What The Auto Industry Can Teach Us About The EU's Airline Emissions Trading System

In January, the European Union's Emissions Trading System--the largest carbon market for greenhouse gases--plans to forcefully enroll any airline that stops in Europe. Airlines are livid and warning of increased ticket prices. But as the history of fuel-economy standards in the automobile industry shows, today's environmental obstruction is tomorrow's common sense.

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1975 High oil prices inspire Congress's Corporate Average Fuel Economy (CAFE) regulations; automakers must up fuel economy from 13 mpg to 27.5 by 1985.

1979 Analyst Arvid Jouppi predicts the fallout from CAFE limits: "[Chrysler] will . . . become more of an assembler and marketer."

1985 CAFE causes Ford to consider overseas production. "It's dumb for the United States, for the union, for Ford," says Louis Ross, a company VP.

1985 GM and Ford miss CAFE's target and face millions in fines. Says GM: "If we have to pay fines, it will be with the capital we need to develop more fuel-efficient cars."

1986 Chrysler achieves the standard and condemns the rollbacks. Says chairman Lee Iacocca: "It's damn stupid to be penalized for obeying the law. It's a shot in the head."

1986 CAFE is "causing the loss of tens of thousands of jobs," says government counsel C. Boyden Gray. The standard for 1986 drops to 26 mpg.

1988 CAFE is "a dinosaur that should be extinct," says Secretary of Transportation James Burnley.

1989 "With the CAFE [standard] running on up, we could close some plants. There’s no question about it," says GM chairman Roger Smith.

1990 The industry standard is 27.7 mpg--more than double where it sat in 1975. Studies show that CAFE helped increase industry jobs by 25%.

Getty Images (gas, iacocca, dinosaur); Flickr user hugo90 (assembly line) ]

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