Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 09:30 AM

Ms. Susan Cischke

EMBARGOED UNTIL DELIVERED
STATEMENT OF:
Susan M. Cischke
Vice President of Environmental and Safety Engineering
Ford Motor Company
Senate Energy and Natural Resources Committee
"The Goal of U.S. Energy Independence"
Tuesday, March 7, 2006
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MEMBERS OF THE COMMITTEE:
My name is Susan Cischke and I am the Vice President of Environmental and Safety
Engineering at Ford Motor Company. Energy security is a significant issue facing our nation. I
appreciate the opportunity to share with you Ford Motor Company's views on this issue.
Energy is literally the fuel that powers the industrial and manufacturing growth of the United
States. The energy supply disruptions of last summer, increases in global demand, and
geopolitical concerns with some of the oil rich regions of the world led to significantly higher energy
prices and consumer angst at the fuel pump. It's our view that action must be taken in all sectors
of course, if we are to meet these challenges as a nation.
At Ford, we recognize that we have a responsibility to do something to help address
America's energy security needs, and we are accelerating our efforts to develop innovative
solutions. As Bill Ford has said, "Ford Motor Company is absolutely committed to making
innovation a central part of everything we do." In our recent product announcements we
committed to increase our hybrid production capabilities to a quarter-million units a year by 2010
and to continuing our leadership in ethanol powered flexible fuel vehicles.
These new product initiatives are a strong commitment for Ford and our customers, and
they recognize a changing marketplace. But there is a limit to what we can achieve on our own.
We believe that our nation's energy challenges can only be properly addressed by an
Integrated Approach: that is, a partnership of all stakeholders which includes the automotive
industry, the fuel industry, government, and consumers. The truth is that we must all accept that
these are long-term challenges and that we are all part of the solution.
So let me set out how we at Ford Motor Company believe each stakeholder can play its
part. I’ll start with the automotive industry itself, because we clearly have a central role to play.
The industry has taken significant steps in improving the fuel efficiency of our products. At Ford
Motor Company we see this not only as being socially responsible but a business necessity, and
we are moving ahead with a range of technological solutions simultaneously -- because there is
simply no single solution, no “silver bullet”. We know that when customers consider purchasing a
vehicle, they are concerned with numerous attributes including price, quality, safety, performance,
comfort and utility. From our perspective, no one factor can be ignored in the highly competitive
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U.S. marketplace. As a result, we are working to accelerate the commercial application of all areas
of advanced vehicle technologies, including hybrids, flexible fuel vehicles, advanced clean diesels,
hydrogen-powered internal combustion engines and fuel cell vehicles. The portfolio approach that
we are taking ensures that we are able to offer consumers a range of products that meet their
specific needs and circumstances. And make no mistake; it will ultimately be the consumers who
decide.
This diversity of customer needs within and across markets is why we are investing in a
portfolio of solutions. The result is a period of unprecedented technological innovation. Innovation
– in matters of the energy, renewable fuels, safety and design – is the compass by which we are
setting our direction for the future.
At Ford, we recognize that hybrids have an important place within this portfolio of solutions.
They deliver excellent benefits in lower speed stop/start traffic and offer many customers
breakthrough improvements in fuel economy – up to 80% in city driving – without compromise.
And much of this technology is also applicable to our fuel cell and ethanol vehicle development
efforts. In 2004, we launched the world’s first gasoline-electric full hybrid SUV, the Escape Hybrid.
In 2005, we expanded this technology to the Mercury Mariner Hybrid, and have announced plans
to offer this technology on the Mazda Tribute SUV, and the Ford Fusion, Mercury Milan, Ford Five
Hundred and Mercury Montego sedans, plus the Ford Edge and Lincoln MKX crossover vehicles.
Expansion of our hybrid offering is now clearly an important part of our overall innovation
strategy which embraces our recent commitment to increase our production capacity to up to
250,000 hybrids per year by 2010 and to offer hybrids on half of our Ford, Lincoln and Mercury
products. Nevertheless, a key challenge facing hybrids is the incremental costs – both in terms of
higher prices for components and engineering investments – that must be overcome for this
technology to transition from "niche markets" to high-volume applications.
In addition to hybrids, we believe that greater use of renewable fuels like ethanol, a
domestically produced renewable fuel, will help reduce reliance on foreign oil. We applaud
Congress' efforts that resulted in the Energy Policy Act of 2005, as well as the President's recent
commitment to address our nation's addiction to oil. Ford has been building flexible fuel vehicles
(FFVs) for over a decade, and we are an industry leader in this technology. These "FFVs" are
capable of operating on up to 85% ethanol, or gasoline, or any mixture in between.
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By the end of this year, Ford Motor Company will have placed a total of nearly 2 million
FFVs on America's roads, and for 2006 this includes America's best selling vehicle -- the (5.4L)
Ford F-150 FFV. As a whole, the U.S. automakers will have produced a total of nearly 6 million
vehicles. If all of these vehicles were operated on E85, over 2.5 billion gallons of gasoline a year
could be displaced.
And we are not stopping there. A little over a month ago we unveiled the Ford Escape
Hybrid E85 research vehicle which marries two petroleum-saving technologies – hybrid electric
power and E85 flexible-fuel capability. Though there are many technical and cost challenges to
address, we believe that if just 5% of the U.S. fleet were powered by E85 HEVs, oil imports could
be reduced by about 140 millions barrels a year.
