## Obama Announces New National Fuel Policy; Two Harmonized Standards, with Fleet Average of 35.5 mpg, 250 gCO2/mile by 2016

##### 19 May 2009

US President Barack Obama today announced a new harmonized national policy intended to reduce fuel consumption and greenhouse gas (GHG) emissions for all new cars and trucks sold in the US. The resulting new standards will cover model years 2012-2016, and will require an average fuel economy standard of 35.5 mpg in 2016 (39 mpg for cars, 30 mpg for trucks), or approximately 250 grams CO2/mile. The CAFE program established by the EISA 2007 legislation specified a minimum 35 mpg in 2020.

However, there will not be an exact one-to-one correspondence between the two standards—GHG and fuel economy—which will be the foundation of the national program.

The Environmental Protection Agency(EPA) and the Department of Transportation, through are jointly developing the proposed rulemaking. EPA is proposing GHG emissions standards under the Clean Air Act (CAA), and NHTSA is proposing Corporate Average Fuel Economy (CAFE) standards under EPCA, as amended by the Energy Independence and Security Act of 2007 (EISA). The two issued a Notice of Upcoming Joint Rulemaking to Establish Vehicle GHG Emissions and CAFE Standards today.

If proposed and finalized, the new standards would apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles. These vehicle categories are responsible for almost 60% of all US transportation-related greenhouse gas emissions.

If ultimately adopted, these standards would represent a harmonized and consistent national policy pursuant to the separate statutory frameworks under which EPA and DOT operate.

—Notice of Upcoming Joint Rulemaking

In addition to the EPA and DOT, California—and states adopting California emissions standards—represent a third policy interest in the area. Under the scope the new proposal, according to a senior Obama administration official in a backgrounder on Monday night, if the EPA does grant the waiver allowing California to implement the Pavley greenhouse gas standards for vehicles, the state has agreed to defer to the proposed national standard through model year 2016.

The 2016 endpoint of the two standards—Pavley I and the new national standard—are essentially the same, although the national standard is using an attribute-based approach (consistent with the new CAFE), while California’s standard used the older approach of vehicle type. The national program ramps up slightly more slowly than the California program envisioned, but does get to the same fleet average endpoint.

The national program also results in a greater total amount of greenhouse gas reductions than what a California program would have delivered, even with the 14 states who they said they would join the California program, according to the official.

Automakers and the UAW embraced the national program because it provides certainty and predictability to 2016 and includes flexibilities that will significantly reduce the cost of compliance. The collaboration of federal agencies also allows for clearer rules for all automakers, instead of three standards (DOT, EPA and a state standard).

With respect to technological feasibility, during MYs 2012-2016 manufacturers are expected to go through the normal automotive business cycle of redesigning and upgrading their light-duty vehicle products (and in some cases introducing entirely new vehicles not on the market today). The proposal under consideration is expected to allow manufacturers the time needed to incorporate technology to achieve GHG reductions and improve fuel economy during the vehicle redesign process This is an important aspect of the proposal under consideration, as it would avoid the much higher costs that would occur if manufacturers needed to add or change technology at times other than these scheduled redesigns. This time period would also provide manufacturers the opportunity to plan for compliance using a multi-year time frame, again in accord with normal business practice.

—Notice of Upcoming Joint Rulemaking

Key Elements of the National Program:

• EPA and NHTSA will propose two separate sets of standards, each under their respective statutory authorities. EPA expects to propose a national CO2 vehicle emissions standard under section 202 (a) of the Clean Air Act. EPA currently is considering proposing standards that would, if made final, achieve on average 250 grams/mile of CO2 in model year 2016. The standards for earlier years would begin with the 2012 model year, with a generally linear phase-in from MY 2012 through to model year 2016.

• NHTSA expects to propose appropriate related CAFE standards. The proposal under consideration would also include a harmonized CAFE standard for MY 2016. Compatible GHG and CAFE standards for earlier model years would increase from the MY 2011 CAFE standard to the MY 2016 level of the National Program.

