Statement of Energy and Air Quality Subcommittee Chairman Boucher

"A Review of the Administration's Energy Proposal for the Transportation Sector"

February 28, 2007

            This morning we continue our focus on an appropriate Congressional response to climate change with the first of what will be a series of hearings on the transportation sector.

            Our subject today is the proposal by the Administration for statutory authority to raise the corporate average fuel economy standard for passenger cars above the standard of 27.5 miles per gallon.

            The Administration's proposal would also for the first time empower NHTSA to establish different fuel economy standards for different classes of passenger cars and for the first time establish fuel economy credit trading among auto manufacturers.

            In the Administration's view, as expressed by the President in the State of the Union address, these far reaching CAFÉ changes would serve to reduce fuel consumption by the motoring public and also address the challenge of climate change.

            The Administration's proposal has now been submitted to the Committee as draft legislation.  It raises fundamental questions which we will explore with our witnesses this morning.

            One obvious question is whether different fuel economy standards for different classes of passenger cars might create a perverse incentive for manufacturers to build more of the larger less fuel efficient vehicles and correspondingly fewer of the smaller more efficient cars.

            The draft asks for the authority to distinguish categories of passenger cars for fuel economy purposes based on "attributes." But the term "attributes" is not defined.  Characteristics of cars that can affect fuel economy can vary widely.  What does the term attributes mean?

            The draft bill proposes a trading system for fuel economy credits, presumably akin to the trading system now in place for SO2 emissions.

            But there are major differences between electric utilities that largely do not compete with each other and the highly competitive auto industry, where depending on the circumstances, manufacturers might prefer to pay penalties for CAFÉ non-compliance than to purchase credits from a competitor.

            And we must ask whether there is any analysis that tradable fuel economy credits would actually save fuel.

            I am also interested in the Administration's view of how its CAFÉ proposal for passenger cars fits within a framework of greenhouse gas control.

            Later this year our subcommittee will process control program legislation to address the climate change challenge.  I am interested in the views of the witnesses about whether the CAFÉ changes now before us would compliment that effort, whether other kinds of CAFÉ changes would better achieve greenhouse gas reductions, or whether an entirely different approach would be preferable for the transportation sector component of the greenhouse gas program.

            I don't anticipate that the witnesses will have complete answers to the climate change questions this morning.  But in outlining the questions, I want to demonstrate our concern that we must view this CAFÉ proposal within that larger context.

            I welcome today's witnesses.