Increasing the Corporate Average Fuel Economy standards for model year 2017-2025 vehicles to 54.5 miles per gallon was first proposed in July 2011. Since then, there has been a lot of back and forth, a lot of positive and negative responses, and, lately, a delay for unknown reasons. Since the CAFE rules were not changed between the mid-1980s and when President Obama came into office and rules for 2012-2016 model year vehicles were put in place in 2010, it's not a huge surprise this update took so long. That all ended today.

Department of Transportation secretary Ray LaHood and Environmental Protection Agency administrator Lisa Jackson announced the official finalization of new federal fuel efficiency standards in a conference call this afternoon. Some headline numbers from the call:
  • The reduced fuel use will save American families over $1.7 trillion dollars in fuel costs.
  • Vehicles on American roads will use two million barrels of oil less per day by 2025, "as much as half of the oil we import from OPEC each day."
  • More efficient cars will be more expensive, but LaHood said that the buyers can expect average fuel savings of $8,000 per vehicle (over the life of the vehicle) for a 2025 model year car compared to a similar vehicle from 2010, using today's prices. That's equivalent to gas being a dollar a gallon cheaper.
  • You like lower emissions? The new standards will "reduc[e] emissions by 6 billion metric tons over the life of the program – more than the total amount of carbon dioxide emitted by the United States in 2010."
We've heard a lot of those numbers before, but there were some items in the press release (not addressed on the call) that caught our eye. Specifically:

The program also includes targeted incentives to encourage early adoption and introduction into the marketplace of advanced technologies to dramatically improve vehicle performance, including:
Incentives for electric vehicles, plug-in hybrid electric vehicles, and fuel cells vehicles;
Incentives for hybrid technologies for large pickups and for other technologies that achieve high fuel economy levels on large pickups;
Incentives for natural gas vehicles;
Credits for technologies with potential to achieve real-world greenhouse gas reductions and fuel economy improvements that are not captured by the standards test procedures.

We don't know how these incentives stack (or don't) with current incentives or if they're just the ones already in place, but we've put in a call to the EPA to find out. We'll let you know when we hear back. A sample of early responses to the official rules – all positive, so far – is available below.
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Obama Administration Finalizes Historic 54.5 mpg Fuel Efficiency Standards
Consumer Savings Comparable to Lowering Price of Gasoline by $1 Per Gallon by 2025


WASHINGTON, DC – The Obama Administration today finalized groundbreaking standards that will increase fuel economy to the equivalent of 54.5 mpg for cars and light-duty trucks by Model Year 2025. When combined with previous standards set by this Administration, this move will nearly double the fuel efficiency of those vehicles compared to new vehicles currently on our roads. 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.

"These fuel standards represent the single most important step we've ever taken to reduce our dependence on foreign oil," said President Obama. "This historic agreement builds on the progress we've already made to save families money at the pump and cut our oil consumption. By the middle of the next decade our cars will get nearly 55 miles per gallon, almost double what they get today. 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."

The historic standards issued today by the U.S. Department of Transportation (DOT) and the U.S. Environmental Protection Agency (EPA) build on the success of the Administration's standards for cars and light trucks for Model Years 2011-2016. Those standards, which raised average fuel efficiency by 2016 to the equivalent of 35.5 mpg, are already saving families money at the pump.

Achieving the new fuel efficiency standards will encourage innovation and investment in advanced technologies that increase our economic competitiveness and support high-quality domestic jobs in the auto industry. The final standards were developed by DOT's National Highway Traffic Safety Administration (NHTSA) and EPA following extensive engagement with automakers, the United Auto Workers, consumer groups, environmental and energy experts, states, and the public. Last year, 13 major automakers, which together account for more than 90 percent of all vehicles sold in the United States, announced their support for the new standards. By aligning Federal and state requirements and providing manufacturers with long-term regulatory certainty and compliance flexibility, the standards encourage investments in clean, innovative technologies that will benefit families, promote U.S. leadership in the automotive sector, and curb pollution.

"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 Transportation Secretary Ray 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."

"The fuel efficiency standards the administration finalized today are another example of how we protect the environment and strengthen the economy at the same time," said EPA Administrator Lisa P. Jackson. "Innovation and economic growth are already reinvigorating the auto industry and the thousands of businesses that supply automakers as they create and produce the efficient vehicles of tomorrow. Clean, efficient vehicles are also cutting pollution and saving drivers money at the pump."