• There will be some important differences in the development of the proposals. For example, under a GHG standard, EPA would expect manufacturers to take advantage of the option to generate credits by reducing emissions of HFCs and CO2 through upgrades to their air conditioner systems. EPA plans to take these reductions into account in developing a proposed GHG standard. However, EPCA does not permit NHTSA to consider air conditioning credits in developing a proposed CAFE standard for passenger cars. As a result, improvements in the efficiency of passenger car air conditioners would not be considered as a possible control technology for purposes of CAFE.

• In addition EPA would take into consideration all of the compliance flexibilities discussed below, such as averaging, banking, and trading of credits, while NHTSA is prohibited by statute from taking such flexibilities into account.

• As a result of those and other factors, As a result, the agencies do not anticipate a one-to-one correspondence between the level of EPA’s proposed GHG standards and NHTSA’s proposed CAFE standards. Instead the CAFE standards under consideration for proposal would be somewhat lower than the mile per gallon equivalent of the corresponding GHG standard. This reflects both the specific differences in standard setting criteria, as well as the general attempt by each agency to harmonize its proposed standards in a way that allows them to achieve their respective statutory and regulatory goals.

Form of the standards:

• Both EPA and NHTSA currently intend to propose attribute-based standards for passenger cars and light-trucks. The agencies currently intend to propose vehicle footprint as the attribute for the GHG and CAFE standards, with footprint defined as a vehicle’s wheelbase multiplied by its track width.

• Under a footprint-based standard, each manufacturer would have a GHG and CAFE standard unique to its fleet, with a separate standard for passenger cars and light-trucks, depending on the footprints of the vehicle models produced by that manufacturer. Generally, manufacturers of larger vehicles (i.e. vehicles with larger footprints) would face less stringent standards (i.e., higher CO2 grams/mile standards and lower CAFE standards) than manufacturers of smaller vehicles.

• While a manufacturer’s fleet average standard could be estimated throughout the model year based on projected sales volume of its vehicle fleet, the standard of compliance would be based on the final model year sales figures. A manufacturer’s calculation of fleet average emissions at the end of the model year would be based on the sales-weighted average emissions of each model in its fleet.

• EPA and NHTSA currently intend to propose separate footprint-based standards, or curves, for passenger cars and light-trucks. In designing the footprint-based standards, EPA and NHTSA intend to work together to build upon the footprint standard curves used in the CAFE rule for MY 2011,12 and to consider proposing changes to the shape of the curve based on, among other things, concerns about the steepness of the slope. EPA and NHTSA intend to consider, among other things, an approach that would generally flatten the passenger car curve, more in line with the shape of the truck curve for the MY 2011 CAFE standard.

Program flexibilities for achieving compliance:

• CO2/CAFE Credits earned based on fleet average performance. Fleet average standards would be based on the applicable attribute-based curves. At the end of each model year, when sales of the model year are complete, a sales-weighted fleet average would be calculated for each averaging set (cars and trucks). Under this approach, a manufacturer’s car and/or truck fleet that achieves a fleet average CO2/CAFE level better than the standard would earn credits. Conversely, if the fleet average CO2/CAFE level does not meet the standard the fleet would generate debits (also referred to as a deficit or negative credits).

• Air conditioning credits. EPA is considering an approach that would enable manufacturers to earn credits by reducing GHG emissions related to air conditioning systems.

• Flex-fuel and alternative fuel vehicle credits. EPCA authorizes an incentive under the CAFE program for production of dual-fueled or flexible-fuel vehicles (FFV) and dedicated alternative fuel vehicles. For the GHG program, EPA contemplates proposing to allow FFV credits in line with EISA limits only during the period from MYs 2012 to 2015. EPA will also consider allowing FFV credits beyond MY 2015 if manufacturers are able to demonstrate that the alternative fuel is actually being used in the vehicles. EPA is also considering how that demonstration could be made.

