Jason Kenney: ‘Emissions Be Damned’
Opinion & Analysis
Premier-designate Jason Kenney torqued up his recent Alberta election win by triumphantly arriving at a Calgary Stampede site stage with the help of almost 400 horses corralled under the hood of his eight-cylinder Dodge Ram campaign truck. It was painted Party blue. His UCP crowd went wild, and began chanting “Build that pipe! Build that pipe!”
The reference to the proposed Trans Mountain pipeline expansion (TMX) project linking Alberta bitumen deposits to Vancouver’s Pacific port was not lost on anyone. With mock solemnity, the newly-crowned Toryausaurus Rex cast a chastening look at his adoring audience, motioned for silence, then reminded them his campaign vow was to build multiple oil pipelines, not just one.
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In subsequent days, Kenney repeated his campaign pledges to:
• See the TMX, Keystone XL, Northern Gateway, and Energy East bitumen pipelines either completed or revived;
• Eliminate an existing provincial carbon tax on Alberta’s heavy emitters;
• Remove the nominal 100-megatonne limit on future greenhouse gas emissions from the Alberta oilsands sector (a 40% increase over 2015 emissions by 2030);
• Join other provinces in fights against federal carbon pricing and pending environmental legislation;
• Cut off conventional oil supplies to neighbouring B.C. if that province continues to oppose a tripling of the TMX pipeline capacity;
• Set up a $30 million ‘war room’ to pressure the federal Canada Revenue Agency to deregister charitable groups which oppose further expansion of the tar sands/oil sands;
His message was clear: ‘Don’t mess with me, or Alberta’s sovereign right to dig up and sell as much bitumen as we can, as fast as we can.’
Kenney’s campaign truck symbolized that emissions-be-damned attitude. Made by Fiat Chrysler Corporation, the blue behemoth has bottom-of-the-barrel fuel economy and carbon emission ratings. It is essentially a tank with lipstick, and 400 horses can obviously haul a prodigious pile of…feckless falsehoods.
The Alberta election results proved this show-boating can play well in regions where there is deep denial about the climate crisis stalking our planet. So does demonizing David Suzuki, B.C. Premier John Horgan, and “treasonous” environmental charities while pretending that his most irrefutable adversary—overwhelming scientific evidence our climate is spiralling out of control—does not exist.
But the trouble with symbols, like Jason Kenney’s big, badass ride, is that their power is in the eye of the beholder. For those Canadians who care about our climate, there are facts which show Alberta’s premier and the maker of his intentionally iconic campaign truck are a match made in hell.
During the past decade, no global automaker has earned a worse reputation than Fiat Chrysler Automobiles N.V. (FCA) for a combination of emissions cheating, failing to meet fuel economy standards, financial scams, indebtedness, loan forfeitures, serial reliability recalls, and being a laggard in electric vehicle development.
Evidence from regulatory battles, class action lawsuits, court judgements and government records shows this conduct has been intentional, remains deeply embedded in FCA corporate culture, and is built into its business model. If a doctor were diagnosing this malignant pattern, they would conclude it has metastasized.
Facing bankruptcy in 2009, Chrysler pleaded for and obtained US$12.5 billion in loans as part of a US$80-billion Obama administration bailout package to Chrysler, GM and Ford. The Big Three had steadily lost major U.S. market share to companies like Toyota and Honda which produced cars with higher fuel economy and reliability records. As a condition of the bailout loans, the Big Three formally agreed to meet increasingly stringent, specified U.S. fuel economy and emission standards through 2025. Chrysler also agreed to merge with Italian automaker Fiat to improve financial stability.
In Canada, the Harper government (with Jason Kenney as a senior cabinet minister) approved a U.S.$1.1-billion loan to Fiat Chrysler to maintain auto plants in Ontario and avert bankruptcy. It was made through the Canada Account of the federal Export Development Canada, an especially secretive channel for Ottawa to funnel funds to private companies. This same EDC account was used last year to purchase the existing Trans Mountain pipeline and assets, for $4.5 billion, from the private company Kinder Morgan.
But the company paid down none of that 2009 loan principal, nor any accrued interest. Last year, Ottawa wrote off recovery of the entire loan, comprising C$2.6 billion in outstanding debt and accumulated interest owing.
Cunningly, that 2009 loan from Ottawa was assigned to a remnant of Chrysler that was designated to go bankrupt, while the surviving Chrysler remnants were moved to tax haven status in The Netherlands. FCA reported a global net profit of US$4.3 billion in 2017.
So in a few brazen strokes, Fiat Chrysler orchestrated a way to wring a loan worth $2.6 billion from Canadian taxpayers, carve the company into discardable or valuable parts, renege on the loan principal and interest owing, then moved the Chrysler division to FCA’s tax haven to shield future profits from potential creditors and taxes owing.
A final shoe dropped weeks ago. Fiat Chrysler announced that it will shut down the third shift at the very Windsor plant which was rescued by Canadian taxpayer loans a decade earlier. That will throw 1,500 workers out of a job, and hammer related supply-chain companies.