The Administration's combined efforts represent the first meaningful update to fuel efficiency standards in decades. Together, they will save American families more than $1.7 trillion dollars in fuel costs, resulting in an average fuel savings of more than $8,000 by 2025 over the lifetime of the vehicle. For families purchasing a model Year 2025 vehicle, the net savings will be comparable to lowering the price of gasoline by approximately $1 per gallon. Additionally, these programs will dramatically reduce our reliance on foreign oil, saving a total of 12 billion barrels of oil and reducing oil consumption by more than 2 million barrels a day by 2025 – as much as half of the oil we import from OPEC each day.

The standards also represent historic progress to reduce carbon pollution and address climate change. Combined, the Administration's standards will cut greenhouse gas emissions from cars and light trucks in half by 2025, reducing emissions by 6 billion metric tons over the life of the program – more than the total amount of carbon dioxide emitted by the United States in 2010.

President Obama announced the proposed standard in July 2011, joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota, and Volvo, as well as the United Auto Workers. The State of California and other key stakeholders also supported the announcement and were integral in developing this national program.

In achieving these new standards, 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.

Major auto manufacturers are already developing advanced technologies that can significantly reduce fuel use and greenhouse gas emissions beyond the existing model year 2012-2016 standards. In addition, a wide range of technologies are currently available for automakers to meet the new 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 to dramatically improve vehicle performance, including:
  • Incentives for electric vehicles, plug-in hybrid electric vehicles, and fuel cells vehicles;
  • Incentives for hybrid technologies for large pickups and for other technologies that achieve high fuel economy levels on large pickups;
  • Incentives for natural gas vehicles;
  • Credits for technologies with potential to achieve real-world greenhouse gas reductions and fuel economy improvements that are not captured by the standards test procedures.

HISTORIC FUEL EFFICIENCY AND AUTO POLLUTION STANDARDS FINALIZED
54.5 MPG-EQUIVALENT STANDARD A BIG STEP TOWARD HALVING U.S. OIL USE WITHIN 20 YEARS, SCIENCE GROUP SAYS


WASHINGTON (Aug. 28, 2012) – The finalization of historic new federal automobile standards covering new passenger vehicles sold between 2017 and 2025 is one of the biggest actions ever taken to reduce U.S. oil use and a huge step on the path toward halving the country's projected consumption within 20 years, the Union of Concerned Scientists (UCS) said today.

Under the new standards, which arose from a widely supported agreement between automakers, the White House, and California state officials, average fuel economy for new cars and light trucks would nearly double, and global warming pollution levels for the new vehicle fleet would be cut in half by model year 2025.

"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 Michelle Robinson, director of UCS's Clean Vehicles program. "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."

The new standards build on a similar set of regulations that are already saving consumers money at the pump and cutting oil use. The Environmental Protection Agency and Department of Transportation are implementing the standards for model years 2012 through 2016, which allow automakers to produce a fleet of vehicles that simultaneously complies with both the Clean Air Act and Corporate Average Fuel Economy standards.

According to UCS analysis, the combined standards will:
  • Cut oil use by as much as 3.1 million barrels per day by 2030 – roughly the amount we import from the Persian Gulf and Venezuela combined;
  • Save consumers $8,000 over the life of a model year 2025 vehicle, compared to the average vehicle on the road today, even after paying for fuel-saving technology; and
  • Reduce U.S. global warming pollution by as much as 570 million metric tons in 2030, the equivalent of taking a third, or 85 million, of today's cars and trucks off the road for an entire year.
In addition to support from automakers, lawmakers, scientists, consumer advocates, environmental groups, and national security experts, a recent poll from the Consumer Federation of America found that 74 percent of Americans support the new standards. Most respondents also said they want higher fuel economy in their next vehicle purchase, but despite this deep popularity and the many benefits of the standards, a vocal minority continues to speak out against the rules.

"If you are against these common-sense standards, you are against saving consumers money, against consumer choice, and for leaving our economy open to being crippled yet again by our expensive oil use," said Robinson.

Automakers are already producing cleaner, more efficient vehicles that meet the standards.

"From advanced engines and transmissions to hybrid powertrains, automakers are already demonstrating what they can do with fuel-efficient technology," said Jim Kliesch, research director for the Clean Vehicles program. "Thanks to these standards, this is just the beginning of the fuel-saving choices consumers will have on the showroom floor."

