Energy Bill Has Only Half a Tank

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GM is banking on increasing the fuel economy of all its vehicles, plus an influx of plug-in cars whose fuel economy is yet to be rated. It will be an interesting political battle to see how plug-ins are counted toward each company's CAFE (corporate average fuel economy) rating. Also missing from the energy bill are continued incentives for consumers, still wary or unsure about hybrids and diesels, to keep buying them. Diesels, for example, were part of the incentive program of tax credits allowed to buyers of Toyota Priuses and Ford Escape Hybrids, which phase out after a certain number of those vehicles are sold. But the standard was set so high that no manufacturers' diesel vehicles qualified.

Clean diesel fuel, which is available now in the U.S., could be a huge game-changer in the U.S., as it has been in Europe. But one of the sticking points for automakers is the technology to meet U.S. and California emissions requirements, as well as the lack of interest by consumers, most of whom don't understand diesel engines.

Consider a measure that would have made a lot of sense in the energy bill, but got no conversation in Washington: What if the U.S. government allocated $1 billion to promote clean diesel and educate the public. The Feds have done this previously with ad campaigns to promote, for example, "Just Say No" to drugs. There are still no peer-reviewed papers showing those ads deter kids from using drugs. None. But it is a fair assumption that, with Europe as a model, $1 billion to educate people about clean diesel would actually have some impact.

Something to Talk About

The energy bill was passed by the Senate last week after it stripped out tax hikes on oil companies and preserved huge ethanol subsidies to agribusiness. And it was done just as the U.S. was looking especially bad at a 190-nation conference that convened on the Indonesian island of Bali to hammer out an accord to fight global warming in the next decade. The U.S., the world's biggest carbon producer, had been fighting participation in the agreement. Said House Speaker Nancy Pelosi (D-Calif.) about the bill: "It sends a message to world leaders meeting in Bali that the United States is serious about addressing global warming."

Here is a prediction. This energy bill, even after it's signed by President Bush, will be revisited in the next few years, amended, tweaked, and ultimately made even less effective than it is now. And here is another prediction. Unless American consumers are led by their government to a new energy age, which will require them to make sacrifices and change their thinking about how they power their cars, houses, and planes, the only change will be increased prices of automobiles, home heating bills, and plane tickets. That's because too many consumers will decide they'd rather have the costs of those things go up as automakers, utility companies, and airlines end up paying fines instead of complying with the new laws.

There is, as we know, a wide-open and raucous Presidential election under way. The idea of "shared sacrifice" has only been occasionally uttered by a few of the candidates—notably New Mexico Governor Bill Richardson and Illinois Senator Barack Obama, both Democrats. But talking to Iowans, New Hampshirites, and South Carolinians about driving fewer pickups and SUVs "doesn't focus-group well," a Democratic campaign strategist told me.

"Right now," says the strategist, "the energy bill has something for everyone to talk about." And that, it seems, was the point all along.

Kiley is a senior correspondent in BusinessWeek's Detroit bureau.