New CAFE rules for 2025: How 54.5 mpg generates a lot of numbers (and opposition from VW)

Following the big CAFE announcement this morning – which called for a 54.5 mpg fuel economy standard by model year 2025EPA administrator Lisa Jackson (pictured) gave a bit more information on how the proposal will affect the vehicle landscape in the U.S. She said that there is no expected percentage of what kinds of powertrains (diesel or plug-in or more efficient gasoline engines) will make up the fleet of vehicles sold in 2025, just that the rule requires those vehicles need to be cleaner than the ones produced today. Jackson told AutoblogGreen that gasoline and diesel vehicles "are treated the same" under the new proposal, something that Volkswagen is not too happy about since diesel doesn't get any of the miles per gallon equivalency incentives, the way that plug-in and fuel cell vehicles do. The EPA says that the proposal also gives, "Credits for technologies with potential to achieve real-world CO2 reductions and fuel economy improvements that are not captured by the standards test procedures," that's apparently not good enough for VW. The White House proposal also gives a lot of love to big trucks, and Jackson said that, "full-size pickups are where we decided to make some accommodations," since that segment is running a bit behind the rest of the industry in terms of getting better fuel economy.

We also gathered a few numbers from various press releases that were put out today. There have been a some negative comments issued (see VW and the American Road & Transportation Builders Association, below), but most are positive:
  • Savings to the consumer of $1.7 trillion at the pump (Source: EPA)
  • Alternate number: Savings of $107 billion at the pump (Ceres)
  • Savings of $8,000 per vehicle by 2025 (EPA)
  • A loss of $65 billion in federal funding for state and local highway, bridge and transit improvements (ARTBA)
  • The entire program will save 12 billion barrels of oil (EPA)
  • By 2025, oil consumption should be reduced by 2.2 million barrels a day (EPA)
  • 54.5 mpg is the same as 163 grams per mile of CO2 emissions
  • 54.5 mpg "would create roughly 484,00 jobs nationwide" (Ceres)
More details after the jump.

[Source: EPA, Ceres, ARTBA]
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President Obama Announces Historic 54.5 mpg Fuel Efficiency Standard
Consumers will save $1.7 trillion at the pump, $8K per vehicle by 2025

WASHINGTON, DC – President Obama today announced a historic agreement with thirteen major automakers to pursue the next phase in the Administration's national vehicle program, increasing fuel economy to 54.5 miles per gallon for cars and light-duty trucks by Model Year 2025. The President was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo – which together account for over 90% of all vehicles sold in the United States – as well as the United Auto Workers (UAW), and the State of California, who were integral to developing this agreement.

"This agreement on fuel standards represents the single most important step we've ever taken as a nation to reduce our dependence on foreign oil," said President Obama. "Most of the companies here today were part of an agreement we reached two years ago to raise the fuel efficiency of their cars over the next five years. We've set an aggressive target and the companies are stepping up to the plate. By 2025, the average fuel economy of their vehicles will nearly double to almost 55 miles per gallon."

Building on the Obama administration's agreement for Model Years 2012-2016 vehicles, which will raise fuel efficiency to 35.5 mpg and begin saving families money at the pump this year, the next round of standards will require performance equivalent to 54.5 mpg or 163 grams/ mile of CO2 for cars and light-duty trucks by Model Year 2025. Achieving the goals of this historic agreement will rely on innovative technologies and manufacturing that will spur economic growth and create high-quality domestic jobs in cutting edge industries across America.

These programs, combined with the model year 2011 light truck standard, represent the first meaningful update to fuel efficiency standards in three decades and span Model Years 2011 to 2025. Together, they will save American families $1.7 trillion dollars in fuel costs, and by 2025 result in an average fuel savings of over $8,000 per vehicle. Additionally, these programs will dramatically cut the oil we consume, saving a total of 12 billion barrels of oil, and by 2025 reduce oil consumption by 2.2 million barrels a day – as much as half of the oil we import from OPEC every day.

The standards also curb carbon pollution, cutting more than 6 billion metric tons of greenhouse gas over the life of the program – more than the amount of carbon dioxide emitted by the United States last year. The oil savings, consumer, and environmental benefits of this comprehensive program are detailed in a new report entitled Driving Efficiency: Cutting Costs for Families at the Pump and Slashing Dependence on Oil, which the Administration released today.

The Environmental Protection Agency (EPA) and the Department of Transportation (DOT) have worked closely with auto manufacturers, the state of California, environmental groups, and other stakeholders for several months to ensure these standards are achievable, cost-effective and preserve consumer choice. The program would increase the stringency of standards for passenger cars by an average of five percent each year. The stringency of standards for pick-ups and other light-duty trucks would increase an average of 3.5 percent annually for the first five model years and an average of five percent annually for the last four model years of the program, to account for the unique challenges associated with this class of vehicles.