• Temporary lead-time allowance alternative standards. EPA is considering a temporary lead-time allowance for manufacturers whose sale of vehicles in the US in a specified time period is below a specified cut-off, such as sales of 400,000 vehicles or less during a specified year, such as MY 2009 or 2010. EPA is considering a less stringent GHG standard that would be 125% of the vehicle’s otherwise applicable foot-print target level. EPA envisions that this allowance would be available only during the MY 2012-2015 phase-in years of the program.

• Additional potential credit opportunities. EPA is considering opportunities for early credits in MYs 2009-2011 through over-compliance with a baseline standard that EPA is considering. The baseline would be set to be equivalent, on a national level, to the California standards.

EPA is currently considering proposing additional credit opportunities to encourage the commercialization of advanced GHG/fuel economy control technology such as electric vehicles and plug-in hybrid electric vehicles. These “super credits” could take the form of a multiplier that would be applied to the number of vehicles sold such that they would count as more than one vehicle in the manufacturer’s fleet average. EPA is also considering allowing such credits to be generated for years prior to MY 2012.

EPA is also considering an option for generation of credits for employing technologies that achieve GHG reductions that are not reflected on current test procedures. Examples of technologies that EPA could consider include technologies such as solar panels on hybrids, adaptive cruise control, and active aerodynamics, among other things.

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It would be nice if Obama and Congress would sign a tiered increase in the gas tax to correspond with the fuel efficiency standards. If the required fuel efficiency goes up 10% in a year, the gas excise tax (currently 18.4) should as well. The idea is that the revenue will remain a function of the miles driven so the trust fund stays financially sound while demand decreases.

It also means that people (in aggregate) won't be paying higher gas taxes. They'll be paying more per gallon but buying fewer gallons, making it a wash.

Here come the little shoddy underpowered unsafe deathtrap eco-cars for the masses.

@stomv:

I agree that gas tax rates ought to rise, However, as mostly-electric vehicles gain market share, gas taxes are going to become an increasingly ineffective and unfair method of collecting usage fees for maintenance of highway infrastructure. Other means (mandatory GPS-based travel loggers?) will eventually be developed and mandated. Until that happens, drivers of electric (or home-filled natural gas) vehicles will get a 'free ride' as it were.

I'm very gratified that President Obama regularly highlights Plug-in hybrids as presumably the leading and most promising vehicle technology. I figure hybrid drivetrain technology is ideal for most purposes and applications. Sure, with hybrids we'll still have cars that express individuality and differing purposes. But their drive characteristics are most likely to have in common the highest standard safety features. They'll run zero-emission electric within neighborhood airsheds and with least emissions on segregated and rural highways. They're not prone to maniacal accelleration. Imagine police disabling a maniacal motorist with the push of a button. But the #1 reason we should be driving Plug-in hybrids remains: They discourage boom-boom stereos because it runs down their batteries. Yo. Right on. Tell it.

ejj, do you really believe that? Do you really believe that all small cars are unsafe? There are plenty of small cars that get great crash ratings. Stop spewing your nonsense.

Some people see coming online and spewing nonsense as a form of freedom, they can say whatever they want with no consequences. They can lie and distort without anyone holding them accountable, all hiding behind free speech and so called right to their "opinion", no matter how ill informed and biased it may be.

@Nick

Actually gas taxes have never come even close to paying for the maintenance of highway infrastructure. Roads and highways are mostly paid for by those who own a house or holds a job - regardless of whether or not they drive a car. So much for the idea of 'user pays.'