The new standards are a critical step to turn around our nation's growing rate of oil consumption, and just one of many. By tapping deeper into existing efficiency technology and promoting innovative solutions here in the United States, our nation can build on the groundwork these standards create and put the nation on a course to cut its projected oil use in half over a 20-year period.

UCS's Half the Oil Plan lays out a practical and feasible path to reach that goal, and includes technologies and policies that make passenger vehicles and commercial trucks more efficient, hybrid and electric vehicles more practical, and vehicle fuels less polluting.

"Automakers are already showing us what they can do with a skilled and determined workforce," Robinson said. "We need to build on that groundwork and take an even bigger bite out of our oil consumption."

Click here to learn more about the new standards and the role they play in long-term oil savings.

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The Union of Concerned Scientists is the leading U.S. science-based nonprofit organization working for a healthy environment and a safer world. Founded in 1969, UCS is headquartered in Cambridge, Massachusetts, and also has offices in Berkeley, Chicago and Washington, D.C. For more information, go to www.ucsusa.org.


BUSINESS LEADERS: New 54.5 mpg standard good for automakers, consumers and economy

(Boston, MA) - With the newly adopted national mileage standard of 54.5 miles per gallon by 2025 making the headlines today, top business leaders are eager to weigh in with the media on how the standard will positively impact the U.S. economy and the U.S. auto industry. New jobs and strong car sales tied to robust fuel standards are already in evidence from Michigan to Indiana to other Midwest states.

THEIR TAKE: U.S. automakers are today seeing growing consumer demand for fuel-efficient vehicles and it's already leading to new jobs and stronger profits. In the long term, U.S. automakers can expect to see an increase in extra profits to the tune of $2.44 billion dollars as well as 300,000 additional vehicle sales in 2020. The new standard is also projected to drive investment and innovation in the U.S. and worldwide auto industry, while creating 484,000 new jobs in the U.S. economy wide.

EXPERT INTERVIEWS:

MINDY LUBBER is President of Ceres, a leading coalition of investors and public interest organizations working with companies to address sustainability challenges. Ceres created the Investor Network on Climate Risk, whose 100 members manage more than $10 trillion in collective assets, and include major institutional investors as BlackRock, Deutsche Asset Management, TIAA-CREF, and public pension funds in California, Florida and New York.

Lubber recently noted in a column in Forbes.com:

"Automakers know that offering buyers a wide range of cars and trucks that go farther on a gallon of gas is good for sales and profits in the United States and around the world. And when the rubber meets the road on the 54.5-mpg standard, they better be ready-or they'll be left behind."

To read Lubber's full take on the new 54.5-mpg standard click here.

CAROL LEE RAWN is the transportation policy expert at Ceres, which collaborated with Citi Investment Research and with Management Information Services to conduct two independent studies of the likely economic and jobs effects of higher fuel economy standards.

Ceres collaborated with Citi Investment Research on Fuel Economy Focus: Industry Perspectives on 2020, which projects the impact that the new U.S. Corporate Average Fuel Economy (CAFE) and greenhouse gas (GHG) emissions program would have on auto manufacturers and their suppliers in 2020.

More Jobs Per Gallon: How Strong Fuel Economy/GHG Standards Will Fuel American Jobs, produced by Ceres with Management Information Services, projects that stronger standards will lead to greater economic and job growth, both within the auto industry and in the broader economy as a whole.

Based on the Ceres and Citi reports, Rawn concludes that:

"Strengthening the national fuel economy standards will create a rising tide that lifts all boats. Car companies and their suppliers will see greater profits and sales. Consumers will save money at the pump. Employment will rise and boost the larger economy. And the U.S. will gain a greater share of the world's rebounding automotive business."

To read Rawn's full assessment of Citi's and MISI's research please click here.

BILL GREEN co-founded VantagePoint's CleanTech Practice, which led investments in companies including Tesla Motors, BrightSource Energy, Miasole, Better Place and New Energy Capital. Green has led five businesses, including Ecolink, the Strategic Chemical Management Group, Team Fuel, and the Environmental Forum on Technology and Business.

As a top investor, Green notes:

"By requiring carmakers to hit an average of 54.5 miles per gallon by 2025, the proposed standard will provide exactly the kind of long-term policy certainty that investors loves. As a long-time investor in innovative car technologies and companies like Tesla, I can attest to the fact that a strong standard would unlock investment and innovation, create jobs, and spur economic growth, in the automotive sector and beyond."