"These standards will help spur economic growth, protect the environment, and strengthen our national security by reducing America's dependence on foreign oil," said U.S. Transportation Secretary Ray LaHood. "Working together, we are setting the stage for a new generation of clean vehicles."

"This is another important step toward saving money for drivers, breaking our dependence on imported oil and cleaning up the air we breathe," said EPA Administrator Lisa P. Jackson. "American consumers are calling for cleaner cars that won't pollute their air or break their budgets at the gas pump, and our innovative American automakers are responding with plans for some of the most fuel efficient vehicles in our history."

A national policy on fuel economy standards and greenhouse gas emissions provides regulatory certainty and flexibility that reduces the cost of compliance for auto manufacturers while addressing oil consumption and harmful air pollution. Consumers will continue to have access to a diverse fleet and can purchase the vehicle that best suits their needs.

EPA and NHTSA are developing a joint proposed rulemaking, which will include full details on the proposed program and supporting analyses, including the costs and benefits of the proposal and its effects on the economy, auto manufacturers, and consumers. After the proposed rules are published in the Federal Register, there will be an opportunity for public comment and public hearings. The agencies plan to issue a Notice of Proposed Rulemaking by the end of September 2011. California plans on adopting its proposed rule in the same time frame as the federal proposal.
Given the long time frame at issue in setting standards for MY2022-2025 light-duty vehicles, EPA and NHTSA intend to propose a comprehensive mid-term evaluation. Consistent with the agencies' commitment to maintaining a single national framework for vehicle GHG and fuel economy regulation, the agencies will conduct the mid-term evaluation in close coordination with California.

In achieving the level of standards described above for the 2017-2025 program, the agencies expect automakers' use of advanced technologies to be an important element of transforming the vehicle fleet. The agencies are considering a number of incentive programs to encourage early adoption and introduction into the marketplace of advanced technologies that represent "game changing" performance improvements, including:

Incentives for electric vehicles, plug-in hybrid electric vehicles, and fuel cells vehicles;
Incentives for advanced technology packages for large pickups, such as hybridization and other performance-based strategies;
Credits for technologies with potential to achieve real-world CO2 reductions and fuel economy improvements that are not captured by the standards test procedures.

In addition, EPA plans to propose provisions for:
Credits for improvements in air conditioning (A/C) systems, both for efficiency improvements and for use of alternative, lower global warming potential refrigerant;
Treatment of compressed natural gas (CNG);
Continued credit banking and trading, including a one-time carry-forward of unused MY 2010-2016 credits through MY 2021.


Ceres Releases Job Numbers from Obama's MPG Announcement,
Results of New Report Showing Economic Benefits of Strong MPG

54.5 MPG standard by 2025 would create roughly 484,00 jobs nationwide, including 43,000 jobs in auto sector; Consumers would save $107 billion at the pump

BOSTON – President Obama announced an agreement today for the next round of fuel efficiency improvements for model year 2017-2025 cars and light duty trucks at 54.5 MPG by 2025. Ceres, a national coalition of investors and public-interest organizations, today released "More Jobs Per Gallon," an economic analysis by the independent firm Management Information Services, Inc. that quantifies what stronger fuel economy/GHG standards would mean for the U.S. economy.

Obama's announcement of 54.5 mpg by 2025 means cars would be required to average a 5 percent improvement in fuel economy each year from 2017 through 2025, while trucks would only need to rise 3.5 percent a year through 2021. This most closely aligns with the 4 percent per year improvement for CAFE mileage and GHG emission reduction in the Ceres report. Key findings from the 4 percent scenario are:
Approximately 484,000 jobs would be created by 2030 (as opposed to nearly 700,000 jobs under 60 MPG).
43,000 of those jobs would be in the auto sector (as opposed to 63,000 auto sector jobs under 60 MPG).
Consumers would save approximately $107 billion at the pump (as opposed) to $152 billion under 60 MPG.
Net job gains in 49 states, and greatest job gains under strongest standards.

"We commend the Obama Administration on today's important step to boost fuel economy and reduce vehicle emissions, which will create jobs, drive innovation, save consumers money and reduce our dependence on foreign oil," said Mindy S. Lubber, president of Ceres. "Our report makes clear that the stronger the standards, the greater the economic benefits, and we urge the Administration to ensure a strong national program."