It is brilliant that Obama sells this as a necessity to secure national security. The large majority can agree that national security is a good thing especially when it is implemented with non-aggressive and peaceful means. However, it is much more than national security. It also helps to lower particle emissions and it helps to fight global warming but these are topics that draw far less consensus of opinions. Furthermore, an often overlooked benefit of oil conservation is that it makes the country less vulnerable to the economic impact of increasing oil prices. When a barrel of oil increases with 20 USD it will cost the US economy (that spend 20 million barrels a day) 146 billion USD a year. That is about 1% of the US’s GDP which is quite a lot. This kind of legislation and similar legislation on air travel and shipping should be able to cut US consumption to 10 million barrels a day and thereby make the economy much more resistant to economic crises that can be triggered by rapidly rising oil prices.

This is going to be very interesting, Six years is a very short time period. Currently only three production cars in the US meet the 2016 standard; Prius, TDI and Insight. Zero current trucks even come close to meeting 30MPG's. The 2016 standard is moonshot teritory.

I repeat, should be interesting.

Joseph, CAFE mileage is calculated using the old cycle, and the current mileage numbers are calculated using the newer, stricter, faster driving speed, AC using, 2008 cycle. So add 15-20% to the EPA mileage for a 2009 car to get the CAFE mileage.

Joseph,
If I'm right, a fleet Average of 35.5 mpg is not at all difficult to meet. A mercedes E consumes about 35mpg diesel at high-speed. Is American technology so behind on Europe's or do they have to compensate for something that they need such ridiculously large cars ?

"do they have to compensate for something that they need such ridiculously large cars ?"

Piston envy? :^D

If I am not mistaken doesn't the ford fusion hybrid all ready meet this standard? Altough it is not a large car it most deffiniatly not a small eco-box. Add e-cars to the mix and 39mpg fleet wide average is most duable.

The main thing the car makers needed was the attribute based setup. That way things like minivans and vans and yes suvs and pickups can get a break on mpg needed as they tend to have to be rather wide and long to carry out thier inteded functions. ie cant carry a 12 foot long sheet of drywall in an 8 foot pickup bed.

It also means as it always should have been that we dont have to worry that the companies that are basicaly truck companies first and car companies last will bog up the increases in small car milage.

It took an Act of Congress to raisie the CAFE to 35 mpg to be achieved in 2020. But Herr Diktator comes along and blandly announces the CAFE will now be raised to 42 mpg, raised by 7 mpg and done, in 2016, four years sooner than before. All in the midst of an worldwide Automotive Depression, and the auto companies without two nickels to rub together, to designnew vehicles. go figure.

I guess Herr Diktator doesn't need a Congress, any more. Maybe he wil appoint a Horse's ass to the Senate like one Roman Emperor did to his Senate.

I think this inordinate jump in required MPG corresponds well with the US auto industries eminent demise (big vehicles can no longer sustain them anyway ), oil prices (assuming the present low prices are transitory) and AGW.

Small cars are less safe mostly (or entirely) because of larger cars on the road.

Forcing any public action can only be justified when the action is necessary and will not happen otherwise or fast enough.

It may be too big a jump – it may not be.

Either way, it’s overdue.

What is all the fuss about. By 2016, Europe and Asia will be at 40+ mpg and Americans being almost as smart, may be at about 36-37 mpg.

We should stop driving around with extended cab pick-ups capable of carrying 12-foot plaster boards. There are plenty of delivery trucks to do that.

Eventual gas tax replacement could be based on miles travelled x by vehicle 1000 lbs weight. EX: A 2000 lbs vehicle would pay 2 cents/mile while a 5000 lbs vehicle would be 5 cents/mile. Collection may be a real problem.

A flat road and bridges registration fee, based on vehicle weight, may be much easier to manage.

Alternatively, pay road and bridges everywhere, with fully automated collection gates at strategic places could capture usage close enough. The technology is there and in use in many places already.

While I generally favor stepping up the gas taxes, a 10% increase in gas taxes concurrent with a 10% increase in mileage does not equate to the same amount of taxes collected. The 10% mpg increase will be for the new model year, whereas the 10% tax increase would be for the existing fleet, most of which would not suddenly be 10% more efficient.