But there is a problem. Even though the volume of E85 vehicles continues to grow rapidly,
there are less than 600 E85 fueling stations in the U.S. – and that's out of over 170,000 retail
gasoline fueling stations nationwide. For ethanol to compete as a motor fuel in the transport sector
and play an increasingly significant role addressing our nation's energy concerns, we need strong,
long-term focus on policies that increase U.S. ethanol production and accelerate E85 infrastructure
development. At the same time, as the President pointed out in the State of the Union address, we
need national research efforts to pursue producing ethanol from more energy-efficient cellulosic
materials like rice straw, corn stover, switch grass, wood chips or forest residue.
Ford is also working on advanced light duty diesel engines. Today's clean diesels offer
exceptional driveability and can improve fuel economy by up to 20-25%. This technology is
already prevalent in many markets around the world -- nearly half of the new vehicles sold in
Europe are advanced diesels -- and Ford continues to accelerate our introduction of diesel
applications in these markets. There are, however, many hurdles that inhibit wide scale
introduction of this technology in the U.S. We are working to overcome the technical challenges of
meeting the extremely stringent Federal and California tailpipe emissions standards, and to
address other issues such as fuel quality, customer acceptance and retail fuel availability.
Looking to the future, we are working on what we think is an important transitional
technology to sustainable transportation – hydrogen-powered internal combustion engines. Ford is
a leader in this technology. We think it's a "bridge" to the development of a hydrogen infrastructure
and, ultimately, fuel cell vehicles, and we are in the process of developing hydrogen powered E450
H2ICE shuttle buses for fleet demonstrations in North America starting later this year. Ford is also
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working on applying this engine technology to stationary power generators and airport ground
support vehicles to further accelerate the technology and fueling infrastructure development.
Even further down the road, hydrogen powered fuel cells appear to be another promising
technology for delivering sustainable transportation. Hydrogen can be derived from a wide range
of feedstocks to increase energy diversity, and fuel cells are highly energy-efficient and produce no
emissions. Our Ford Focus Fuel Cell vehicle is a state-of-the-art, hybridized fuel cell system –
sharing much of the same hybrid technology we developed for our Escape Hybrid SUV. We have
already placed a small fleet of these vehicles in three U.S. cities as part of the U.S. Department of
Energy's hydrogen demonstration program collecting valuable data.
As you can imagine, the R&D investment that goes with all this work is a very big number --
certainly in the billions, not the millions -- and it will only grow in the future. Many of our
competitors and suppliers are also investing heavily. But there is only so much we can achieve
without the help of others outside our industry. We need an integrated approach.
It is clear that the solution to the energy issues associated with road transport will need to
come from advances in fuels as well as vehicle technology. We need the oil industry to endorse
an Integrated Approach here in the U.S., just as they are beginning to do with automakers and
government officials in Europe. We at Ford are clearly excited about the potential role of
renewable fuels. However, the fact is that without the whole-hearted involvement of the fuel
industry, we cannot move forward far enough or fast enough. We obviously need key partners like
the oil industry to invest in developing and marketing renewable fuels like E85 – and we need it to
do so now and rapidly. We fully support government incentives to encourage the industry or
others to accelerate this investment.
There is a great deal that policy makers can do at all levels as well. We would like to see
more R&D support for vehicle technologies and renewable fuels. Government incentives for
advanced technology vehicles and E85 infrastructure can accelerate the introduction of these
vehicles and fuels into the marketplace. Government must play a critical role to promote U.S.
innovation and can do so by expanding and focusing R&D tax credits for a broad range of energy
efficient technologies. We would also like to see greater investment in improved road traffic
management infrastructure in order to reduce congestion and save fuel. According to the
American Highway Users Alliance, about 5.7 billion gallons of fuel are wasted annually due to
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congestion. Effective traffic light synchronization is a good example of a change that could lead to
big reductions.
There is also a role for government in educating the public on how to drive in an energy
efficient manner. In the end, it will ultimately be the size of the car park, and consumers' choices of
vehicles, how many miles they drive, and driving behaviors that will determine how much motor
fuel we consume. A person who drives in an energy-conscious way – by avoiding excessive idling,
unnecessary bursts of acceleration and anticipating braking – can enjoy much better fuel
consumption, today. And government can play a key role to raise public awareness. We believe
that awareness is a simple and effective early step which is why we have introduced driver training
programs in Europe and recently developed on-line training for all Ford Motor Company
employees.
Consistent implementation of an Integrated Approach will allow us to achieve much more in
a shorter timeframe and at a significantly lower cost than if each stakeholder were to pursue its
own agenda in isolation, however well-intentioned they might be.
The challenges are considerable but not insurmountable, and there is an enormous amount
we can achieve if we act together in an integrated manner. We have to ensure that our business
is sustainable by making vehicles that continue to meet the changing needs of the 21st century.
That’s a responsibility we owe to our customers, shareholders and our employees. But at another
level, all of us have the opportunity to do something about energy independence – and that’s a
responsibility we owe future generations.
Thank you again for the opportunity to address the Committee.