Ceres' new report, available at, evaluated different regulatory scenarios under consideration for CAFE mileage and GHG emissions improvements – specifically, improvements of three, four, five and six percent per year for model years 2017-25.

Among the report's key findings:

· The six percent scenario (roughly 60 MPG) would generate an estimated $152 billion in fuel savings for consumers in 2030 compared to business as usual. Of the $152 billion saved at the pump, $59 billion would be expected to be spent in the auto industry as drivers purchase cleaner, more efficient vehicles. The remaining $93 billion will be spent across the rest of the economy, boosting consumers' discretionary income for everything from retail purchases to restaurant trips to increased spending on health care.

· Nearly 700,000 new full time jobs would be created under the six percent scenario, compared to only about 350,000 jobs under the three percent (roughly 47 MPG) scenario.

· 63,000 new, full-time domestic auto industry jobs would be created in 2030 under the six percent scenario; more than double the 31,000 jobs under the three percent scenario.

· States seeing the biggest gains in terms of relative impact on their job markets also have some of the largest auto industry sectors. Again, job growth would be significantly higher under the six percent scenario. The top 12 states in terms of percentage job increases include Indiana, Michigan, Alabama, Kentucky, Tennessee, Ohio, North Carolina, New Hampshire, Vermont, Oregon, New York and Missouri.

· Net jobs gains in 49 states, and greatest job gains under strongest standards. Each of the four regulatory scenarios analyzed would bring substantial economic and job benefits for the U.S. economy in 2030.

· Effects on state GDPs would be overwhelmingly positive. States seeing the biggest percentage GDP gains under the strongest fuel efficiency standard have large auto industry sectors. The biggest gainers would be Michigan and Indiana, followed by Kentucky, South Carolina, Tennessee, Wisconsin, Iowa, Ohio, Alabama and Oregon. Compared to the three percent scenario, the six percent scenario would bring 382,000 more jobs, a $15.7 billion increase in gross economic output (sales), $10.3 billion more in personal income, and $9.5 billon more in tax revenue for cash strapped federal, state and local governments.

For more details and to read the full report, visit:

About Ceres: Ceres is a national coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as climate change.


New Fuel Efficiency Standards = $65+ Billion in Lost Revenue for Highway & Transit Improvements Between 2017-2025


A July 29 Obama Administration proposal to increase fuel efficiency standards for cars and light trucks to an average 54.5 miles per gallon (mpg) between 2017 and 2025 would result in the loss of more than $65 billion in federal funding for state and local highway, bridge and transit improvements, an analysis by the American Road & Transportation Builders Association (ARTBA) shows.

The impact on the nation's transportation improvement program, ARTBA President Pete Ruane says, would be like eliminating all federal highway funding for nearly two years.

"Like everyone else, we are supportive of efforts to reduce carbon emissions and improve fuel economy. However, from a public policy perspective, this is a classic case of the left hand not knowing what the right hand is doing," Ruane said. "It's irresponsible to advance such proposals without acknowledging and attempting to mitigate the adverse effect they would have on other areas of federal responsibility like making infrastructure improvements that improve safety, reduce traffic congestion, create jobs and help grow the economy."

Per gallon federal gasoline and diesel taxes collected at the pump are deposited into the federal Highway Trust Fund (HTF). By law, these excises are the primary revenue source for financing road, bridge and transit projects. The less motor fuel used by drivers, the less revenue generated for improvements financed through the HTF.

The analysis, conducted by Dr. William Buechner, a Harvard-trained economist and ARTBA vice president of economics & research, assumes the increase in fuel efficiency standards between now and 2016 will occur as required (the Obama Administration in 2010 put in place an increase from an average 28.3 to 34.1 mpg by 2016). It also assumes the mpg requirement will be phased in at five percent per year from 2017 through 2025 as proposed. The baseline for calculating revenue losses is the U.S. Treasury's February 2009 projections of HTF revenues. As new cars and light trucks are purchased in the future and old ones retired, average fuel economy will improve, reducing the 2009 forecast of gasoline sales and HTF revenues.

The HTF is already taking a revenue hit with the standards put in place in 2010, Buechner says. From fiscal years 2010-2016, he estimates that action will cost the HTF about $9 billion. Thus, if the new standards are enacted, the total loss of revenue for transportation improvements through 2025 is projected at $75 billion.

Given the nation's overwhelming infrastructure needs, Ruane said the nearly two-year overdue federal highway and transit program reauthorization bill provides a ripe opportunity for Congress and the President to identify all possible options to generate the revenues necessary to maintain and improve the system.

Established in 1902 and headquartered in the Nation's Capital, ARTBA represents the public and private sectors of the U.S. transportation design and construction industry.

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