To read Green's full take on the 54.5 mpg standard, click here.

Ceres is non-profit organization that mobilizes its network of investors, companies and public interest groups to tackle sustainability challenges. Ceres also directs the Investor Network on Climate Risk, which supports 100 institutional investors with assets totaling $10 trillion.


Pew Applauds Obama Administration for Final Fuel Economy Rule

Washington (Aug. 28, 2012)-Phyllis Cuttino, director of Pew's Clean Energy Program, issued the following statement today in reaction to the joint Environmental Protection Agency and Department of Transportation final rule increasing fuel economy standards for cars, SUVs, and pickups to 54.5 mpg by 2025.

"We commend the Obama administration, the auto industry, and environmental organizations for working together to bring about this historic leap in fuel efficiency. The new standard of 54.5 mpg by 2025 for cars and light trucks will effectively double fuel efficiency and provide many benefits to drivers and the country.

"Our nation will be more secure, our environment will be cleaner, and consumers will have more money in their pockets as a result of the new rule.

"The auto industry will also benefit from this action, because up to 570,000 jobs could be created, innovation will be enhanced, and more fuel-efficiency technology choices will be available to consumers."

The Pew Clean Energy Program seeks to accelerate the clean energy economy for national security, economic, and environmental benefits. www.PewTrusts.org/CleanEnergy.

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Editorial Note: A poll conducted for the Pew Clean Energy Program by the bipartisan polling team of the Mellman Group Inc. and Public Opinion Strategies from July 8 to 12, 2011, found that an overwhelming majority of respondents supported strong fuel efficiency standards. Eighty-two percent of respondents supported an increased fuel efficiency standard of 56 mpg by 2025, with 68 percent of respondents saying they "favor strongly."


Vets Group: Newly adopted 54.5-mpg standard is a national security imperative. Cutting dependence on oil will make U.S. stronger, more secure.

Washington, DC – In response to the new national gas mileage standard of 54.5-mpg by 2025, which was adopted today, Operation Free spokesperson Benjamin Lowe released the following statement: "This national effort to boost gas mileage to 54.5-mpg is a key step in tackling our dangerous demand for oil. We currently send more than a billion dollars a day to other countries to buy oil. Too much of that money ends up in the hands of people who don't share our values or have our best interests in mind. And every time the price of a barrel of crude oil goes up by $5, Iran gets an additional $7.9 billion a year.

"Under the new gas mileage standards, by 2025 we will cut our oil consumption by 2.2 million barrels a day - equal to half of the oil we now import from OPEC. Making the cars and trucks on America's roads go farther on a gallon of gas will save Americans $80 billion at the pump every year by 2030 and create 150,000 jobs.

"We applaud this forward-looking policy for providing a boost to the long-term security and economy of the United States."

Operation Free is a nationwide coalition of military veterans working to secure America with clean energy. Learn more at OperationFree.net. Operation Free is a campaign of the Truman National Security Project.


Dingell Supports Today's Fuel Efficiency Recommendations for Light Cars and Trucks

Commends Obama Administration for finding a commonsense solution to protect jobs and save consumers money at the pump

Washington, D.C. – U.S. Congressman John D. Dingell (D-MI15) expressed his continued support today for increased fuel efficiency following the Environmental Protection Agency's and National Highway Transportation Safety Administration's joint announcement of new national standards for Model Year 2017-2025 light cars and trucks.

"I commend the Obama Administration for working with auto manufacturers, environmentalists, consumer groups, and labor to find a commonsense solution that will protect American jobs while saving consumers at the gas pump," said Dingell. "Not only will this new standard reduce our reliance on foreign sources of petroleum, it will also reduce greenhouse gas emissions. As the House author of the Clean Air Act Amendments of 1990, I am proud of the work we have done to reduce air pollutants while protecting jobs and the economy, and this new standard continues those efforts."

"Of critical importance in the standard is the mid-term review, which will allow all parties to take a step back and reevaluate, making necessary adjustments," Dingell continued. "In addition, the flexibilities built into the program are of the utmost importance. Finally, and most importantly, this is one national standard. A patchwork of different standards would have been a disaster for the economy."

The new standards will increase fuel economy in cars and light-duty trucks while providing certainty to the automotive industry of one national standard.


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