James A. Croce, CEO NextEnergy

Originally published in the Michigan Energy Report

The massive controversy surrounding CAFE standards, or Corporate Average Fuel Economy Standards, is so intense that it’s difficult to escape the hype coming from all sides.

The fundamental issue is whether an increase in CAFE standards is an effective means to drive the U.S. market towards a sustainable energy future.

From the pro-CAFE standards camp; American automakers are losing market share to the more fuel-efficient vehicles produced by foreign automakers and need the “tough love” only CAFE standards can provide. Plus, CAFE standards will ultimately help force the U.S. to sever our ties to foreign oil, and CAFE standards will also help reduce harmful emissions from our vehicles by reducing the amount of petroleum we burn.

It’s the first part of this argument, the “tough love” argument, which is most troubling to me. I don’t buy Congress’ contention that if the Detroit Three simply bought into CAFE sooner, they would be on a better financial footing today. There is no evidence to suggest that. And other huge and critical issues such as health care costs and unfair international trade agreements are not given due consideration in the CAFE logic. Only recently have we seen a migration among consumers towards energy efficient vehicles and yet, Detroit 3 market share has been on a steady decline for decades. The ailment goes far deeper than the cure CAFE can provide.

Washington is frustrated with the Detroit automakers over their “just say no to CAFE” history and are determined to “help” by enacting an arbitrary set of CAFE mandates that, ultimately, will not lead Michigan’s auto industry to future prosperity. Michigan’s right-minded Congressional delegates are like voices in the D. C. wilderness arguing on behalf of the Detroit 3 and Toyota. They care for our state, understand the real issues, and are our strongest advocates.

Not so with a majority of delegates from other states. I was invited to Washington D.C. on June 6th by Sen. Debbie Stabenow and Senate Majority Leader Harry Reid to a Senate Democrats “Manufacturing Summit” and heard their anger first hand. The Summit focused on three core issues: health care, trade, and energy. After much discussion, health care and trade issues emerged as far greater detriments to the Detroit 3’s prosperity than their track record of building fuel efficient cars and trucks.

And yet, for now, it is far more expedient for Congress to “save” Detroit by rubber stamping CAFE than to accelerate resolution to the thornier issues of national health care and unfair trade practices. To Congress, it’s “win-win” for the country. But it does not help Michigan. And only exacerbates our problems. Furthermore, the perception of Michigan as a “clean technology” innovation leader greatly suffers as our incumbent automotive industry and Congressional delegation struggle for reason in the CAFE debate.

There is no silver bullet solution to fix Detroit’s automotive market share decline and there’s certainly no silver bullet solution to address our nation’s energy woes. However, it is in our nation’s national security interest to prod consumers towards adopting fuel efficient vehicles as well as a diverse portfolio of domestically-derived alternative fuels.

But it’s a mistake for us Michiganders to expect CAFE to fix the economic woes resulting from a decades-long decline in our manufacturing sector. And, by itself, CAFE isn’t enough to drive our nation’s energy security either. The better solution is a sustained commitment to funding alternative energy innovation (a la the Manhattan Project or the Apollo program), and a demonstration of real political will to “just say no” to large corporate fossil fuel interests.

That’s when real progress will occur. That’s when we will really make a dent in fossil fuel imports. Only then will our nation and the State of Michigan achieve economic security through energy diversity.

Sign up for a free subscription to the Michigan Energy Report e-newsletter.