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Posts Tagged ‘taxpayer subsidies’

Saturn Homecoming! Jobs Return to Spring Hill

Investment assumes successful “incentive negotiations” with local and state officials General Motors claims this morning.

by on Sep.17, 2010

Cost per taxpayer subsidized job will be controversial no doubt - the reason they weren't announced?

General Motors Company today promised to spend $483 million of taxpayer money and return 483 jobs of the 2,000 lost to its former Saturn plant complex in Spring Hill Tennessee.

There’s a catch though. This investment assumes successful “incentive negotiations” with local and state officials, according to Mark Reuss, GM North America President.

That these negotiations were not completed ahead of today’s press conference shows how leery elected officials are of a taxpayer revolt that is underway less than two months before the mid-term Congressional elections. Another – perhaps more plausible – theory is that the incentives are likely in place, but the politicians don’t want to admit to them before November.

As TDB previously reported, the jobs come from building current – and ultimately next-generation – Ecotec four-cylinder engines, as GM shifts its emphasis from larger and more fuel thirsty V6 and V8 engines. If the deal comes off,  GM would triple its North American production volume of four-cylinder engines with direct injection technology by 2012 when more stringent fuel economy rules start to take hold.  (See Unloved Ex Saturn Plant to Get New Ecotec Engine)

In a statement GM claimed that the additional work would bring to almost $2.9 billion the amount of new U.S. investment and 7,417 jobs that GM has created or retained in 20 U.S. plants since emerging from a controversial taxpayer financed – more than $50 billion –  bankruptcy in July 2009. (Hundreds of thousands of GM jobs were eliminated during the past two years, if you’re keeping score.) Employees filling these positions will be recalled in accordance with the United Auto Workers-GM National Labor agreement, which favors seniority not performance.


Chevrolet to Increase Volt Production Capacity 50%

Promise comes as U.S. President Tours Volt’s Hamtramck Plant.

by on Jul.30, 2010

The first Volt moving down the line at the Detroit-Hamtramck manufacturing plant.

General Motors today said that thanks to “strong public interest” in the Chevrolet Volt, it will increase production capacity of the four-seat series hybrid car from 30,000 units to 45,000 units in 2012.

The announcement came as U.S. President Barack Obama toured the Detroit-Hamtramck facility, where the Volt is being produced now for sale later this year.

“We are very proud to host the President of the United States at this plant, where the future of the American automobile industry is being built today by the men and women of General Motors,” said Edward E. Whitacre, Jr., the GM Chairman and CEO, who was approved by the Administration and took over as the failed company was emerging from bankruptcy.

U.S. taxpayers invested more than $60 billion in GM to allow it to survive and now own a majority stake in the privately held firm. It is a matter of much debate as to whether taxpayers will get all of their money back, but recent developments, including GM’s return to profitability, means some of the more than $50 billion spent will be returned if a public stock offering is successful.

Earlier this week, Chevrolet dealers began taking customer orders for the 2011 Chevrolet Volt, following the release of retail and lease pricing. (See Chevy Volt Electric Vehicle Starts at $41,000, Gulp, about $8,000 More than the Nissan Leaf)

Job Creation?

Taxpayers are providing massive subsidies to help overcome the objections of potential buyers for what are now and for the foreseeable future high cost, limited range electric vehicles, including tax credits of up to $7,500 per vehicle to purchasers, as well a variety of subsidized infrastructure changes. (See Taxpayers to Subsidize EVs and Charging Stations)


Chevy Volt Electric Vehicle Starts at $41,000, Gulp, about $8,000 More than the Nissan Leaf

Lease payments for 36 months are $350; $2,500 due at signing.

by on Jul.27, 2010

Volt has a claimed total driving range of 340 miles.

In what will be the largest market test for expensive electric vehicles in the U.S. since General Motor’s Impact or EV1 of more than a decade ago, Chevrolet announced today that the Manufacturer’s Suggested Retail Price of the Volt starts at $41,000, including a freight charge of $720. The price is $33,500 if, big if, the buyer qualifies for a full federal income tax credit that ranges from $0 to $7,500.

