Driving a Sustainable Economy
A 21st century marked by climate change and other sustainability challenges must quickly pave a path for more fuel efficient vehicles, cleaner fuels and better infrastructure for every mode of travel. Yet the transportation sector remains largely tied to decades-old technologies, high carbon fuel sources, and a transportation infrastructure that spawns more pollution and congestion. A new energy economy is emerging, and with it new solutions and opportunities for the sector to move forward sustainably.
Transportation is the second largest carbon emitter in the U.S. For U.S. businesses, reducing emissions from vehicles and the fuels that power them, makes both environmental and economic sense. And consumers and companies want the better gas mileage and zero-emission technologies that lower their overall driving costs while cutting pollution and health costs. As oil and gas become riskier and more expensive to extract, companies that innovate and prepare for a carbon constrained economy will have a substantial, perhaps decisive edge over those opting for business-as-usual.
Ceres works with corporations, investors, and policymakers to reduce the transportation sector’s environmental and social impacts and create more sustainable and efficient ways of driving the economy forward.
Improving Fuel Economy Standards
Improved fuel economy standards are – in addition to cutting carbon emissions and decreasing our dependence on oil – vital to U.S. automakers’ competitiveness. Setting strict fuel economy standards will help create jobs, save businesses money and encourage investment in the U.S. auto industry. Stricter standards will also promote energy security by decreasing the amount of fuel needed to power cars and trucks, lessening our dependence on foreign oil.
Ceres actively supports improved fuel economy standards by rallying investor and corporate support for stringent new standards and publishing cutting-edge studies that make the economic case for more fuel-efficient vehicles.
In April 2012, we issued the report "Fuel Economy Focus: Perspectives on 2020 Industry Implications," which evaluates the impact that the proposed fuel economy/GHG standards would have on the automotive industry in the year 2020. Produced by Citi Investment Research and Analysis, in collaboration with Ceres, the report finds that under the proposed vehicles standards, the auto industry, and particularly American automakers, would likely see higher profits and sales.
The report findings include the following:
- Adopting technologies necessary to meet proposed new fuel economy standards will likely boost industry profits by 5%, or 4.76 billion in 2020.
- Ford, Chrysler and GM would likely see a larger increase in profits than the rest of the industry, earning a 6% increase in profits of $2.44 billion in 2020.
- Technologies required to meet the proposed standards are cost effective for consumers; even if gas prices dropped to $1.50 in 2020, fuel savings would fully offset the additional cost of the technologies.
- The proposed standards could largely be met by using existing, cost-effective technologies that improve the performance of cars powered by traditional internal combustion engines.
In the spring of 2009, when fuel economy standards for 2012-2016 were under development, Ceres partnered with Citi Investment Research and the University of Michigan to analyze the impact of strong standards on the auto industry. The resulting analysis, CAFE and the U.S. Auto Industry Revisited: A Growing Auto Investor Issue, made the economic case for an average fuel economy standard for passenger vehicles of 35.5 mpg, the standard that was eventually adopted by the Obama Administration.
The new standards will result in reducing our oil consumption by 1.8 billion barrels and reducing greenhouse gas emissions by 900 million metric tons.
As policymakers developed standards for the years 2017-2025, Ceres analyzed the implications of strong standards for the auto industry and job creation, as well as voter support for strong standards.
In March 2011, Ceres again partnered with Citi in 2011 to analyze the impacts the proposed standards would have on automakers by the year 2020. The March 2011 report, Fuel Economy Focus: Perspectives on 2020 Industry Implications, found that stricter standards would actually enhance the competitiveness of domestic automakers and be cost effective for consumers.
In June of 2011, Ceres commissioned independent consultant Management Information Systems, Inc., to analyze the impacts of stronger standards on U.S. and state job creation. The report, More Jobs per Gallon; How Strong Fuel Economy/GHG Standards will Fuel American Jobs, found that the stronger the standards, the greater number of jobs would be created.
In May, Ceres also commissioned the Mellman Group to conduct a poll in Michigan and Ohio, the historic heart of the auto industry, and found that voters across the political spectrum supported strong standards.
Soon after, the Administration announced its intention to propose strong standards. Ceres will continue to make the economic case for strong standards during the rulemaking process.
In addition to making the economic case for stricter standards, Ceres has encouraged support from our investor and corporate partners.
In October 2010, the Investor Network on Climate Risk (INCR) and Business for Innovative Climate and Energy Policy (BICEP), both led by Ceres, issued letters to the EPA in support of the proposed standards for 2017-2025. In support of this effort, investors met with key policymakers in support of strong standards.
During the public comment period for the 2017-2025 standards, Ceres worked with credible business leaders who took a public stand in favor of strong vehicle standards. For example, pioneering CleanTech investor in January. In addition, Martin Lagod, managing director of the venture capital firm Firelake Capital Management, wrote an op-ed in support of the proposed California standards.
BICEP, an advocacy coalition of businesses committed to working with policy makers to pass meaningful energy and climate legislation, which is coordinated by Ceres, ran an ad in support of the California clean cars package in January.
