Fuel-Economy Rules Set EPA Climate-Change Standard (Update2)

BusinessWeek , Saturday, April 03, 2010
Correspondent : By John Hughes
April 1 (Bloomberg) -- The Obama administration set the first national regulations targeting climate change, boosting U.S. automobile fuel-economy standards by about 30 percent.

The requirements were raised to an average of 35.5 miles per gallon for 2016 model-year cars and light trucks from 27.3 mpg in 2011. The final rule issued today will cost automakers $52 billion to comply and add $926 to the cost of buying a car within five years, according to government estimates.

“This is a significant step,” Environmental Protection Agency Administrator Lisa Jackson said in a joint statement with Transportation Secretary Ray LaHood. “Our economic and environmental priorities go hand-in-hand.”

The partnership with the Transportation Department in controlling carbon pollution from cars and trucks sets a precedent for the EPA’s plans to restrict greenhouse-gas emissions throughout the economy, the American Petroleum Institute said today in a statement.

“The rule is not just about vehicle efficiency,” the Washington-based trade group for oil and natural-gas companies said. “It’s about EPA overreaching to create an opportunity for regulating greenhouse gas emissions from virtually every firm and business in America, no matter how unwieldy, intrusive and burdensome such regulation might be.”

‘Sensible’ Regulations

The EPA has said it plans to require permits for emissions that may contribute to global warming from industrial polluters including power plants and oil refineries. The agency said March 29 it will take “sensible” steps toward such regulation no sooner than January.

Senators including Jay Rockefeller, a West Virginia Democrat, have said EPA rules could hurt the economy and has proposed a “two-year suspension” in EPA action. Republicans including Senator Lisa Murkowski of Alaska have been seeking legislation to bar the EPA from acting.

President Barack Obama, automakers, union leaders, state officials and environmentalists agreed on the fuel economy goals in May. The rules were formally proposed in September.

Automobile makers will likely meet the new standards by using existing technologies including more efficient engines, transmissions, aerodynamics and air conditioning systems, the EPA and National Highway Traffic Safety Administration said. Hybrid vehicles, diesel engines and electric cars may also contribute to better fuel economy, the agencies said.

‘Doomsday Scenarios’

Jackson told reporters that today’s action shows greenhouse-gas regulation “can be done in a thoughtful way, that doesn’t turn the economy on its ear, that doesn’t cause the sky to fall, and really puts to rest these sort of doomsday scenarios about how we couldn’t do this thoughtfully.”

Most or all of the $52 billion cost to automakers for 2012- through-2016 models will be recovered through higher prices for their vehicles, according to the rule. The increased cost to consumers will be eclipsed by more than $3,000 in reduced fuel costs over the life of each vehicle, the agencies estimated.

Canada said today it will harmonize its automobile emissions regulations with the U.S. for the 2011 model year. The change “will protect our environment and ensure a level playing field for the automotive industry,” Environment Minister Jim Prentice said in a statement from Ottawa.

2016 Targets

The EPA’s 2016 target of 35.5 mpg would be reached if all emission reduction standards came from fuel-economy improvements. The agency will let automakers receive credit toward the goal for improvements in air-conditioning systems.

The highway-safety agency, which doesn’t allow air- conditioner credits, estimates the 2016 standard at 34.1 mpg.

Passenger cars will have to meet a target of 37.8 mpg by the 2016 model year, while pickups, sport utility vehicles and minivans will need to average 28.8 mpg, according to an Obama administration fact sheet.

The 5 percent annual increase in fuel mileage in the next five years would save 1.8 billion barrels of oil and reduce 960 million metric tons of greenhouse gas emissions by 2016, the administration said.

--With assistance from Greg Quinn in Ottawa. Editors: Romaine Bostick, Larry Liebert.

To contact the reporters on this story: John Hughes in Washington at jhughes5@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

 
SOURCE : http://www.businessweek.com/news/2010-04-01/u-s-releases-final-fuel-economy-rule-for-vehicles-update1-.html
 


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