Senate Passes Energy Bill; Compromise on CAFE

22 June 2007

The CAFE component of the Senate energy bill raises average fuel economy for new vehicles by 10 mpg in 10 years. Click to enlarge.

The Senate late last night passed the energy bill by a Yea-Nea vote of 65-27, including a compromise version (SA 1792) of CAFE legislation that increases new light-duty vehicle fleetwide fuel economy to an average 35 mpg by 2020, but that eliminates the mandatory 4% per year increase thereafter that had been part of the original proposal.

The bi-partisan compromise, which is more exacting than the Levin-Bond amendment supported by the auto industry (earlier post), was offered by Senators Ted Stevens (R-AK) and Thomas Carper (D-DE), and was endorsed by Senators Dianne Feinstein (D-CA), Olympia Snowe (R-ME), Daniel Inouye (D-HI), Byron Dorgan (D-ND), John Kerry (D-MA), Maria Cantwell (D-WA), Bill Nelson (D-FL), Barbara Boxer (D-CA), Amy Klobuchar (D-MN), and Larry Craig (R-ID).

Comparison of nominal  fuel consumption and greenhouse gas standards. Solid lines represent mandatory standards, dotted lines represent proposed standards. (Europe does not yet have mandatory limits.) Rendered as L/100 km. Different test cycles will produce different results on the same vehicle. This chart represents the averaged nominal standards for each country, but does not attempt to normalize them to a single standard. Click to enlarge.

Major provisions of the new “Ten-in-Ten” Act (10 mpg increase in fuel economy in 10 years) include:

• Increases fleetwide average fuel economy for all cars, SUVs, and trucks up to 10,000 lbs in weight by 10 miles per gallon from model years 2011 to 2020—from 25 to 35 miles per gallon by model year 2020.

• The rules will use attribute-based classes (such as size or weight) determined by the Department of Transportation’s National Highway and Transportation Safety Administration (NHTSA). Each class of vehicles—as determined by NHTSA—will be required to meet the new fuel economy standard for that particular class to achieve the fleetwide average of 35 miles per gallon by 2020. Each automaker will no longer be required to average the fuel economy for the entire fleet of cars they produce.

• From 2011 to 2019, NHTSA must set fuel economy standards that are the maximum feasible, and ratchet these standards up to meet the 2020 target of 35 miles per gallon. In 2020, the total average must meet 35 miles per gallon, unless NHTSA determines that the achievement of the 35 miles per gallon standard would not be cost-effective for the nation. The bill defines “cost-effective” to mean that the value to the United States of reduced fuel use from a proposed fuel economy standard is greater than or equal to the cost to the United States of such standard. From 2021 to 2030, NHTSA must set fuel economy standards that are the maximum feasible, and ratchet these standards up at a reasonable rate.

• Establishes a credit system and trading program for automakers run by NHTSA. Should an automaker exceed the standards it can sell its credits to another automaker, or bank the credits for up to 5 years. If an automaker cannot meet the standards in a given year, it can purchase credits, use banked credits, or borrow from projected surpluses from future years.

• Establishes an “off-ramp”, or mechanism for alternative standards, for automakers (upon their application), if NHTSA determines that the prescribed standard is more stringent than the maximum feasible average fuel economy level that manufacturer can achieve.

• Directs NHTSA to develop a structure to evaluate and establish fuel efficiency standards for commercial trucks that increase at the maximum feasible rate. Requires improvement in the fuel economy of medium and heavy duty trucks over a 20 year period. It also removes work truck weighing up to 10,000 pounds from the fuel efficiency standards for cars and light trucks.

• Automakers that sell less than 0.4% of the cars sold in the United States would have their fuel economy standard set by NHTSA at the maximum feasible level outside of the regular car standard.  (Currently 0.4% of the cars sold in the US each year is approximately 60,000 cars).

• Creates a consumer labelling program that also includes greenhouse gas emissions.

• Requires the federal government to purchase the most fuel efficient cars practicable.

• Uses money raised by fuel economy penalties to fund research into fuel-saving technologies and to expand the availability of alternative fuels. Calls for an advanced battery initiative and standards for biodiesel.

• Requires NHTSA to issue a final rule by 2018 to create safety standards that address the differences between the largest and smallest vehicles.

The final version also removes the earlier provision that mandated that 50% of cars be flex-fuel in 2012, increasing to 80% in 2015. The new language calls for ensuring that 50% of vehicles sold in the US are alternative fuel vehicles by 2015—including but not limited to flex-fuel vehicles, hybrids, electric vehicles, fuel cells and others.

The action on fuel economy now moves to the House.

Resources:

• Senate Amendment 1792