Energy and Global Warming News for June 24nd: U. Michigan study says it was “standard practice” to ignore consumer demand for fuel efficiency — “If GM had followed its own research it would likely not be in Chapter 11 today.”

An important new study from U of M’s Transportation Research Institute, “Fixing Detroit: how far, how fast, how fuel efficient” concludes:

The impact of higher fuel economy standards on industry profits is very clear:  Increasing fuel economy 30% to 50% (35 MPG to 40.5 MPG) would increase the Detroit 3’s gross profits by roughly $3 billion per year, and increase sales by the equivalent of two large assembly plants. The sensitivity analysis showed our findings are very robust. The overall risk and reward profile is very positive, with only a small chance of losing and a very large probability of gain.

I’m gonna say “duh” (see “Has Obama saved Detroit from itself “” or is that simply impossible?“).  The NYT/AP has some excellent quotes from the report’s authors:

U.S. automakers ignored fuel-efficiency research — UM study

U.S. automakers have underestimated the importance of fuel efficiency to consumers, but new federal standards are expected to help the companies turn a profit, according to the results of a University of Michigan study released Monday.

Researchers at the U of M Transportation Research Institute said plans for vehicles to be 30 percent more efficient by 2016, along with federal intervention at General Motors Corp. and Chrysler Group, are forcing the companies to pay closer attention to fuel efficiency when designing new cars, something the automakers failed to do in the past.

At times there was a concerted effort by company officials to discount the results of consumer research when making planning decisions, said the authors of the report, also former GM employees.

”It is standard practice to discount consumer research. It was only applied to safety and quality issues,” said Walter McManus, director of the automotive analysis division for the institute and co-author of the study.

He said that people abandoned American-made vehicles in favor of fuel-efficient Japanese models, leading to the downturn of all three automakers.

”The reaction to fuel prices was way beyond what anyone would have ever predicted,” McManus said.

But U.S. automakers now have a chance to catch up, as vehicles must average 35 mpg by 2016. The study estimates a combined $3 billion in annual profit for the Detroit companies as consumers gain greater options for more fuel-efficient vehicles.

”They confused people [who were] staying away from fuel-efficient, small cars as not liking fuel economy, instead of the fact that they made mediocre cars that no one wanted,” said Rob Kleinbaum, co-author of the study and managing director of RAK & Co. ”If GM had followed its own research it would likely not be in Chapter 11 (bankruptcy protection) today.”

Japanese automakers, already well on their way to meeting the federal fuel economy standards, could lose customers as U.S. automakers begin to reach those requirements.

But in order for automakers to see improvements they must make deep cultural changes within the organization. Fiat CEO Sergio Marchionne made sweeping management changes when he took over Chrysler earlier this month.

”It’s always the same people at the table. GM needs to change the top 50 to 100 people in North America,” Klienbaum said. ”They need to change the fundamental belief and values of the company that led them into this mess in the first place.”

Ford, Nissan and Tesla Awarded $8 Billion to make clean energy cars

The Department of Energy has released the first third of its $25 billion advanced technology loan fund for automakers to “create thousands of green jobs while helping reduce the nation’s dangerous dependence on foreign oil.”

The agency released about $8 billion, with Ford the largest beneficiary, receiving $5.9 billion. Nissan received $1.6 billion and Tesla Motors got $465 million. Sue Cischke, an environmental vice president at Ford, said, “This is not related to our financial viability “” it’s very different, and it’s what governments do “” assisting the best green technology.”

A Diaspora From African Drylands

Sam Knight, a talented young British journalist, filed a revealing dispatch for The Financial Times from the front lines of sub-Saharan Africa’s ongoing drought-driven diaspora. The piece is a close-up view of the global issue of migration driven by climate change. He focuses on Nandom, a town in the poorest part of northern Ghana that has lost half its population. Elders stay, both in town and in surrounding parched (and periodically drenched) drylands. But the young increasingly flee.

Study finds record smog levels during Beijing Olympics

Athletes at the Beijing games last summer faced air pollution at double and triple the levels found at other recent Olympic cities, according to a joint American-Chinese study released earlier this month.

“Considering the massive efforts by China to reduce air pollution in and around Beijing during the Olympics, this was the largest scale atmospheric pollution experiment ever conducted,” said Staci Simonich, an associate professor of environmental and molecular toxicology at Oregon State University, which worked on the study with Peiking University.

