Strong Fuel Efficiency and Pollution Standards Put Country on Right Track

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According to numerous media reports, the President will announce tomorrow a new agreement with automakers and California to strengthen carbon pollution and fuel efficiency standards to 54.5 mpg by 2025. The new agreement is the single biggest step the president can take to lower drivers’ gas bills and cut heat-trapping pollution at the same time.

The 54.5 mpg level can be met by using well-known technologies such as better engines, lower-cost hybrids and electric cars. Drivers can expect a greater range of choices in fuel efficient offerings without sacrificing performance while saving over $3,000 over the life of their vehicles.

We are committed to working with the administration and the auto industry to continue building the clean cars of the future. Based on our joint analysis with UAW, this standard has the potential by 2021 to produce up to 150,000 new auto jobs.

With this standard everybody wins---not only drivers and auto workers but every man, woman and child who will be able to breathe cleaner air. Of course, the technology exists to cut even more carbon pollution and save even more oil in the future.  The Environmental Protection Agency, the Transportation Department, and California are committed to review progress in several years, and we will keep working for stronger standards that cut more pollution and save consumers even more money.

Stringency of Proposal

  • U.S. Environmental Protection Agency Pollution (EPA) Standard of 163 gram per mile of CO2. The EPA pollution standard is equivalent to a fuel efficiency level of 54.5 mpg if the standard was met all through fuel economy technologies.  Model year 2010 model year passenger vehicles averaged 314 grams per mile and 2016 standard is 250 grams per mile.
  • A separate, but jointly coordinated National Highway Safety Traffic Administration (NHSTA) fuel efficiency standard of about 50 mpg. The actual CAFE fuel economy standard is likely to be lower than 54.5 mpg since the fuel economy standard, unlike the EPA standard, cannot consider air conditioning emission reductions and other measures not captured over the official certification test cycle. The current standard for 2011 is 28.3 mpg and the 2016 standard is 34.1 mpg.
  • Fuel economy window label value of about 40 mpg. Because of the differences between the laboratory certification test cycle and the on-road fuel efficiency, drivers can expect to see the average window fuel economy label to be about 40 mpg, compared to today’s average of about 22.5 mpg.

Our current understanding of key elements of the agreement

  1. EPA standard of 163 grams per mile of CO2 and the NHSTA CAFE standard of about 50 mpg, maybe slightly less. This represents about a 50 percent cut in carbon pollution from today’s vehicles, and 40 percent reduction in fuel consumption.
  2. A 5 percent annual improvement rate for model years 2017-25 cars. For light trucks, a 3.5 percent annual improvement rate for model years 2017-21 and 5 percent for model years 2022-25. The lower 3.5 percent light truck improvement rate is the primary reason for why the original proposal of 56.2 mpg is now 54.5 mpg. This lighter stringency could encourage manufacturers to classify more vehicles as light trucks, depending on how the standard is designed.
  3. A midterm review several years prior to the model year 2022 to assess whether the model year 2022-25 standards need to be revised. It will be a joint assessment by the U.S. EPA, NHSTA and California Air Resources Board. The outcome of the assessment could be to strengthen, keep the same, or weaken the 2022 -25 standards. The fine print of the agreement matters here.
  4. Extra credits for mild hybrids in model years 2017-21 and strong hybrid pickups for model years 2017-25 to encourage early introduction of advanced technologies in the pickup market which is behind in its adoption of fuel-efficiency technologies.
  5. So-called “off-cycle” credits for technologies that don’t show up on the official certification test cycles, such as front grills with shutters, solar roof cells that charge batteries, thermoelectric systems to capture energy otherwise lost in the exhaust gases, etc.
  6. Cap on the number of battery electric and plug-in hybrid electric vehicles treated as zero emissions, number to be determined, but same structure as the current model year 2012-16 program. The current cap is up to 300,000 per manufacturer for 2012-16.

Technologies Well-Known and Affordable

The technologies needed to meet a 54.5 mpg standard are well-known, affordable and require no radical technical or cost breakthroughs, including gasoline direct injection engines, turbochargers, 6-7 speed transmissions, lower cost hybrids and electric cars. Drivers can expect a greater range of vehicle choices in fuel-efficient offerings without sacrificing performance. 

There are four key technologies that are needed to meet a 54.5 mpg standard:

  1. Improved conventional gasoline engine vehicles through such technologies as direct fuel injection, turbocharging, cooling and boosting the exhaust gas, and adding stop/start systems that shuts the engine off at idle.
  2. Improved, lower-cost hybrids technologies called “parallel 2-clutch” systems that Hyundai, VW, Nissan are introducing now into the marketplace.
  3. Plug-in hybrids and battery electrics with lower cost, advanced lithium batteries. 
  4. Lightweight, high strength materials to reduce mass 10 percent from 2016 levels, consistent with auto industry trends.

The EPA, NHSTA and CARB have previously estimated the sales mix of the fleet for the various technologies. The 54.5 mpg standard falls between their 4 percent and 5 percent scenarios. 

Estimates of Program Benefits

Based on what we know about the agreement, we estimate substantial benefit assuming the agreement is implemented in a strong manner.

  • Drivers can expect to save over $3,000 over the life of their vehicles, and the additional cost of the fuel-efficiency technologies will pay for itself in about 4 years.
  • Based on our joint analysis with the United Auto Workers, Driving Growth, this standard has the potential to produce up to 150,000 new auto jobs by 2021.
  • Nationally, savings at the gas pump under the new standards could total as much as $80 billion annually by 2030, based on our joint analysis with UCS.
  • By 2030, the standards could cut U.S. oil consumption by as much as 1.5 million barrels per day, which is equivalent to U.S. imports from Saudi Arabia and Iraq in 2010, based on our joint analysis with UCS.
  • The standards could reduce dangerous carbon pollution by as much as 280 million metric tons annually by 2030, based on our joint analysis with UCS. We estimate is the equivalent of the emissions from 72 coal-fired power plants.  

Next Steps
In a May 2010 memorandum, President Obama directed the Environmental Protection Agency and the Department of Transportation to work with California to develop two separate but coordinated proposals for pollution and fuel efficiency standards. The announcement of an agreement ensures that the President’s deadline of September 28th for the official, detailed proposed regulation will be met.  There will be a public comment period and the final rule is expected by the end of July 2012.  The final rule will apply to cars and light trucks for model years 2017 to 2025.