the traditional Detroit brands moved away from zero-percent promotions in 2002, sales stumbled. It isn't so much the zero-percent deal -- only a small fraction of consumers actually wind up qualifying for zero-percent loans. It's the message that the zero-percent promotions convey, which is, "we're discounting the merchandise big time." Consumers not obsessed with the economics of the car business may not know precisely that over the next year or two, auto makers are going to crank up even more factories to serve the thoroughly oversupplied U.S. market. But they know do that auto makers have more vehicles to sell than a sluggish economy is likely to absorb, so why pay sticker?

SUVs

But behind that broad statement is an important new trend. The Big Mo in the SUV market isn't behind vehicles like the Ford Explorer or Chevy Trailblazer, which are derived from body-on-steel-frame pickup trucks. The big growth in the SUV sector is in sales of vehicles that are really cars or minivans under the skin. The Acura MDX and Honda Pilot, both from Honda Motor Co. and both mechanical kissing cousins of Honda's successful Odyssey minivan, have become the benchmarks for this new and growing slice of the SUV market. Two new vehicles hitting the market over the next year will accelerate this trend: the Volvo XC90 and the Cadillac SRX. These vehicles combine luxury features and nimble, more car-like handling with seating for seven (or eight), lots of cargo space, and up-high command seating. In other words, they look like hits.

It's not that sales of truck-like SUVs will die. But car makers already are shelling out bigger and bigger discounts to keep the Explorers and Trailblazers and Dodge Durangos of the world moving off dealer lots, while Acura dealers are selling their MDXs almost as soon as they hit the showrooms.

Wagons

These new models won't be marketed as "station wagons." But they aren't really SUVs. They ride lower to the ground, like cars, and aren't meant for off-roading. But they aren't really cars in the traditional sense, either. The closest thing most Americans have seen to the Pacifica is a Mercedes, BMW or Audi station wagon -- although these Euro wagons sell in tiny volumes, mainly in enclaves like southwestern Connecticut.

Is mainstream America ready to rediscover the joys of the wagon? The Pacifica is one of the most stylish mass-market vehicles to come out of Detroit in a while. (Although the definition of "mass market" depends on your point of view -- initially its price will likely top $30,000.) If the Pacifica is a hit, Chrysler could inspire a host of imitators. If it's a flop, more than a few industry product visionaries will be wiping egg off their faces.