New Vehicle Standards Take Aim at Climate-Altering Emissions
The Obama administration recently announced new standards that will improve fuel efficiency in new vehicles starting in 2012. The standards mark the first time in U.S. history that the federal government has crafted regulations aimed specifically at reducing greenhouse gas emissions and stemming the impact of global climate change.
In a joint rulemaking unveiled April 1, the U.S. Environmental Protection Agency (EPA) and the Department of Transportation (DOT) established standards that will apply to vehicles in model years 2012 through 2016.
EPA's portion of the regulation will limit greenhouse gas emissions from tailpipes. By model year 2016, the average car will emit no more than 250 grams of carbon dioxide per mile. The standards will reduce emissions by 960 million metric tons, "equivalent to taking 50 million cars and light trucks off the road in 2030," according to EPA's press release.
DOT's National Highway Traffic Safety Administration (NHTSA) will update its Corporate Average Fuel Economy (CAFE) standards to comport with EPA's emissions limits. The average model year 2012 vehicle will be required to achieve a fuel efficiency rate of 29.7 mpg (miles per gallon). The standard ratchets up the fuel efficiency level each year through 2016, when the average vehicle will need to reach 34.1 mpg.
The standards are the culmination of a compromise President Obama brokered shortly after assuming office. In May 2009, the Obama administration agreed to model regulations after a California vehicle emissions program supported by environmentalists and adopted by 13 other states and the District of Columbia. These standards had never been implemented because the Bush administration did not grant the required waiver under the Clean Air Act that California needed in order to act. Automakers signed on to the plan, preferring the standards be set at the federal level, instead of at the state level, to achieve a uniform national standard.
On March 31, the president announced that the federal government will double the size of its fleet of hybrid vehicles, according to BNA (subscription required). According to the administration, a car manufactured in 2016 could save consumers $3,000 over the life of the vehicle. The administration estimates the standards will conserve 1.8 billion barrels of oil. "This is a significant step towards cleaner air and energy efficiency, and an important example of how our economic and environmental priorities go hand-in-hand," said EPA Administrator Lisa Jackson.
EPA's regulatory impact analysis (RIA) for the final rule estimates that the benefits of the rule far outweigh the costs. The estimated lifetime costs of the rule are $51.5 billion dollars, while the lifetime discounted benefits are more than $240 billion. According to the RIA, "EPA estimates that the additional technology required for manufacturers to meet the GHG standards for this final rule will cost on average $948/vehicle. This cost is roughly $100 lower than that projected" in the agencies' proposed rule issued in September 2009. The difference in costs between the proposed and final rule is due to revisions in the costs of new technologies expected to be used by manufacturers to comply with the rule.
The vast majority of consumer benefits will come from fuel savings. According to NHTSA's fact sheet on the final rule, "the lifetime benefits of the CAFE standards will total over $182 billion," which accounts for the bulk of the total benefits. "NHTSA attributes most of these benefits—about $157 billion—to reductions in fuel consumption."
Both agencies explained that there were many benefits they expect from the rule that are not counted in their analyses. For example, NHTSA's fact sheet indicates that the agency "has not monetized reductions in toxic air pollutants due to the standards (a benefit), nor potential reductions in vehicle performance or utility (a cost) that might result from the standards. However, by any metric, NHTSA expects that the benefits of the standards will vastly outweigh the costs."
Environmentalists and the automotive industry are cheering the new standards. "These standards are a grand slam: billions of dollars in consumer savings at the pump, a huge reduction in oil use, significant cuts in pollution, and they will help a more sustainable domestic auto industry thrive," said Michael Brune, Executive Director of the Sierra Club.
The auto industry has also provided its support. "Today, the federal government has laid out a course of action through 2016, and now we need to work on 2017 and beyond," Alliance of Automobile Manufacturers President and CEO Dave McCurdy said April 1.