This is roughly $8,000 more than the Nissan Leaf EV, which has a similar roll-out plan for the U.S. also starting late this year. The pricing is aggressive on GM’s part, and no doubt meant to recover something close the the Volt’s cost to produce, not including the  program cost which could easily run to $1 billion.

The four-seat Chevrolet Volt electric vehicle will also come with a standard, eight-year/100,000-mile warranty on its lithium-ion battery pack – the best in the business thus far. (See GM Flings Warranty Gauntlet on Volt EV)

Nissan has not yet released its warranty details, but it has released pricing. Including the maximum $7,500 federal tax credit for which the Leaf is also eligible, the consumer’s after-tax net cost of a Leaf could be as low as $25,280. The Manufacturer’s Suggested Retail Price is $32,780. Leaf leasing begins at $349 per month.

Stay Wired!

Taxpayers are providing massive subsidies to help overcome the objections of potential buyers for what are now and for the foreseeable future high cost, limited range electric vehicles, including tax credits of up to $7,500 per vehicle to purchasers, as well as a variety of subsidized infrastructure changes. (See Taxpayers to Subsidize EVs and Charging Stations)


EPA Sets Renewable Fuel Standards below Mandate

Cellulosic volume is lower than the Congressional EISA target.

by on Jul.12, 2010

As always, the devil will be in the final rule details after lobbyists shape the regulations.

The U.S. Environmental Protection Agency (EPA) today proposed that the 2011 percentage standards for the four fuels categories under the agency’s Renewable Fuel Standard program must make up 7.95% of total gasoline sales.

The Energy Independence and Security Act of 2007 (EISA) established annual renewable fuel volume targets, reaching an overall level of 36 billion gallons in 2022 – 16 billion gallons of cellulosic biofuels; 15 billion gallons annually of conventional biofuels; 4 billion gallons of advanced biofuels; and 1 billion gallons of biomass-based diesel.

The 16-billion gallon cellulosic target looks laughable – EPA is projecting that less than 18 million gallons of the fuel will be available in 2011.

As the implications of the act continue to unfold, critics call it a needless subsidy for agri-business, one that would take food out of production.Hence the push for cellulosic since it can in theory be made form non-agricultural crops on land not in food production.

Mandating demand for products that don’t yet exist or haven’t been proven commercially viable or are not cost effective is the height of U.S. Congressional folly, in their view. In addition, a fierce debate about how much some of these fuels actually reduce greenhouse gas emissions is underway.

Almost every gallon of gasoline now sold in the U.S. contains ethanol: 98% as E10 – up to 10% ethanol for conventional autos, and 2% as E85 – 85% ethanol/15% gasoline for use in flex fuel vehicles only. (See How a Bad Bush Administration Energy Policy Begets More Bad Policy?)

Current law and infrastructure preclude the use of greater than 10% ethanol blends in conventional autos although agricultural industry lobbyists are pushing for higher levels. In 2012, the E10 market reaches saturation at approximately 12.5 – 14 billion gallons of ethanol annually. (See President Takes Steps to Boost Biofuels, Coal Use) EPA is considering upping the required amount of ethanol right now,  but isn’t due to rule until this fall.


To achieve the volumes required by EISA, EPA calculates a percentage-based standard for the following year. Based on the standard, each refiner, importer and non-oxygenate blender of gasoline determines the minimum volume of renewable fuel that it must be used in transportation fuel.

The proposed 2011 overall volumes and standards are:

  • Biomass-based diesel (0.80 billion gallons – 0.68%)
  • Advanced biofuels (1.35 billion gallons – 0.77%)
  • Cellulosic biofuels (5 to 17.1 million gallons – 0.004-0.015%)
  • Total renewable fuels (13.95 billion gallons-7.95%)


A Less Expensive Chevrolet Volt?

GM says costs are coming down, so it begs the question.

by on Jun.22, 2010

Two high-mileage vehicles, the Chevrolet Volt and the Chevrolet Cruze.

General Motors still has not announced pricing for the Chevrolet Volt, but there are indications that cost might come in lower than originally anticipated.

Micky Bly, director of electric vehicle programs at GM, told an audience at last week’s Green Car Conference that prices for some of the Volt’s key components might be lower than expected.

“We’re seeing significant downward cost pressure on these suppliers,” Bly said. He added that in some cases, the price reductions are about three to five years ahead of GM’s expectations.

