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SAE: U.S. energy policy key to what we drive

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SAE: U.S. energy policy key to what we drive

Incentives to buy will determine mix of cars in America

David Shepardson / Detroit News Washington Bureau

Detroit -- The government will need to offer further incentives in order to influence the mix of vehicles in America's driveways, automakers and experts said Wednesday.

At the Society of Automotive Engineers World Congress convention at Cobo Center, the nation's energy policy was identified as a major force in determining what Americans will buy and drive in coming years.

Policymakers already have invested billions to back various technologies.


The Obama administration has shifted funding from hydrogen fuel cells and toward electric cars. And automakers have largely shifted their focus from biofuels -- although they still back efforts for cellulosic ethanol.

Patrick Davis, program manager at the Energy Department's Vehicle Technologies program, noted that half of his agency's budget is targeted toward electric vehicles.

Much of the future mix depends on the price of gasoline, the amount of government incentives for expensive technologies such as plug-in electric hybrids, technology improvements and tough fuel-efficiency mandates.

The Obama administration awarded $2.3 billion in grants in August to boost battery technology and electric vehicles, with about $1.4 billion of the funds going to Michigan companies or projects.

The administration is "really laying the groundwork for putting a battery industry in place," Donald Hillebrand, director of the Center for Transportation Research at the Argonne National Laboratory, said at an SAE panel on energy policy.

Congress also approved a $7,500 consumer tax credit for plug-in electric vehicles.

Other programs include a $25 billion low-government loan program to help automakers and their suppliers retool to produce more fuel efficient vehicles.

But at a hearing Wednesday in Washington, House Ways and Means Committee Chairman Sander Levin, D-Royal Oak, said the government needs to do even more.

"We have lacked an energy policy for changing times and changing technologies. We have been behind the curve," Levin said.

"GM is going to bring the Volt (electric vehicle) to market on schedule, but initially the battery packs are being supplied by South Korea. Why? In part, this is because for years the South Korean government had a strategy to financially support this technology and the local industry."

David Friedman, research director of the Clean Vehicles program at the Union of Concerned Scientists, told the SAE forum that the government needs a "carrot and sticks" approach.

"You can't just provide incentives," Friedman said. "You also need to provide some sort of regulation that is going to guarantee to meet your goal."

But he said capping carbon dioxide emissions might add 20-30 cents to the price of a gallon for gasoline -- not enough to dramatically change motorists' habits.

Friedman said the administration should require low-carbon fuels and force drivers to pay for what they drive -- considering a pay-per-mile revenue scheme.

Other emerging technologies may need more help.

Congress has mandated the use of 36 billion gallons of ethanol by 2022 -- more than four times current use -- and 16 billion gallons of cellulosic ethanol, a biofuel made from renewable sources such as agricultural waste, algae and wood chips.

GM, for example, acquired equity stakes in two cellulosic ethanol startups in 2008. But no significant amounts of cellulosic ethanol have been produced.

The government set aside $786.5 million to accelerate biofuels research and boost commercialization, by providing additional funding for commercial biorefineries.

"We need about $2 billion a year to help launch a lagging cellulosic industry," Friedman said. "That industry is at least four to 10 years behind" the requirements set by Congress in 2007.

Toyota Motor Corp.'s head of technical and regulatory affairs in Washington, Tom Stricker, warned against requiring vehicles to run on E85 -- a blend of 85 percent ethanol -- without assuring an adequate supply of the fuel. He noted that the $100 per vehicle cost of making a flex-fuel vehicle represents about 10 percent of the predicted cost of meeting 2016 fuel-efficiency standards.

Stricker also said government "shouldn't pick winners and losers" among emerging technologies.

Nor should automakers adopt a "build-it-and-they will-come mentality," he said. "Without market demand, it doesn't matter how many battery plants we build; it doesn't matter how many electric vehicle assembly plants we build."

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