White House finalizes higher standards

Source: Jason Plautz, E&E reporter • Posted: Wednesday, August 29, 2012

The White House today finalized rules that could double fuel economy in light-duty vehicles by 2025, a move the administration says will reduce domestic oil consumption by 12 billion barrels over the life of the program.

The new standards, announced today by the Department of Transportation and U.S. EPA after a lengthy White House review, establish a 54.5 mpg fleetwide standard by model year 2025. The standards, which apply to cars produced between model years 2017 and 2025, will also require reductions in greenhouse gas emissions, which EPA says will slash 6 billion metric tons of emissions over that time.

The rules have the backing of environmentalists and the auto industry, with 13 major carmakers signing off on the standards last summer. The final rule appears largely similar to a draft rule released in November to much fanfare.

“These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil,” said President Obama in a statement. “This historic agreement builds on the progress we’ve already made to save families money at the pump and cut our oil consumption. By the middle of the next decade our cars will get nearly 55 miles per gallon, almost double what they get today. It’ll strengthen our nation’s energy security, it’s good for middle class families and it will help create an economy built to last.”

The rules follow already-released standards for model years 2012-2016 that require 35.5 mpg by 2016.

The standards include incentives for a variety of alternative fuel vehicles, including electric, hybrid, natural gas and fuel cell cars.

A footprint approach to the standard will allow automakers to continue to produce large vehicles, supporters say. The rules will also offer incentives for hybrid and other fuel-saving technologies for trucks. Large cars will have a slightly smaller annual fuel economy reduction target compared to light-duty vehicles.

The new standards contain a midterm review that had been sought by automakers, since the standards don’t even start to kick in until five years from now. In a statement, the Alliance of Automobile Manufacturers said periodic check-ins would be helpful because of the difficulty in predicting technology, cost and what consumers will opt for.

“Compliance with higher fuel-economy standards is based on sales, not what we put on showroom floors,” the lobbying group said. “The Auto Alliance has called for a single, national program because conflicting requirements from several regulatory bodies raise costs, ultimately taking money out of consumers’ pockets and hurting sales. We all want to get more fuel-efficient autos on our roads, and a single, national program with a strong midterm review helps us get closer to that shared goal.”

The announcement comes despite criticism from House Republicans, notably Oversight and Government Reform Chairman Darrell Issa (Calif.), who had urged the White House last week to delay the final rule (Greenwire, Aug. 22). Earlier this month, Issa’s committee released a report charging that the administration had stepped on safety and consumer concerns to push through the standards and please environmentalists.

“The rule finalized today by the Obama Administration will hurt American consumers by forcing them to drive more expensive and less safe automobiles,” Issa said today. “The Administration drafted these standards in secret, strong-arming automakers and short-circuiting the deliberative regulatory process to achieve a purely political result, abandoning sound science and objectivity to appease its political allies in the extreme environmentalist lobby.”

Environmental groups cheered the announcement, with some saying it was the most significant move by the administration this year. Frances Beinecke, president of the Natural Resources Defense Council, said that “everybody is a winner today” with the new rules.

“Everybody wins because using less gasoline will reduce our dependence on oil and lead to cleaner air. Less pollution means a healthier populace and lower medical bills. That’s great for our economy,” Beinecke said. “Today’s news also is a welcomed antidote to the public perception of a gridlocked Washington utterly incapable of producing a positive result for the good of our country.”

And Daniel Weiss, director of climate strategy at the Center for American Progress, said the standards will “build a more innovative and competitive American auto industry.”

“Vehicles that go much farther on a gallon of gasoline are the best weapon we have against rising gas prices,” he added.

The California Air Resources Board, which had announced plans to set its own greenhouse gas emissions standards, was also involved in drafting the national program.

However, opponents have argued that the standards will raise the price of vehicles and limit consumer choice. A report released this spring by the National Automobile Dealers Association found that 6.8 million drivers would not qualify for a new car loan if vehicle prices rose $3,000 by 2025, as predicted by the administration in the November draft rule (Greenwire, April 12).

The White House said that the rules will save consumers more than $1.7 trillion in gas and several outside analyses have predicted that consumers will offset the higher cost of cars in fuel savings.

The standards are also expected to be a boon for Obama in his re-election bid. Fuel economy is among the top qualities consumers look for when purchasing a car and an April poll by Consumer Reports found that nearly 80 percent of those surveyed agreed that fuel economy standards should require an average of at least 55 mpg.

Presumptive Republican White House nominee Mitt Romney has said that the standards could hurt domestic automakers and represent an overreach by the EPA, although he adopted fuel efficiency rules in 2005 as Massachusetts governor in concert with the state of California.