Still, to make the Volt and other battery-electric vehicles viable, Bly said the industry needs to do more.

“We have to drive the technology costs down,” Bly said.

No Subsidies!

Prabhakar Patel, CEO of Compact Power, agreed, saying at the conference that the fledgling battery electric vehicle industry should not count on government incentives for more than four to five years.

Already there are signs of a taxpayer revolt. See Ken Zino’s Taxpayers to Subsidize EVs and Charging Stations. (more…)

Government Waste Paper Fueled Car Debuts

Novozymes claims improved technology for advanced biofuels.

by on Jan.26, 2010

The elusive pursuit of a viable

The elusive pursuit of a commercially viable cellulose-derived fuel continues.

In a publicity stunt that attempts to prove a point about biofuels made from waste, a Chevy fueled with the byproducts of government office paper and cardboard will appear on the streets of Washington D.C. today.

A small company called Novozymes has collaborated with Maryland-based Fiberight to provide the demonstration fuel.

Taxpayers, who also underwrite the production of government paper, funded the research. Novozymes received two contracts from the Department of Energy for its research efforts to bring down the cost of enzymes and improve their efficiency in converting cellulose to biofuels. The first contract for $2.2 million was given in 2002, and the second for $12.3 million was given in 2008.

Automakers are given fuel economy credits for producing ethanol-compatible vehicles even though few of them are ever operated on ethanol, which is not cost competitive with gasoline with current production methods.

It is thought that using biomass – inexpensive farm waste – could radically alter the economics of ethanol. For example, making ethanol from the cellulose of plants is less costly than using corn grain. Switch grass, a crop that grows readily in the U.S. east of the Rocky Mountains, and corn leaves and stalks or other crop wastes are cheap to acquire and potentially solve the starvation issue, which arises from using corn for fuel instead of feed.


The lower cost could also end the huge taxpayer subsidies, although the farm lobby holds powerful sway in the “pay to play” Washington scene and  has successful defended against reformers its taxpayer supplied pork for decades.    (more…)

Ontario Abandons Marketplace and Proposes Record Subsidies for Electric Vehicles

The liberal McGuinty government says it is "making it easier" to buy electric vehicles at taxpayer expense.

by on Jul.15, 2009

McGuinty, left, meeting with the Japanese Emperor,right, July 2009

A clear beneficiary of the new policy is Japanese owned Lexus, which has a plant in Ontario.

One out of every 20 vehicles driven in Ontario, Canada will be electrically powered by 2020 if the huge incentives proposed by the provincial government are effective in forcing the market to favor electric vehicles.

The government of Premier Dalton McGuinty said in a statement that “Expanding the use of electric vehicles by consumers and government will help create and sustain jobs in the auto sector and put Ontario at the forefront of the new, green economy in North America.”

The plan, just announced today, would favor buyers of plug-in hybrid and battery electric vehicles with rebates of up to $10,000 paid for by taxpayers for vehicles purchased after July 1, 2010.

The maximum rebate appears to be among the highest, if not the highest, ever offered by a government to subsidize electric vehicles. It was not immediately clear how popular the plan will be among voters.

Nonetheless, the proposed Ontario plan continues a global trend that sees taxpayers’ money being shifted to help small numbers of relatively affluent vehicle buyers in the name of reducing greenhouse gases and combating global warming.

It's Free!

It's Free!

A clear beneficiary of the new policy is Japanese-owned Lexus, which has a plant in Ontario. A hybrid version of its best selling RX350, the RX450h, will enter production this fall at Toyota Motor Manufacturing Canada (TMMC), which also builds the Corolla and Matrix models.

Toyota and Honda with their growing list of hybrid models will also benefit from the subsidies.


President’s Emerging Energy Plan Renews the Renewable Fuel Debate

A taxpayer subsidy to agribusiness could morph into another American War of Independence. But here come the lobbyists.

by on May.12, 2009

A New Jersey political background will help Jackson dealing with the mob of lobbyists.

A New Jersey political past will help Jackson with the mob of lobbyists.