South of the border, the Big Three automakers eventually repaid all but US$10 billion of the $80-billion loan package they received in 2009 from the Obama administration. The U.S. government lost $1.3 billion on the loan to Fiat Chrysler.
But what became of the promised auto fuel economy gains, and related reductions in fleet carbon emissions, which were a contractual condition of that $80-billion fiscal survival package?
Ford and GM partially kept their commitments with advances in engine combustion design, transmission efficiency, aerodynamics, lighter materials, low-resistance tires, and by producing all-electric or hybrid models for markets with the strictest standards, like California. Nationally, their sales of small, fuel-efficient cars helped offset those of gas-guzzling trucks and SUVs enough to meet what is known as the Corporate Average Fleet Economy (CAFÉ). Even so, in the U.S. they represent the basement of major automakers in rankings for fuel economy and emissions compliance. Fiat Chrysler represents the sump pump.
Under EPA rules, car companies which don’t meet the mandatory CAFÉ standard in a given year are required to pay penalties proportional to the volume of excess gas-guzzling vehicles sold. Those automakers with fleet averages that exceed the CAFÉ standard (like Tesla) receive proportional credits which can be sold, swapped, or banked to offset projected future penalties for failing to meet fuel efficiency standards. Similar regulatory regimes operate in the European Union and China. (Canada relies on the U.S. to set fuel economy and tailpipe emission standards, and has no independent CAFÉ-style system of penalties and credits).
But Fiat Chrysler proved to be a master of procrastination during the Obama era because—despite the $12.5 billion in loans it received which were largely meant to improve fleet fuel economy and retool for a ramp-up of electric vehicles—the CAFÉ rules allowed FCA to defer doing that as long as it eventually complied with deadlines far in the future.
So it elected to be a tortoise, and a lame one at that, compared to its more responsible rivals.
The reason is no secret in the industry: big trucks (like Jason Kenney’s V-8 Dodge 1500 Hemi), SUVs (like the FCA Jeep), and muscle cars garner much higher sales margins and profits than smaller, more fuel-efficient cars. That convinced FCA to pay off $11 billion in U.S. government-owned loans in 2011, then double down on a global business plan that was truck-, SUV-, and muscle car-centric. Emissions be damned.
As a result, Fiat Chrysler has cashed in on being a laggard, but its average fleet fuel economy and related tailpipe emissions rank dead last in North America and not much better in Europe. In 2017, it paid a US$77-million fine for failing to meet the CAFÉ fuel economy standard, and it’s currently the biggest purchaser of emission credits to avert heavier EPA fines. And it has banked at least US$500 million in credits it purchased from the cleanest car companies in the U.S. It is also poised to pay many millions more for similar pollution credits in China.
But Fiat Chrysler is fast running out of time to make up for a decade of doing almost nothing. Global tailpipe limits are tightening, banked emission credits are expiring, and its bestselling models are precisely what is hurtling FCA towards a perpetual tsunami of annual fines in the U.S., Europe, and China, and/or the purchase of ever-more expensive pollution credits.
By contrast, automakers like Honda, Toyota, and Tesla are far better shielded from looming pollution and fuel economy compliance costs in the world’s largest vehicle markets, and poised to earn increased income streams from selling ever-more valuable pollution credits.
So the race isn’t over, and now the Fiat Chrysler tortoise is trying to catch up—with one of the biggest, dirtiest engines in the business still strapped to its shell.
This explains why Fiat Chrysler, GM, and Ford began lobbying Donald Trump’s senior advisors, the month he took office, to eviscerate the 2021-2025 CAFÉ limits and deadlines they had (grudgingly) accepted when they took their loans from Washington. If they succeed, it will mean those rival automakers who have met the CAFÉ rules since 2009 (led by Honda, Toyota, Tesla) were suckered by Fiat Chrysler’s calculated conniving. It would also stall industry-wide improvements in fuel economy and EV adoption, and cause a spike in tailpipe emissions, including carbon dioxide. So far, California has been a bulwark against such a CAFÉ capitulation.
In Europe, politicians and regulators are not so compliant. There, Fiat Chrysler is facing a 2021 deadline to significantly reduce average fleet CO2 emissions from 123 to 95 grams per kilometre. FCA has vowed to spend some $10 billion to achieve that, but has not specified how. True to form, it just purchased EU pollution credits from Tesla, which sells only all-electric cars in Europe. That will reportedly cost FCA $500 million, but is unlikely to come close to averting heavy EU fines.
It gets worse. Fiat Chrysler does not want to just weaken pending emissions regulations. It has been cheating on existing ones.
In 2017, Fiat Chrysler paid the U.S government an $800 million fine after EPA regulators discovered it had installed “defeat device” software (similar to that discovered in VW and Audi vehicles) on many of its bestselling North American diesel trucks and SUVs. They were heavily advertised (especially during sports telecasts) as being fuel-efficient and eco-friendly.