That means you don't get a free pass politically for raising that tax.

JosephT, My Altima hybrid meets 2016 standards today, and the Fusion gets better mileage than my car. My car has 5 star safety ratings in every area, as well as traction control. And it does 0-60 in 7.2 seconds. This is no pipe dream.

This is great political victory, but alas it won't really adress the problem of oil addiction in US. It is a step in a right direction but only a small step. Firts of all they don't say if these CAFE will be enforced to oblige auto manufacturer to respect them (which they don't currently because the penalties are not dissuasive enough) and there is so many loopholes. If they don't put a gas tax people will not buy cars simply because they respect the CAFE standard. These CAFE force automakers to make cars that people don't want (because they think like eji). Eventually people will just keep driving their old truck instead of buying a new one. You will garage who will specialise in repairing truck and SUV just to keep them on the road for ever.

On my 700+ mile trip around Southern Utah this weekend, my Ford Focus rental car was quite capable of achieving in excess of 40 mpg on average. I drove just as fast as everyone else, albiet with slower acceleration some times. In fact, the last 250 miles on the highway, I averaged 90 mph (don't tell the cops!)

If you are in need of a cheap commuter car with great gas mileage, get the new Ford Focus sedan. There is NOTHING fancy about it, but it grows on you :-) I hated it at first but now I like it. I just love that I could drive around for a whole weekend for just $40 worth of gas :-D toppatom, what does the eminent (i think you meant imminent) demise of the US auto industry have to do with mileage requirements? And PLEASE quit with your Al Gore hate. It is not his fault that human caused climate change is a problem. Try to think for yourself instead of repeating your Rush Limbaugh nonsense. The US car industry is NOT going away. Innovate you boneheads!!! To the auto engineers who read these comments, quit getting your asses kicked in the marketplace. Create the next VW Bug or Model T. Give the world a$5k car with more technology than an iPod. The technology is out there.

Our roads are the commons. We do not allow people to drive M1 Tanks on our roads and we shouldn't allow King W Ranchers, Landcruisers and Expeditions for personal transportation.

Let me clarify.
High CAFE and high gas taxes were not politically expedient because CAFÉ would hurt the US auto industry and high gas taxes would anger the voters.

Few now care what the US auto industry wants so CAFÉ is an easy way to reduce oil consumption.

High gas taxes (like nuclear power) is still apparently taboo with the masses.

I do not know what you think hate for Al Gore or Rush Limbaugh have to do with this. The cost of oil imports and AGW both argue for reduced consumption.

When Chrysler is in chapter 11 and GM borrowed ~$16 billion (?) and lost$6 billion in each of the last two quarters, you can hope the US car industry is NOT going away; but hope won’t do it.

Ford will go last, or maybe be propped up, but they will not likely be a major player.

The UAW has ridden Chrysler into the ground and been rewarded with the carcass.
They will now make and sell cars the people want – like Fiats. - Good luck with that.

You want innovation ? Start by producing a TV or VCR (or many other examples) in the US and take the market back from ASIA.

While your at it, make a factory that will underbid the countries that almost ALL of our industries are sending work to.

Then tell the automakers how to compete.

What everyone above fails to mention is that while cars are expected to achieve 39 miles per gallon, they are also being subjected to double the required roof crush strength.

If we keep squeezing the automobile ever more ruthlessly between fuel economy and safety, we're going to end up with only being able to travel 45 miles per hour, rather than the 60 (if not 70) miles per hour we're accustomed to.

We may end up with a lot less mobility, mainly to satisfy the emotional and ego needs of those who have all along disdained our way of life.

To those who are worried about being shoehorned into miniscule boxes or pootering along at 45 mph everywhere, take a trip to Europe.

We meet these standards already (252 g/mile CO2 fleet average) and we're not exactly living in the dark ages of automotive transport here.

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