The U.S. Environmental Protection Agency is calling for a science-based review of the four renewable fuel categories that it announced earlier this month under its proposed Renewable Fuels Standard (RFS2). For the first time, some renewable fuels must achieve greenhouse gas emission reductions compared to the gasoline and diesel fuels they displace. Also for the first time, all transportation fuels are covered, not just gasoline. EPA wants to determine if using bio fuels really do decrease greenhouse gas emissions when an analysis is conducted over the entire life of the fuels.

A political struggle is developing with corn-based ethanol producers and soy-based biomass diesel producers whose fuels likely will not meet the proposed tests. EPA has proposed some sort of grandfathering for existing production plants, but has limited the output to existing levels.

From an economic point of view, the current taxpayer subsidies for ethanol make no sense. Now the real possibility exists that some renewable fuels are unhealthy too. For producers and investors in these fuels, billions of dollars are at stake. A public hearing on June 9th will no doubt be lively.

The health issue is only the latest twist in the tortured road the EPA has been on over fuel economy and global warming standards. After a “thorough scientific review” ordered in 2007 by the U.S. Supreme Court, EPA issued a proposed finding in April that said greenhouse gases contribute to air pollution and may endanger public health or welfare. It is now moving ahead in several areas that will affect not only your future driving but the use of any machine that uses fuel.

The proposed RFS2 thresholds for the new fuel categories would be 20% less greenhouse gas emissions for renewable fuels produced from new facilities, 50% less for biomass-based diesel and advanced biofuels, and 60% less for cellulosic biofuels.    (more…)

How a Bad Bush Administration Energy Policy Begets More Bad Policy?

Lavish taxpayer subsidies for ethanol fuels are not enough agri-business says. Hang onto your wallet as they ask for more.

by on Apr.16, 2009


There are far too many subsidized ethanol plants to meet too little demand for the gasoline additive.

The United States Environmental Protection agency this morning requested public comments on a waiver application to increase the amount of ethanol that can be blended into a gallon of gasoline to up to 15% of volume (E15). At the heart of this seemingly innocent request is a push by taxpayer-subsidized fat cats in the agricultural sector to have you pay more for a gallon of fuel even as demand declines and fuel efficiency increases.

Since 1978, the limit has been 10% ethanol (E10) for conventional (non flex-fuel) vehicles for sound technical reasons – ethanol picks up water and corrodes the fuel systems of the vast majority of vehicles on the road today. It also has less energy density per gallon than gasoline, which means that ethanol fuels provide fewer miles per gallon when you use a fuel with it, adding increased driving cost to the insult of taxpayer subsidies.

The request for the waiver to increase the percentage of ethanol in the fuel you buy comes from 54 ethanol manufacturers who are struggling to remain in business since the price of oil has dropped. Now even the taxpayer subsidized cost of ethanol is no longer competitive on the market. Today regular gasoline is averaging $2.05 a gallon, down from $3.40/gallon a year ago, according to AAA.

In the face of a decline in gasoline usage in the U.S., where even ExxonMobil says demand is probably at or near its peak, there are far too many ethanol plants to meet too little demand for the gasoline additive.

You are already subsidizing ethanol at 45 cents per gallon by way of a tax credit to companies that blend ethanol with gasoline, as well as a requirement that ethanol be blended into gasoline. As a result, U.S. consumption of ethanol last year exceeded 9 billion gallons — a record high, according to the Congressional Budget Office. That credit is costing U.S. taxpayers revenue losses of between $3 and $4 billion a year.

This production subsidy for ethanol applies to both domestic and imported ethanol, but the United States charges importers of ethanol a tariff of 54 cents per gallon and an ad valorem tariff of 2.5% of the value of the imported ethanol, which means countries such as Brazil that can produce ethanol much more efficiently than the U.S. are blocked from selling it here. (Prices for ethanol sold in the United States fluctuated between $1.61 and $2.90 per gallon in 2008.)

It was the business-interest subservient Bush Administration that put the subsidies in place by way of the Energy Independence and Security Act of 2007, and mandated that the required usage of biofuels in the United States be at least 20.5 billion gallons annually by 2015, or more than double the country’s usage in 2008. This from an administration that professed to “let the free market sort things out” while its leader Bush — aka “I’m the decider” — was doing exactly the opposite. (more…)