This made Fiat Chrysler not just a laggard, but a liar countless times over. According to evidence produced last year at a civil trial in San Francisco, seized FCA emails indicate key engineers were explicitly warned about the illegal software as early as 2010.
As with the infamous VW defeat devices, they were designed to give false readings when hooked up to the emission testing equipment of federal and state regulators.
Fiat Chrysler admitted no formal wrongdoing when it paid the $800-million fine for its diesel deception. More recently, it was nailed for providing falsified test results on many gasoline-fuelled models sold in North America. Last month, FCA sent out recall notices for one million U.S. vehicles, and 103,000 cars and mini-vans sold in Canada, to replace pollution control equipment which allows higher emissions and fails fuel economy rules.
That followed a $105-million settlement with the U.S. federal vehicle safety agency for failing to properly conduct 23 different recalls involving more than one million Fiat Chrysler vehicles. Weeks ago, FCA agreed to pay some investors $110 million to settle a separate civil lawsuit alleging the company failed to disclose key evidence about diesel emissions and comply with national safety regulations.
In a cryptic post-settlement statement, Fiat Chrysler maintained that “it continues to vigorously deny the allegations of wrongdoing” while noting that the settlement “is completely covered by the company’s insurance.”
How’s that for a weasel-word, non-denial denial?
Is it fair game to judge a politician by the truck he or she drives, and the craven corporate character of a supplier like Fiat Chrysler? Perhaps not in normal circumstances.
But in this case, it was Jason Kenney who proudly put his eight-cylinder Dodge Ram 1500 at centre stage in most of his campaign stops during the past two years. It was his main prop. He literally drove it to his victory-speech stage on election night. A politician who deliberately deploys his truck for promotional purposes can hardly expect it to receive immunity from scrutiny.
Among his most ardent supporters, and campaign backers, was the Motor Dealers Association of Alberta. According to a formal complaint filed with the provincial election office in 2018, the MDA approved donating C$100,000 to a newly-minted but obscure political action committee called Shaping Alberta’s Future. It also asked each car dealer to contribute $5,000, via the PAC, toward a $1-million companion fund. The advantage, noted its website, was that donations could skirt personal election donation limits of $4,000, and be kept from the public registry of donations.
And the purpose of those donations, as declared on its website?
One hundred per cent of donor contributions are spent by us on efforts
to promote Jason Kenney and the United Conservative Party.
Jason Kenney, of course, is free to purchase any vehicle he wants and drive anywhere he pleases. Even to his own coronation. And Alberta car dealers are allowed, apparently, to pass around a corporate collection plate and donate to whatever campaigning saint they believe will help sell more trucks and SUVs. Emissions be damned.
But Jason Kenney made his gas guzzler an election showpiece. His bravado includes not just building every pipeline possible, but threats of rending the fabric of federalism if Ottawa and other provinces won’t embrace an escalating bitumen export binge which scientists warn our climate cannot tolerate. So Canadians are entitled to ask hard questions about his judgement.
On the campaign trail, he publicly scorned the idea of driving a much more fuel-efficient Toyota Prius. That would be like offering kale salad to his red-meat base. However, he could have bought instead a full-size Pacifica hybrid mini-van, made by Canadian workers at Fiat Chrysler’s plant in Windsor, Ontario.
It is the most innovative, fuel-efficient model in the North American Chrysler fleet, and even beats comparable Honda and Toyota vehicles on fuel economy. The Pacifica is also a legacy of the forfeited loan to Fiat Chrysler by former prime minister Stephen Harper, Jason Kenney’s mentor and campaign ally, in 2009. For the record, the Pacifica consumes three litres per 100 kilometres of highway driving, compared to the Ram 1500 5.7 Hemi rating of 11 litres per 100 kilometres.
A Windsor-made Pacifica could have been the perfect campaign office on wheels. Instead, Kenney chose a petro-pig, with its V-8 Hemi engine casting and truck assembly done at plants in Saltillo, Mexico. It telegraphs that he wants no limits on tar sands/oil sands expansion, no limits on how big a gas tank should be, no limits on how much fuel anyone can burn, and no limits on the emissions he can spew into the atmosphere.
Even if there is a cheaper-to-operate, more fuel-efficient, less-polluting option built by Canadians.
Armed now with imperial arrogance, Jason Kenney’s gimlet-eyed ambitions spell trouble for all of us, due to the 914,749 votes he won provincially. He has a formidable bully pulpit. However, his bare majority support in Alberta (55% of votes cast) equates to only a small fraction of the 26 million who are eligible to vote in the October 2019 federal election.
If most Canadians opt to elect candidates who respect climate science and spurn the cheap theatrics of a Toryausaurus Rex, our national democracy can defeat such drumbeats of denial.
Paul McKay is an award-winning investigative reporter and author. His reports have appeared in the Ottawa Citizen, Globe and Mail, Toronto Star, and Vancouver Sun. He owns a Chevrolet Volt, which he charges with his home solar array.