US Government Announces New Fuel Efficiency Standard for Cars and Light Duty Trucks

• By: Staff Editor
• Date: August 19, 2011

The threat of global warming coupled with the need to cut carbon pollution and dependency on non-renewable fuels has forced governments around the world to impose fuel efficiency standards on vehicles.

In the USA, the National Highway Traffic Safety Administration (NHTSA) has been setting fuel economy standards since 1978. These are known as Corporate Average Fuel Economy (CAFE) standards, which automakers must meet in each Model Year (MY). They were first established by the Energy Policy and Conservation Act (EPCA) of 1975, in response to the concerns about oil dependence in the wake of the 1973-1974 Arab oil embargoes.

The first standards raised fuel economy for passenger cars from a level of 13 miles per gallon (mpg) in 1974 to 27.5 mpg in 1985. The standards remained unchanged for twenty-five years. In 2008, the CAFE standard for passenger cars was still 27.5 mpg. Meanwhile, fuel economy standards for light-duty trucks rose slowly from 17.2 mpg for MY 1979 to 20.7 mpg for MY 1996. NHTSA increased the standards in 2003 and then again in 2006, replacing the single average standard for each automaker’s light-truck fleet with a size-based system that tied mileage requirements to a vehicle’s “footprint” – an approach that has since been adopted for passenger cars as well.

The Energy Independence and Security Act (EISA) of 2007 restructured and strengthened the CAFE program, requiring that the combined passenger car and light truck fleet reach 35 mpg by MY 2020.

The new standards were agreed upon by the Obama administration and major auto manufacturers including Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo – which together account for over 90% of all vehicles sold in the United States – as well as the United Auto Workers (UAW), and the State of California. California officials are allowed to set their own vehicle emission standards under the Clean Air Act. California was the first state to regulate greenhouse gas emissions from cars and light trucks. A legal battle between automakers and California started after a dozen states adopted the same restrictions.

Cutting fuel consumption, saving fuel costs

• The new standards are expected to cut oil consumption in the country by 2025, leading to a reduction of 2.2 million barrels per day.
• The standards also aim to curb carbon pollution, cutting more than 6 billion metric tons of greenhouse gas over the life of the program.
• The fuel efficiency program is estimated to save American families $1.7 trillion dollars in fuel costs, and by 2025 result in an average fuel savings of over $8,000 per vehicle.
• The program would require a five percent annual improvement rate in the fuel efficiency of passenger cars
• Pick-ups and other light duty cars should increase in efficiency by 3.5 percent per year for the first five years and then by five percent for the last four years of the program.

Better air quality

“This is another important step toward saving money for drivers, breaking our dependence on imported oil and cleaning up the air we breathe,” said Environmental Protection Agency (EPA) Administrator Lisa P. Jackson. “American consumers are calling for cleaner cars that won’t pollute their air or break their budgets at the gas pump, and our innovative American automakers are responding with plans for some of the most fuel efficient vehicles in our history.”

Proposed rulemaking

The EPA and the NHTSA are developing a joint proposed rulemaking, which will include full details on:

• The proposed program and supporting analyses,
• Costs and benefits of the proposal and
• Its effects on the economy, auto manufacturers, and consumers. 

After the proposed rules are published in the Federal Register, there will be an opportunity for public comment and public hearings.  The agencies plan to issue a Notice of Proposed Rulemaking by the end of September 2011. California plans on adopting its proposed rule in the same time frame as the federal proposal.

Given the long time frame at issue in setting standards for MY 2022-2025 light-duty vehicles, EPA and NHTSA intend to propose a comprehensive mid-term evaluation.  Consistent with the agencies’ commitment to maintaining a single national framework for vehicle greenhouse gas and fuel economy regulation, the agencies will conduct the mid-term evaluation in close coordination with California.

Use of advanced technologies and incentive programs

Agencies expect automakers to use advanced technologies to achieve the new fuel efficiency standards in the required timeframe.  The agencies are considering a number of incentive programs to encourage early adoption and introduction into the marketplace of advanced technologies that represent “game changing” performance improvements, including:

• Incentives for electric vehicles, plug-in hybrid electric vehicles, and fuel cells vehicles;
• Incentives for advanced technology packages for large pickups, such as hybridization and other performance-based strategies;
• Credits for technologies with potential to achieve real-world CO2 reductions and fuel economy improvements that are not captured by the standards test procedures.

Additional EPA provisions

The EPA plans to propose provisions for:

• Credits for improvements in air conditioning (A/C) systems, both for efficiency improvements and for use of alternative, lower global warming potential refrigerant;
• Treatment of compressed natural gas (CNG);
• Continued credit banking and trading, including a one-time carry-forward of unused MY 2010-2016 credits through MY 2021.