Economist says greenhouse gas rules mean more expensive cars

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(Host) An economist hired by the auto industry told a federal court today that Vermont’s new greenhouse gas rules will make cars more expensive.

The testimony was part of the car companies’ legal battle against the state’s effort to control carbon dioxide pollution from cars.

But the state and environmental groups hope to show that the industry has over-estimated the economic impact of the regulation.

VPR’s John Dillon reports:

(Dillon) Economist David Harrison testified that if the rules go into effect, new car sales in Vermont will drop by 18%. And since cars would be more expensive, he said Vermonters will end up driving older vehicles.

Charles Territto is a spokesman for the Alliance of Automobile Manufacturers.

(Territo) “They believe that sales will decrease as the cost of vehicles increases and that ultimately consumers will hold onto vehicles longer as the number of models they have to choose from decreases.”

(Dillon) Nine states – including Vermont – have followed California’s lead in adopting new rules that require a 40% reduction in CO2 emissions by 2016.

It’s one of the biggest environmental challenges facing the auto industry in decades. So the car companies sued to block the rules in a number of states. The Vermont case is the first to go to trial.

The industry’s main argument is that states are really trying to control fuel economy by regulating CO2 emissions. The car companies say that’s illegal, since only the federal government – not the states – can regulate vehicle mileage.

But it was the economic impact of the regulations that dominated most of the testimony on Thursday. Economist David Harrison said he used numbers provided by the industry to conclude that the regulations will hurt both consumers and the car companies.

But Melissa Hoffer, a lawyer for the Conservation Law Foundation, said the state and environmental groups will have plenty of counter arguments when they present their case. She said the industry economist is relying on flawed assumptions

(Hoffer) “And in this instance in particular, Mr. Harrison is not taking into account the increase in savings that a consumer will achieve by driving a vehicle that gets so much better fuel economy.”

(Dillon) Under cross-examination, Harrison acknowledged that his model is only as good as the data that’s plugged into it. He said if the inputs to the model are faulty, then the results will also be flawed.

For VPR News, I’m John Dillon in Burlington.

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