Energy Policy:

Former Secretary Mineta says U.S. should not provide consumer incentives for autos

Is the federal government unfairly favoring some vehicle technologies? During today's OnPoint, Norman Mineta, former secretary of Transportation and former secretary of Commerce, explains why he believes the United States should take a technology-neutral approach to autos. He also weighs in on the Obama administration's new fuel economy standards.


Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Norman Mineta, former secretary of transportation and former secretary of commerce. Secretary Mineta, thanks for coming on the show.

Sec. Norman Mineta: Thanks for having me.

Monica Trauzzi: Secretary, you've just released a new white paper focusing on the federal government's role in favoring certain vehicle technologies in the marketplace. Is it favoritism or is it a way for the U.S. government to sort of give the markets and the auto industry some direction?

Sec. Norman Mineta: Well, I think there is a legitimate role in terms of government encouragement, in terms of certain direction, but at some point, there really has to be a level playing field. And my feeling is that money ought to be on the research side, but once you get into development or deployment to the marketplace, then that ought to be the private sector role and not the government. And so, when you have the government not only saying to -- let's say GSA saying to federal agencies buy only electric vehicles or buy hybrid vehicles or the EPA saying we're going to be favoring emerging technologies. Well, what about existing technologies that have been improved over the years by the companies themselves without any government assistance and yet are able to, from a cost basis or from a fuel-efficiency perspective, equal what's being touted? So, what we're saying is the government ought to be not favoring technology, but ought to be keeping a level playing field so that if I'm the procurement manager for the Department of Transportation, that I'd be able to buy an internal combustion engine that is as fuel-efficient and is economically to purchase than an electric or a hybrid vehicle.

Monica Trauzzi: So, the white paper is being released in partnership with the U.S. Coalition for Advanced Diesel Cars.

Sec. Norman Mineta: That's correct.

Monica Trauzzi: So, what you're promoting here is diesel?

Sec. Norman Mineta: No, it's really internal combustion engine, whether it be gasoline or diesel, but in this instance it was a white paper authored or financed by the Advanced Diesel Coalition.

Monica Trauzzi: So, in terms of the emissions to emissions comparison, does the internal combustion engine -- does diesel compare to the benefits of say an electric vehicle or a hybrid?

Sec. Norman Mineta: Well, of course, an electric is sort of on its own because it has no emissions as such. The question is, from a well-to-wheel approach, in terms of the electricity you'd have to be generating for the electric car, is that going to be coal-fired, is that going to be -- wherever the source might be? Again, what are the trade-offs that we have in that mode of power?

Monica Trauzzi: So, what's your view then on tax credits that currently exist for certain vehicle technologies? What role should the government be playing in actually helping consumers access these technologies?

Sec. Norman Mineta: Well, again, my point is that that money ought to be done at the research level. But once it's at the marketplace, the $7500 federal tax credit for an electric vehicle ought not to be there, because that really does definitely leverage against existing technology and my feeling is there ought to be a level playing field in terms of the consumer being able to make their choice.

Monica Trauzzi: But without a tax credit like that, what incentive would a consumer ever have to move away from the status quo?

Sec. Norman Mineta: Well, that's why I say the subsidies ought to be on the research side as the manufacturers are developing it and not at the marketplace once the marketing of that vehicle is there.

Monica Trauzzi: There's been some criticism of the administration's CAFE standards, the 2017 to 2025 targets. Does the government need to provide some guidance for industry on how to meet those targets or should they just lay them out and let industry do what they need to do?

Sec. Norman Mineta: Well, I think really the feeling I think is that the government ought to be setting the standards, even as aggressive as they might want to make them, and then let the industry try to figure out in terms of their own research, in terms of their own manufacturing capabilities or not capabilities, but can it be manufactured to the standard of consumer interest, there are a number of complex issues in terms of the automotive industry. And so we ought to be outcome oriented, rather than specific specification driven. And I think that I know in terms of my own experience I've always been more interested in outcomes rather than being specific, because I remember when the federal transit or the old urban mass transit administration wanted a bus and they specified the size of the tire, what's the-where will the floorboard be above the ground? And they did all of the specifications and it was a bus that was going to cost $450,000. Well, there wasn't a transit district that could afford that kind of a bus. So, as chair of the oversight committee for the House Committee on Public Works and Transportation, I did away with that whole issue of a bus with specifics and said let's go to outcome-based specifications.

Monica Trauzzi: There's a very polarized climate in Washington right now surrounding energy. What do you see as the path forward on creating some kind of cohesive energy policy?

Sec. Norman Mineta: Next question. Well, you know, I think it's not just as it relates to energy. I think right now the whole polarization of the politics, I don't know whether it's being driven by election 2012 or whatever it is, we're not getting the kinds of legislative outcome we should be having in terms of people trying to get together and to compromise, today compromise is a bad word, and to get results. But it's so polarized right now, and I think part of it is being driven by the election and also by when something gets done and someone gets credit for it, and I think people are sort of trying to make sure that nobody gets any credit for getting anything done, so there's this sort of legislative gridlock right now.

Monica Trauzzi: You mentioned at the top that the money should be going on the research side instead of on the backend in tax incentives. But when we're talking about things like loan guarantees, we immediately think of the Solyndra bankruptcy. So, how lightly does the government need to tread in terms of how much money they're putting into research and loan guarantees and where that money is going?

Sec. Norman Mineta: Well, again, first you have to have people who are capable to assess what they had before them to make those judgments about where the money ought to be going. And, you know, I'm not sure the government is a good venture capitalist or private equity firm in that sense. And so, because first of all we're not, in government, trained to do that kind of thing and I think some of the examples, and especially the ones you cite, are examples of probably where we didn't have the judgment to make those decisions. Because I come from Silicon Valley and represented that area for 20 years. Their ask was always on the front end, so you go from simple transistors to semiconductors in the progression of making transistors or rather semiconductors from small wafers to today where they're making them on 12 inch wafers. But from the early on, once they got their research money, that applied research that they did to get the marketplace was tremendous and they were able to do that on their own. And I would hope that that would still be where we are, rather than having on the back end still doing the work to encourage marketplace conduct.

Monica Trauzzi: All right, we're going to end it right there on that note. Thank you for coming on the show, nice to see you.

Sec. Norman Mineta: Thank you for having me.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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