‘Feebate’ plan floated to bail out SUV owners

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WASHINGTON – For all those SUV owners weary of paying $70 to fill up, there could be good news on the way: Some in Congress are discussing seriously the idea of bailing you out through a program of government “feebates.”

The idea is simple: Trade in your truck for a fuel-sipping hybrid or ethanol-burning model, and you would get a tax rebate. But buy another gas guzzler, and would you pay extra tax as a penalty – on top of $3-per-gallon gas.

Sen. Gordon Smith, R-Ore., an advocate of raising fuel-economy standards, floated the idea during a hearing on Capitol Hill this week. He suggested that such a program could steer car owners toward more-efficient models – and bridge the ideological divide between advocates of conservation and greater production.

“I have noticed that there are two schools of thought,” Smith said. “One is all carrot, and the other is all club.”

Smith made his comments as the Senate Commerce Committee debated how to raise fuel-economy standards for the nation’s automobile fleet. Known by the acronym CAFE – for Corporate Average Fuel Economy – the standards were set in 1975. The top goal of 27.5 miles per gallon has remained unchanged since 1990.

The feebate idea offered by Smith has been bouncing around think tanks for years. But with gas prices now near record highs and the potential for more instability in the oil-producing nations of the Middle East, it has commanded new attention.

The idea was featured in a 2004 report entitled “Winning the Oil Endgame” from the Rocky Mountain Institute in Snowmass, Colo. The report concludes that the United States could achieve oil independence by 2025 largely by creating incentives to reward companies that develop energy-saving products, including cars.

The report urges decision makers to view feebates as a method for increasing consumer choices, not limiting them. For example, a schedule of feebates could be developed for each class of cars, giving manufacturers incentive to develop better SUVs rather than focusing only on smaller, lighter cars.

“(T)his new pattern of demand pulls superefficient but uncompromised vehicles from the drawing board into the showroom,” the report concludes.

The feebate idea has been the subject of intense scrutiny in Canada, which is searching for ways to reduce greenhouse gas emissions to meet its obligations under the Kyoto climate-change treaty. But the reviews there have been mixed.

Objections, raised mostly by auto manufacturers, include the possibility that feebates could backfire – that is, encourage people to hold on to inefficient cars with outdated technology.

But a recent government report on energy-saving incentives included a long list of societal benefits in addition to gas savings. Reduced emissions would reduce the cost of treating respiratory and cardiovascular diseases, and investment in new technologies could help create new jobs, it said.

“There is no contradiction between promoting long-term carbon emission reductions and pursuing Canada’s other key societal objectives,” the National Round Table on the Environment and the Economy said in the August 2005 report.

Back in Washington, however, the debate over fuel-economy standards appeared to stall over disagreement between the legislative and executive branches.

At a congressional hearing Tuesday, Transportation Secretary Norm Mineta asked Congress for authority to create new standards based on a sliding scale for different classes and sizes of cars. If Congress didn’t like the system the administration created, it always could pass legislation demanding change, he said.

“I see no reason why that cannot be done because Congress still has the oversight responsibility,” Mineta said.

But Smith was among those who raised concerns about ceding too much authority to unelected bureaucrats.

“The problem we have is what the next administration will do with it,” Smith said. “Will it be arbitrarily undertaken to do something that is devastating to the auto industry, devastating to safety, all in the name of fuel efficiency?”

JM END BARNETT

(Jim Barnett can be contacted at jim.barnett(at)newhouse.com)

AP-NY-05-11-06 1658EDT

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