U.S. Appears 'Ready' for New Fuel Efficiency Policy

On May 19, the response to the Obama Administration's national fuel efficiency policy—requiring an average fuel economy standard of 35.5 mpg in 2016—seemed supportive all around.

In attendance at the announcement were several C-level automaker executives; the United Autoworkers' president; Department of Transportation, Environmental Protection Agency, and California authorities; U.S. legislators, and Leaders of League of Conservation Voters, Natural Resources Defense Council, Sierra Club, Environmental Defense Fund, and Union of Concerned Scientists.

The White House press release noted that "Ten car companies and the UAW have embraced the national program because it provides certainty and predictability to 2016 and includes flexibilities that will significantly reduce the cost of compliance."

President Barack Obama based the national policy on California's tailpipe emissions standards, which are being adopted by many other states. "A national policy on fuel economy standards and greenhouse gas emissions is welcomed by the auto manufacturers because it provides regulatory certainty and predictability 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)," the White House statement says.

The new standard will surpass the CAFE law passed by Congress in 2007, which required an average fuel economy of 35 mpg in 2020. U.S. Rep. Edward J. Markey (D-Mass.) is co-author of the original 35-mpg standard. "With this historic announcement, President Obama is firing on all cylinders by getting the automakers to simultaneously agree to higher fuel economy standards and drop their litigation against California," Markey said. "As someone who has pushed for stronger fuel economy standards for decades, the difference between then and now is like being stuck in stop-and-go traffic and hitting every green light on your way home."

Ailis Aaron Wolf, spokesperson for 40MPG.org, said, "When gas pump prices jump again above $3 and $4 dollars, as experts predict that they will, Americans will once again flock to the most energy efficient vehicles available. U.S. auto companies need to do better if they want to remain competitive in an increasingly tough and competitive global marketplace. Hopefully, the new mpg deal with help to create a culture of innovation and experimentation that will help put the U.S. auto industry back on top."

A June 2007 report noted that Japan is moving to the equivalent of 48 mpg by 2010, the European Union is shooting for about 44 mpg, and China is requiring the equivalent today of 37 mpg.

Randall Scheps, chair of The Aluminum Association's Auto & Light Truck Group, said, "Specific to this rule, we agree with the administration for continuing to support size-based standards for passenger cars. Size-based standards will allow automakers to build large vehicles that consumers demand with the fuel efficiency they expect and will positively impact future vehicle design and construction. Research proves that size—not weight—is a better determinant of vehicle safety."

The new policy is expected to reduce oil consumption by approximately 1.8 billion barrels over the life of the program and greenhouse gas emissions by approximately 900 million metric tons.

Deborah Schmall, a leading partner in the Environmental Law and Sustainability and Global Climate Change Practice Groups at international law firm Paul Hastings, said, "California has apparently agreed through its governor that once the federal regulations are in place, California will defer the time frame of its regulations to synchronize with those of the new federal standards (i.e. deferring major emission limitations until 2016). Overall, this bartered resolution confirms the pragmatic approach of the Obama administration to resolving climate change issues while never wavering from its resolve to address it forthrightly."

Schmall cautioned, however, that "It is not clear that this brokered deal will end all challenges based upon preemption to California's regulatory scheme for GHG tailpipe emissions. There may be an interim period, before the new federal regulations for fuel efficiency are issued, that California's program may be in place and be more stringent, and the impetus to challenge the regulations may continue."