Lifestyle

Detroit's Growing Green Problem


The Big Three automakers once again rank poorly for their green car efforts. But now the costs of lagging are on the rise

Want to drive a car from a U.S. automaker that is tops in its class for being green? You have just one choice—the Chevrolet Malibu Maxx, a hatchback that tied for eco-friendliness with Toyota's larger Avalon.

This lone win for Detroit is a bright spot for the Big Three in the annual green rankings from the Union of Concerned Scientists. The group looked at levels of pollutants and global-warming-causing emissions of carbon dioxide from all vehicles sold in 2005 and weighted those emissions by the number sold to rank individual cars—and companies—according to their environmental performance.

For the fourth year in a row, Honda (HMC) tops the charts, thanks to relatively clean and fuel-efficient vehicles across the board, from the Civic to the Odyssey minivan. Nipping at its heels is Toyota (TM), which gets a huge boost from rising sales of the hybrid Prius. Hyundai-Kia pulls into third place, ahead of Nissan (NSANY) and Volkswagen (VLKAY). Then, pulling up the rear is Detroit, with Ford (F) ranking the best of the bunch, followed by General Motors (GM). "DaimlerChrysler earns the rusty tailpipe award with the worst scores on both greenhouse gas emissions and smog," says UCS engineer Don MacKenzie. Overall, Honda's offerings are 22% better than the average, while DaimlerChrysler's (DCX) are 15% worse.

Paving the Way for the States

And this year, the list is taking on an added importance. "The rankings couldn't come at a more appropriate time," says David Friedman, research director of UCS's clean fuels program. On Apr. 2, the U.S. Supreme Court issued a dramatic decision, saying that global warming is a serious problem and that the Environmental Protection Agency has the power to regulate the greenhouse gases—carbon dioxide—spewing from auto tailpipes (see BusinessWeek.com, 4/2/07, "Court Turns Up the Heat on Global Warming").

The EPA is not about to issue such regulations any time soon. But the Supreme Court ruling paves the way for states to act. Back in 2002, California passed a law requiring tougher tailpipe emissions rules to combat global warming. Nearly a dozen other states have voted to adopt those rules. Detroit automakers filed suit to block the regulations, and those cases have been tied up in court, awaiting the Supreme Court decision (see BusinessWeek.com, 10/30/06, "Global Warming: Here Come the Lawyers").

Now, it doesn't look good for the Big Three's legal case. "The Supreme Court knocked out all of the claims of the carmakers," explains Natural Resources Defense Council attorney David Doniger. The biggest issue was whether CO2 is a pollutant under the Clean Air Act and thus should be regulated. Automakers said no. The top court emphatically said yes.

The Big Three Will Take a Hit

Automakers are responding by ratcheting up the pressure on Congress to pass sweeping global warming legislation that preempts the states. They'd rather have one national rule than a patchwork of state regulations. Plus, they think they can get a better deal in an economy-wide climate bill than in regulations aimed at just the auto industry. But whether the action is at the state or federal level, the eventual result will be regulations requiring far greater fuel efficiency.

As the UCS rankings show, the Big Three will be hit the hardest by such rules. And the court case comes on top of the latest bad sales figures. In March, GM posted a 7.7% decline in U.S. vehicle sales. Ford was down 9%, and Chrysler fell 4.6%, while Toyota jumped 12% (see BusinessWeek.com, 4/3/07, "Pickup Trucks at the Crossroads").

It's impossible to know how much of Detroit's sales declines and Toyota's gains reflect how green their cars are. But Ted Grozier, an associate at the environmental strategy consulting firm GreenOrder, believes that a fundamental shift in consumer preference is occurring. "We expect to see a lot more consumers choosing environmentally preferable vehicles," he says. And right now, Toyota may be leading the pack. Even though it's slightly behind Honda, it has a much broader vehicle lineup, with large sport-utility vehicles, cars, and pickups not offered by Honda. "One of the big stories in the rankings is Toyota," says UCS's MacKenzie. "It proves that size is no excuse for a dirty fleet. Toyota has big vehicles in categories where Honda does not compete, yet it nearly tied Honda" in the overall ranking.

Especially after the Supreme Court decision, there seems to be increasing value for automakers in being green. GM will need more than just the Chevrolet Malibu Maxx.

Click here to see a slide show ranking the greenest automakers.

John Carey is a senior correspondent for BusinessWeek in Washington.

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