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Climate Change Legislation
In the U.S., the policy debate surrounding climate change has been overshadowed by other issues, including concerns over budget deficits. Nevertheless, the U.S. Environmental Protection Agency (EPA) continued to pursue greenhouse gas emissions regulations for mobile and stationary sources using their authority under the Clean Air Act. EPA and the U.S. National Highway Transportation Safety Administration (NHTSA) finalized regulations for 2012–16 model year vehicles. And in 2011, California began the first year of their Low-Carbon Fuel Standard.
Ford has participated in the public discourse on climate policy for some time. In 1999, for example, we discussed greenhouse gases in our first corporate citizenship report. In late 2005, we published a special report on the Business Impact of Climate Change, and in 2007 we joined the U.S. Climate Action Partnership to support the prompt enactment of climate legislation.
These experiences, as well as our participation in carbon markets globally, have helped to shape Ford’s position on climate policy. The linked issues of climate change and energy security create an urgent need to transform the country’s economy into one with lower greenhouse gas emissions, higher energy efficiency and less dependence on fossil fuels and foreign oil. This transformation will require changes in all sectors of the economy and society. A comprehensive legislative framework is needed to spur these changes.
We believe we need a comprehensive, market-based approach to reducing GHG emissions if the U.S. is going to reduce emissions at the lowest cost per ton. An economy-wide program would provide flexibility to regulated entities while allowing market mechanisms to determine where GHG reductions can be achieved at the lowest cost. The environment doesn’t care where reductions occur, but the economy does, and given the potentially high cost of abatement, it is important to achieve the lowest cost possible.
As part of an integrated approach to addressing energy security and climate change, Ford supports comprehensive legislation that will create a price signal to encourage consumers to purchase more fuel-efficient vehicles. Thoughtful and comprehensive national energy and climate policy that provides a price signal is needed to support the billions of dollars being invested into low-carbon and fuel-efficient vehicle technologies. Without a cohesive policy that includes a price signal, we could be caught in an endless cycle wherein development of the advanced technologies needed to help address climate change and energy security is sporadic and not aligned with fuel providers or consumer demand.
Ford will continue to advocate for effective climate change policies that drive down GHG emissions and provide a framework for sound business and product planning.
Greenhouse Gas and Fuel Economy Regulation
In 2009, the Obama Administration announced an agreement among the federal government, the state of California, the auto industry and other stakeholders in support of a single national program for motor vehicle fuel economy and greenhouse gas standards covering the 2012 to 2016 model years. Ford views this “One National Program” agreement as a positive step for all stakeholders toward our common goals of energy security and reduced greenhouse gas emissions.
A national program is essential for the efficient regulation of motor vehicle fuel economy and GHG emissions. It allows manufacturers to average the fuel economy and carbon dioxide (CO2) emissions of their vehicles based on nationwide sales, which in turn enables manufacturers to formulate their product plans on a national scale. In contrast, state-by-state or regional regulations could force manufacturers to restrict the sale of some products in certain parts of the country, harming both consumers and dealers in those areas. Since CO2 emissions do not create localized air-quality problems, state or regional standards are unnecessary, and the incremental benefits of such standards are negligible in comparison to the costs and market disruptions they would impose.
In May 2010, the Obama Administration announced plans to set a new round of light-duty motor vehicle fuel economy and GHG standards for the 2017–2025 model years. Consistent with the One National Program agreement for 2012–2016, the EPA and NHTSA are again planning to issue harmonized standards (with EPA setting GHG standards under the Clean Air Act, and NHTSA setting fuel economy standards under the Energy Policy and Conservation Act). The agencies expect to issue proposed standards in September 2010.
The California Air Resources Board is also planning to issue its own proposed 2017–2025 GHG standards at the same time. State standards are inherently incompatible with federal standards. Although California has expressed support for the One National Program framework, at this writing it is not clear whether California will ultimately defer to the federal standards as it did for the 2012–2016 time period.
Ford is committed to working constructively with all stakeholders toward the implementation of workable and effective One National Program standards for 2017–2025. For the longer term, Ford supports a legislative solution requiring One National Program, in order to head off the possibility that various agencies may promulgate and enforce multiple, inconsistent fuel economy/GHG regulations in the future.
In May 2010, President Obama announced a set of principles for the EPA and NHTSA to work together to develop a single national program for greenhouse gas and fuel economy standards for heavy-duty vehicles. As a result, in November 2010 the EPA and NHTSA proposed CO2 and fuel consumption requirements for 2014 through 2018 model year combination tractors, heavy-duty pickup trucks and vans, and vocational vehicles. The agencies estimate that the combined proposed standards have the potential to reduce GHG emissions by nearly 250 million metric tons and save approximately 500 million barrels of oil over the life of vehicles sold during the program. Final requirements are expected to be published in late summer 2011.
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