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Fuel Efficiency Standards To Double by 2025

Friday, July 29, 2011 - 01:01 PM

President Obama, Ray LaHood, and EPA Administrator Lisa Jackson (photo courtesy of DOT)

Speaking today in Washington -- half an hour after he urged politicians to reach a compromise on the debt ceiling -- President Barack Obama unveiled an agreement that would double fuel economy standards to 54.5 miles per gallon by 2025.

The president said these new standards "represent the single most important step we’ve ever taken as a nation to reduce our dependence on foreign oil.”

The current fuel economy standards for cars with a 2010 model year are 27.5 m.p.g.

These new corporate average fuel economy standards -- or CAFE standards -- were developed by the Department of Transportation and the Environmental Protection Agency. The 54.5 m.p.g. mark applies to the average of the entire fleet of cars and light trucks model years 2017- 2025. Some models could fail to meet 54.5 m.p.g, but then others would have to surpass it to compensate.

Under the plan, the standards for passenger cars will increase by an average of five percent each year, while pick-ups and other light-duty trucks would increase an average of 3.5 percent annually for the first five years. After 2021, both would face a 5 percent annual increase, when cars and light trucks will be required to get 54.5 miles per gallon by 2025.

"Think about what this means," the president said. "It means that filling up your car every two weeks instead of filling it up every week. It will save a typical family more than $8,000 in fuel costs over time."

The President was joined by representatives from GM, Ford, Chrysler, Toyota, Nissan, Honda, Hyundai, BMW, Volvo, Mitsubishi and Jaguar -- which together account for over 90 percent of all vehicles sold in the United States -- as well as the United Auto Workers (UAW), and the State of California. Mazda, which was reported to be a last-minute holdout, was also on hand.

Who wasn't present? Mercedes parent company Daimler AG, as well as Volkswagen -- two companies which have invested heavily in diesel engines. (The program incentivizes the development of new technology, and administration officials said diesel is already in broad use.)

The president took the opportunity to needle lawmakers about the debt ceiling impasse. "This agreement ought to serve as a valuable lesson for leaders in Washington," he said. "This agreement was arrived at without legislation. You are all demonstrating what can happen when people put aside differences -- these folks are competitors, you've got labor and business, but they decided, we’re going to work together to achieve something important and lasting for the country."

You can read the president's full remarks here and the DOT press release here.

The new standards, however, aren't loophole-free. The administration promised a midterm review of the new standards, which some environmentalists worry will be used by automakers as wiggle room.

Automakers must pay a penalty for failing to meet CAFE standards. According to the National Highway and Transportation Safety Administration's website: "The penalty for failing to meet CAFE standards recently increased from $5.00 to $5.50 per tenth of a mile per gallon for each tenth under the target value times the total volume of those vehicles manufactured for a given model year. Since 1983, manufacturers have paid more than $500 million in civil penalties. Most European manufacturers regularly pay CAFE civil penalties ranging from less than $1 million to more than $20 million annually. Asian and domestic manufacturers have never paid a civil penalty." Details about CAFE fines can be found here (pdf).

A White House graphic of the new fuel economy standards (image courtesy of the White House)

The White House also released a report (PDF) about the new fuel economy standards.

The president has some other changes he'd like to see car manufacturers adopt. "It’s only a matter of time until Malia gets her learner’s permit," he said. "So I’m hoping to see one of those models that gets a top speed of 15 miles an hour (and) the ejector seat anytime boys are in the car."

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