Environmental leader supports rescue of auto industry

Jeffrey Sachs, director of the Earth Institute at Columbia University, has an op-ed in the Washington Post supporting a rescue package for the Big Three automakers designed to restructure the auto industry around next generation vehicles that are better for the environment:

A government-supported restructuring of the auto industry is urgently needed for our economic and energy security. If the Bush administration allows the auto industry to collapse, it will compound the panic that started with the bankruptcy of Lehman Brothers. Washington should seize the opportunity to begin a new era of U.S. technological leadership in the global auto industry, starting with an immediate loan…

First, this is an opportunity to embark on a major industry restructuring to position the United States to lead the world in producing cars that get 100 miles or more per gallon. This achievement is closer than many suppose, with the pathbreaking plug-in hybrid Chevy Volt set to arrive in 2010 and several new hybrid models on the way. American-made fuel-cell cars may be a large-scale reality within a decade. Success would dramatically improve energy and national security, climate security, and U.S. global competitiveness, and a public-private partnership is needed to bring about this transformation…

Some want to see the industry punished for its neglect of energy and environmental realities, but we should acknowledge that the SUV era reflected poor judgment across society. Yes, the industry ignored warnings about energy insecurity and climate, but so did the public and politicians. Rather than kill the auto industry, and destroy the U.S. economy in the process, we should fix the industry with a sense of national responsibility and purpose. (We should also fix our ramshackle health-care system, which has burdened the industry and the economy with punitively high costs.)

There are many crucial issues for the design of a long-term restructuring. The government needs the authority to steer a public-private consortium to create a high-mileage-vehicle economy in the coming decade. Public and private funding will be needed for research, development and demonstration of breakthrough technologies. During the restructuring, taxpayers will need protections, including warrants or equity shares, limits on industry compensation, and an equitable restructuring of worker benefits, a process that has already begun because of market hardships.

We face an unprecedented financial calamity, energy crisis and environmental threat. A vibrant, growing U.S. automobile industry should play an essential role in solving all three. The technologies that will win the day are in sight; industry has already made important advances. A partnership with government is vital and should begin this week.

Sachs argues that allowing the auto companies to go into bankruptcy “would be death knell” because it would cause the collapse of companies that supply parts for the manufacturers and would lead consumers to buy foreign cars because those companies are more likely to be around in later years.