Following a delay from his administration’s self-imposed Aug. 15 deadline, today President Barack Obama announced an amended version of the “54.5” mpg CAFE standard for 2017-2025.
The final ruling was amended to add natural gas vehicles into the list of incentivized advanced-tech cars including those utilizing plug-in hybrid and all-electric plug-in technologies. This last concession was made to benefit makers of natural gas powered vehicles, particularly Honda which now has a car on the market it had said was initially excluded.
In short, the CAFE rules will add to the retail price of vehicles by way of research and development that will have to go into making them more efficient, but CAFE rules are being portrayed as more than paying for themselves in fuel and environmental savings.
The Obama administration said when combined with previous standards it has set, CAFE will nearly double fuel efficiency of those vehicles compared to current-day new vehicles. In total, the administration’s national program to improve fuel economy and reduce greenhouse gas emissions will save consumers more than $1.7 trillion at the gas pump and reduce U.S. oil consumption by 12 billion barrels.
“By the middle of the next decade, our cars will get nearly 55 miles per gallon, almost double what they get today,” said Obama today in a statement. “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.”
German automakers Daimler AG and Volkswagen AG did not sign the agreements under protest that they give unfair advantage to light trucks, especially those made by U.S. automakers. Honda also has said as much about advantages given to trucks, but did sign.
“Volkswagen Group of America (VW) continues to support a single national standard for greenhouse gas (GHG) emissions regulation for 2017-25,” said the company in a statement. “However, VW did not endorse the Notice of Proposed Rulemaking (NPRM) in part because it believed the compliance burdens were not equitably shared across the industry. Following an initial review, the Final Rule reflects the NPRM by imposing very high GHG reductions on passenger cars, and much lower reductions on light trucks. VW continues to believe that this places an unfair burden on manufacturers focused primarily on passenger cars — the segment of the fleet already delivering to consumers the most fuel efficient, low CO2 emitting vehicles – and fails to achieve an equitable burden across the full range of light-duty vehicles. In addition, the Final Rule grants valuable compliance credits to certain fuel-saving technologies while failing to equitably recognize the environmental benefits of others.”
CAFE has also been strongly opposed by groups including multiple attempts by the National Automobile Dealers Association, and House Republicans led by Darrel Issa, chairman of the House Oversight and Government Reform Committee.
Companies that have already shown favor for the tough new rules include General Motors, Ford Motor, Chrysler Group LLC and Hyundai Motor Co. Executives from these companies had previously made a public showing of support months ago by standing with the president when rules were initially announced.
“While the requirements are aggressive, we intend to pursue them vigorously by utilizing our strong history of innovation and technology development,” said General Motors. “As the rule also provides, however, further assessments and reviews will be undertaken to see if the underlying assumptions used to set the fuel economy and greenhouse gas requirements are achievable and realistic in the years well into the future.”
Of the rules released today, the Obama administration says they will lead to an average fuel savings of $8,000 per 2025 and onward vehicle over the life of the vehicle.
Total cost of CAFE rules through 2016 and from 2017-2025 could cost as much as $192 million, according to Automotive News. For the 2017-2025 period, the reduction in fuel spending is being estimated at $515 billion.
Overall, automakers will be required to improve automobile fuel economy by 5 percent on average annually and for most years trucks will have to improve by 3.5 percent.
“Everybody is a winner today. Motorists win because they will have much more fuel-efficient cars to drive,” said Frances Beinecke, president of the Natural Resources Defense Council. “thus saving thousands of dollars at the gas pump every year. The auto industry — and its workers – win because these standards will spur the creation of thousands of new jobs as well as state-of-the-art vehicles that go nearly twice as far on the same gallon of gasoline.”
As noted the rules also restrict greenhouse gases, and were endorsed also by the Union of Concerned Scientists, as Michelle Robinson, director of its clean vehicles program observed.
“This is truly a watershed moment. Twenty years from now we’ll be looking back on this as the day we chose innovation over stagnation,” said Robinson. “These standards will protect consumers from high gas prices, curb global warming pollution, cut our oil use, and create new jobs in the American auto industry and around the nation.”
Transportation Secretary Ray LaHood also summarized the sentiment of the administration as an overall win.
“Simply put, this groundbreaking program will result in vehicles that use less gas, travel farther, and provide more efficiency for consumers than ever before—all while protecting the air we breathe and giving automakers the regulatory certainty to build the cars of the future here in America,” said LaHood. “Today, automakers are seeing their more fuel-efficient vehicles climb in sales, while families already saving money under the administration’s first fuel economy efforts will save even more in the future, making this announcement a victory for everyone.”
In its statement, the Obama administration also said “The administration’s combined efforts represent the first meaningful update to fuel efficiency standards in decades.”
It added that the U.S. EPA and NHTSA “expect automakers’ to use a range of efficient and advanced technologies to transform the vehicle fleet. The standards issued today provide for a mid-term evaluation to allow the agencies to review their effectiveness and make any needed adjustments.”
The administration noted a wide range of technologies are already available for automakers to meet new CAFE standards, including advanced gasoline engines and transmissions, vehicle weight reduction, lower tire rolling resistance, improvements in aerodynamics, diesel engines, more efficient accessories, and improvements in air conditioning systems.
The program also includes targeted incentives to encourage early adoption and introduction into the marketplace of advanced technologies including various forms of hybrid and full electrification and natural gas “to dramatically improve vehicle performance.”