The amount of particulate air pollution in Beijing was roughly one-third higher than what was reported by Chinese officials, according to the study, which also found that the pollution exceeded the level of what’s considered safe by the World Health Organization roughly 81 percent of the time.

China commits to offshore renewable energy

China is planning to construct a number of 10 GW wind power bases in the coming years, in a bid to further boost the development of the country’s renewable energy industry, the country’s top energy official said recently.

Zhang Guobao, administrator of the National Energy Administration, said: “We have worked out the strategy of building large (wind power) bases and integrating them into the mainstream power grid in order to speed up the pace of wind power development in the country”.

GOP, industry pit state vs. state in bid to derail House bill

For years policy experts have repeated again and again the mantra that energy politics breaks down along regional, not partisan lines.

As the House barrels toward a long-anticipated showdown vote on the Waxman-Markey climate bill, Republicans and other critics of the legislation are counting on that adage to hold up as they make a list-ditch effort to scuttle the package.

Over the last few days House Republicans have attempted to ramp up pressure on Democrats from the Midwest and South — agricultural and coal-dependent regions — by arguing that the bill would be particularly harmful to their districts and constituents. At the same time, advocacy groups that oppose the bill have increasingly circulated maps and other materials that distinctly try to demonstrate the state-by-state “winners” and “losers” in the energy debate.

US nixes 40 percent cuts at climate change talks

President Barack Obama’s climate envoy dismissed recommendations that the United States and other developed countries reduce their emissions of greenhouse gases 40 percent by 2020.

“The 40 percent below 1990 (levels) is something which in our judgment is not necessary, and not feasible given where we’re starting from, so it’s not in the cards,” Todd Stern said Tuesday at a conference on global warming.

Stern spoke at the end of the two-day meeting of the Major Economies Forum on Energy and Climate, a gathering of 19 nations and the European Union that together produce 80 percent of the world’s greenhouse gases. The group, called together by Obama, is trying to build a replacement climate change treaty for the expiring Kyoto Protocol.

Houston Biodiesel Plant For Sale

When the $70 million GreenHunter Energy biodiesel refinery opened on the Houston Ship Channel almost exactly a year ago with the capacity to produce 105 million gallons of fuel a year, Texas Gov. Rick Perry bragged that the plant embodied “the future of energy in Texas and the United States.”

But on Tuesday The Houston Chronicle reported that GreenHunter is financially strapped and seeking to sell the plant. The refinery “” reported by The Chronicle to be the country’s largest “” has been idled the last four months due to low demand for fuel in the United States, as well as new trade barriers imposed by Europe on American biodiesel exports. Damages from last summer’s Hurricane Ike didn’t help matters either.

Justices Say Waste Can Be Dumped in Lake

The Supreme Court ruled Monday that the Clean Water Act does not prevent the Army Corps of Engineers from allowing mining waste to be dumped into rivers, streams and other waters.

In a 6-to-3 decision that drew fierce criticism from environmentalists, the court said the Corps of Engineers had the authority to grant Coeur Alaska Inc., a gold mining company, permission to dump the waste known as slurry into Lower Slate Lake, north of Juneau.

“We conclude that the corps was the appropriate agency to issue the permit and that the permit is lawful,” Justice Anthony M. Kennedy wrote for the majority.

The corps permit, issued in 2005, said that 4.5 million tons of waste from the Kensington mine could be dumped into the lake even though it would obliterate life in its waters. The corps found that disposing of it there was less environmentally damaging than other options.

INTERVIEW-Global warming is a security threat – Kofi Annan

Global warming must be seen as an economic and security threat, former United Nations Secretary General Kofi Annan said on Tuesday, calling on poorer countries to speak louder about their climate change needs.

In an interview, Annan said he chose to focus his retirement energies on environmental risks because he believes that left unchecked, they could destabilise both rich and poor countries.

“We do have economic bases for conflict, and tensions, that we sometimes ignore,” he told Reuters in Geneva on the opening day of his Global Humanitarian Forum’s two-day meeting on the human impact of climate change.

11 Responses to Energy and Global Warming News for June 24nd: U. Michigan study says it was “standard practice” to ignore consumer demand for fuel efficiency — “If GM had followed its own research it would likely not be in Chapter 11 today.”

  1. paulm says:

    I wonder what the real reason is why the they ignored the research on efficiency.

  2. Andrew says:

    Does anyone have a link to the full automotive study? I couldn’t find it on the website

  3. Col says:

    Friends of the Earth Launches Ad Campaign Opposing House Climate Bill

  4. Mark says:

    No comments on NPR’s story on The Breakthrough Institute this morning?!?

