Automakers May Feel Pressure by CalPERS to Improve Emissions
California State Controller Steve Westly and CalPERS board member Sean Harrigan want the state's pension fund to lean on automakers to comply with ground-breaking new standards adopted by the state Air Resources Board to help curb global warming.
The two sent a letter to the other members of the California Public Employees' Retirement System board Monday, urging them to threaten to yank Cal-PERS' $838 million in investments in car manufacturing companies unless they accept the new rules. Carmakers have threatened to sue to block the new standards.
"We're concerned that car companies would rather litigate than innovate to meet California's new emission standards," Westly and Harrigan wrote. "Carmakers should put new technology in high gear -- not take shareholders on a long and pointless legal detour."
The state Air Resources Board adopted the new rules in September to force carmakers to cut carbon dioxide exhaust emissions from passenger cars and light trucks, making the state the first in the nation to crack down on the greenhouse gas emissions.
The regulations require automakers to begin selling vehicles with reduced carbon dioxide and other heat-trapping gas emissions by model year 2009 and cut the greenhouse gas emissions by 30 percent by 2016.
Other states, including New York and Massachusetts, plan to follow California's lead in adopting tougher standards for automakers.
But car manufacturers have threatened to file lawsuits against the new standards, which they call costly and ineffective in producing substantial environmental effects.
"This proposed regulation would place a $3,000 surcharge on every Californian with no identifiable health or environmental benefits," said Eron Shosteck, director of communications for the Alliance of Automobile Manufacturers.
The air board disputes the trade group's cost estimate and said instead the new rules would add about $1,000 to the price tag of automobiles, a cost the board said would be negated by fuel savings.
Shosteck said consumers should choose whether to pay the price for expensive added technologies.
"Some consumers are willing to pay for that. That's great, they should have that choice," Shosteck said. "Some consumers don't want to be forced to pay for that technology."
The new regulations are politically popular, however and Gov. Arnold Schwarzenegger has said he will not fight them.
Westly and Harrigan hope to add to the pressure with the weight of the nation's largest pension fund. They've asked that the matter be placed on the CalPERS' investment committee's Dec. 13 agenda for further discussion.
"We urge CalPERS to put pressure on these companies to act responsibly," the letter states. "This could include asking companies to explain their preparedness for the new regulations and their financial rationale for considering litigation instead."
Source: Knight Ridder/Tribune Business News