In February 2012, BICEP, INCR and Ceres submitted comment letters supporting the proposed fuel economy/GHG vehicle standards for 2017-2025, and Ceres also testified at the January San Francisco public hearing in support of the proposed standards.
In 2010, the EPA and the National Highway Traffic Safety Administration (NHTSA) proposed new truck standards, which will, for the first time, regulate the fuel economy of medium and heavy-duty trucks. To support the stricter standards, members of INCR, along with Ceres, testified at public hearings in Chicago and Boston in the fall of 2010. Additionally, comment letters from BICEP and INCR members supporting stricter truck standards were submitted to the EPA and NHTSA in January 2011.
Stronger standards are also key to promoting advanced vehicle technologies, which will help make the domestic auto industry globally competitive. In February 2011, Ceres partnered with Citi Investment research to produce Electric Vehicles; Perspectives on a Growing Investment Theme, on the viability of the growing electric vehicle industry, and the policy framework needed to support the industry.
Developing a Clean Fuel Standard
Establishing well designed Clean Fuel Standard (CFS) would lower emissions by curbing the use of high-carbon fuel sources like oil sands while gradually reducing the carbon content of other fuels over time – in part by mixing in higher proportions of lower carbon fuels or using clean electricity to power vehicles. Many of these fuels could be locally sourced, helping to further reduce their overall carbon footprint while bolstering local economies.
California has such a standard in place and Ceres is helping to support a CFS under development in New England and the Mid-Atlantic states by engaging and educating and investors and companies, on the benefits of a CFS. Investors, and Ceres have testified at public hearings and submitted comments in support of a strong CFS. In October 2011, INCR and BICEP members submitted letters supporting a clean fuel standard for the Northeast and Mid-Atlantic states.
Tier 3 Standards
Another important regulatory initiative is the EPA's Tier 3 standards for fuels and vehicles, which are the most cost effective way to realize significant reductions in pollutants such as ozone (smog), particulate matter (soot), and air toxics. The proposed Tier 3 standards represent a unique opportunity for the United States to strengthen the economy, create jobs, prevent illness, reduce healthcare expenditures and contribute to the long term growth of the auto and emission control industries.
The standards are the most cost effective way to realize significant reductions in pollutants like smog, soot, and air toxins. The standards would reduce the sulfur content of gasoline, making pollution control equipment more efficient, and facilitating compliance with the new fuel economy and greenhouse gas vehicle standards.
The public comment period for Tier 3 standards ended on July 1st 2013. Members of Ceres' Investor Network on Climate Risk (INCR), including the Office of the Connecticut State Treasurer and Wespath Investment Management, have urged the Environmental Protection Agency to adopt the standards this year in order to realize their significant economic and public health impacts as soon as possible.
Ceres also produced the report Canada’s Oil Sand, Shrinking Window of Opportunity, which focuses on environmental and regulatory risks posed by tar sands development to investors. Ceres used the report to brief policymakers as well as investors and companies on the link between carbon intensive tar sands and a low carbon fuel standard.
Learn more about a Clean Fuel Standard by downloading our fact sheet.
Learn more about California's Low Fuel Standard by downloading our fact sheet.
Learn more about the Tier 3 standards by downloading our fact sheet.
Pay-As-You-Drive Auto Insurance
Ceres is helping to craft performance standards for Pay-As-You-Drive (PAYD) auto insurance. PAYD prices insurance policies based on miles driven - the less you drive, the less you pay. It saves consumers money, incentivizes reduced pollution and traffic congestion and helps cut wear and tear on roadways. In 2009, Ceres convened state regulators, auto insurers and advocates to create a performance standard for PAYD policies, and is working to advance the standard in states and regions around the U.S.
To learn more about PAYD Insurance, download the PAYD Technical Report by the Victoria Transport Policy Institute.
Ceres Roadmap for Sustainability
Ceres has released as a vision and practical roadmap for integrating sustainability into the everyday practices of all businesses, regardless of sector or industry. It analyzes the key drivers, risks and opportunities in making the shift to sustainability, and details strategies and results from companies already tackling these challenges. The Ceres Roadmap is designed to provide a comprehensive platform for companies and investors alike to design sustainable business strategies and accelerate innovative solutions that increase performance.
Ceres, drawing on the expertise from the Ceres Coalition, holds regular stakeholder engagements with companies such as Ford, Virgin America Airlines and other transportation related companies. These stakeholder meetings bring together corporate executives, investors and public interest groups to boost company attention to sustainability risks and set specific goals for managing them, including increasing fuel efficiency, reducing carbon emissions from transportation activities and improving supplier sustainability performance.
Investors in Ceres' Investor Network on Climate Risk are using their leverage as shareholders to secure meaningful commitments on sustainability challenges from companies they invest in. Through shareholder resolutions and face-to-face meetings, investors working with Ceres are asking auto, rail, shipping and airline companies to improve their transparency on sustainability-related risks and to set tangible performance goals for reducing their carbon emissions and improving fuel efficiency.
For More Information
Read article and download reports about the transportation industry listed on the right-hand side of this page.
To learn more about how Ceres works with the transportation sector, or to get involved in Ceres' work, contact Carol Lee Rawn, director of Ceres Transportation Program.