    [JR: How about “pathetic!”]

    Regarding the domestic car companies, they certainly deserve to die for their repeated mismanagement. I really question whether it is really better for our economy to save them. And will they really be able to take a lead role in developing the cars of tomorrow? Time will tell.

  5. Leland Palmer says:

    The way I have it figured, the reason that the auto companies ignore their own research on consumer demand for efficient vehicles is that the auto companies are not independent.

    The automobile manufacturers are connected to the oil companies via the major banks, like JPMorgan/Chase and Citigroup. So, they don’t follow their own self-interest, they follow the combined interests of the entire eastern financial establishment, aka Wall Street.

    It’s either that, or that our eastern financial establishment wants the Arctic icecap to melt, so that the oil corporations can go after the large reserves (estimated at 90 billion barrels) of oil under the current polar icecap, IMO.

    This last possibility is not as unlikely as it sounds. Scott Borgerson, a visiting fellow at the Council on Foreign Relations, has been touting Arctic riches for a couple of years now, on the CFR website, in the journal Foreign Affairs, in testimony before Congress, in op-eds in the Huffington Post, NYT, Baltimore Sun, and articles in the Atlantic, among other efforts. His message is generally similar IMO – the Arctic is melting, it doesn’t really matter why, and we need to exploit the resources under the melting icecap before the other Arctic nations like Russia do.

    So, I think that the actions of the car companies make sense, if viewed in the skewed, distorted self-interest of a disconnected and irresponsible financial elite, whose fortunes have traditionally been based on oil, banking, and weapons sales, and who have a love of geopolitical gamesmanship.

    This sounds a lot like the influence of David Rockefeller is at play, here, to me.

    David Rockefeller is 90 years old or so, and this is a hyper-conservative, even senile policy, based on scientific understandings of the potential for disaster from global warming that may be decades old, and may seriously underestimate the potential for truly disastrous consequences from runaway positive feedbacks.

  6. Mark says:

    “”They confused people [who were] staying away from fuel-efficient, small cars as not liking fuel economy, instead of the fact that they made mediocre cars that no one wanted,” said Rob Kleinbaum, co-author of the study and managing director of RAK & Co. ”If GM had followed its own research it would likely not be in Chapter 11 (bankruptcy protection) today.” ”

    I’m not going to defend GM’s decision making, but their entire cost structure was not sustainable. Maybe when selling a lot of the big high profit margin cars. Even if they built a mix of smaller more fuel efficient cars that could compete favorably across the market, if GM’s cost per car is 30 or 40% higher than the competition, they could outsell the competition and still go broke.

  7. Seth Masia says:

    Regarding auto companies and market research: We said as much a month ago.


  8. David B. Benson says:

    The July/August 2009 issue of Sierra, sometimes sold on magazine racks, has an article on propects for serious coal mining in Alaska.


  9. BBHY says:

    But this study is wrong about one point. They didn’t just ignore consumer demand for fuel efficiency. They spent many millions of dollars actively lobbying to fight against being forced to improve fuel economy. They knew that the public wanted their representatives in congress to raise CAFE standards, and they fought against it very, very hard.

    Spending huge amounts of money to fight against something is not what I would call ignoring it!

  10. James Newberry says:

    Leland Palmer may be on to something. President Obama seems to be surrounded by estalishment banking types as advisors in science and economics who will probably deliver undefined “clean energy” via “clean coal,” “clean and safe atomic fission” and “low-carbon” fossil gas via foreign LNG tankers. These commodities and emission trading schemes will all be brought to us by the controlling interests of transnational financial establishments who have no idea what they are doing, except for their own selfishness.

    Hasn’t everyone heard the President say ‘we must use nuclear.’

  11. GM lost the war to remain as number one producer of automobiles because of plenty of reasons. But the main reasons were they failed to produce proper innovation in design and building cars and they totally ignored the cost.
    Once upon a time when rest of the world was sleeping and did not know about assembly line production then GM had its glorious days under the Sun. But then GM was so arrogant then it never cared to look back and see that companies like Toyota and Honda are striving hard to close the distance.
    But then the present total rush towards electric vehicles would also prove wrong in the decades to come. Hydrogen will be the fuel of tomorrow but unfortunately research and development in that area is ignored at present. For a glimpse into the world of future transportation please visit the website