The Obama administration is moving toward a deal with automakers on a new fuel economy standard, which will likely boost the current standard by 80 percent, according to several news reports.
The new standard could be announced as soon as Friday.
At least five major automakers in the U.S., including General Motors and Ford, are expected to back the proposal, two auto makers told the Detroit News.
Administration officials have been meeting with stakeholders over the past month, and are expected to provide more details on the framework agreements to automakers this week.
Current U.S. fuel economy standards require manufacturers’ fleets to average 30.2 mpg for passenger vehicles and 24.1 for light trucks.
News reports say that the new standard would require them to average 54.5 miles per gallon by 2025 — slightly lower than the previously reported proposal of 56.2 mpg.
The White House did not respond to a request for comment on the new proposal.
The initial proposal, reported last month, set off a predictable fracas between the auto industry and environmentalists, and sparked off opposition from a bipartisan group of 16 of Michigan’s congressional lawmakers.
The lawmakers late last week had called the administration’s proposal “overly aggressive and not reasonably feasible.” In a letter to the White House, they said that “such a proposal would push beyond the limits of reasonably feasible technology development and would have significant negative ramifications for U.S. jobs and competitiveness.”
The new standard would apply to car models for the years 2017 to 2025 and is being proposed by the Department of Transportation and the Environmental Protection Agency.
Officials are expected to unveil a formal draft of the plan September 1, and once all the stakeholders agree, the agencies will draft a rule that will become effective by the summer of 2012.
The Alliance for Automobile Manufacturers, the trade group that represents General Motors, Ford, and Chrysler, argued in late June that currently a 56.2 mpg standard can only be achieved by electric and hybrid vehicles.
Automakers and the lawmakers argue that the stricter fuel-economy standards will result in more expensive vehicles, which will deter consumers from buying cars, which will in turn hurt economic growth and the job market.
The Center for Automotive Research recently projected that a standard of 62 mpg by 2025, the most stringent of the targets being pushed by environmental groups, could raise car prices by $9,790 and result in some 1.7 million lost jobs.
The only way to meet such a standard, the report added, would be if electric and hybrid vehicles made up 64 percent of the auto fleet.
But a March 2011 joint report by Citigroup and the Natural Resources Defense Council concludes that higher fuel efficiency would actually benefit industry and the economy.
The report forecasts that a six percent annual increase in the national fleet’s fuel efficiency would boost sales and could generate an eight percent growth in industry-wide profits by 2020 (the 56.2 mpg by 2025 standard represents a 5 percent annual increase.)
Staggered increases in fuel efficiency would also make Detroit auto companies more competitive against major international players like Toyota and Honda, the report stated.
The White House, meanwhile, did not confirm the 56.2 mpg figure, saying that negotiations are ongoing. The administration’s focus remains on a national standard that has the support of key stakeholders and continues to reduce reliance on foreign oil, a
spokesman told TPM.
Electric cars’ relatively high sticker prices, and the range limitations of their batteries raise questions about whether they can gain widespread acceptance quickly, despite White House ambitions.
The administration’s proposal for the 2012 budget allocates $8 billion to support research in clean energy. That includes research into advancing battery technology.
The cost of electric vehicle batteries is unlikely to decline enough to compete with the cost of producing gas-powered vehicles in the foreseeable future, according to Lux Research analyst Kevin See, who recently authored a report on the lithium-ion battery market.
Electric cars, which can travel up to 100 miles on a full charge, will be limited to short-distance drivers until charging stations expand their presence.
But transitioning to an auto fleet dominated by plug-in electric and biofuel vehicles is necessary to meet US greenhouse gas emissions reduction goals by 2050, the NRDC’s transportation programs director Roland Hwang told TPM, who was briefed on the White House discussions.
The 56.2 mpg goal is a step in the right direction, he said.
Still, the auto industry is not moving fast enough. The Obama administration is pushing the industry to put one million electric vehicles on US roads by 2015. But the current production rate is not on track to meet these targets, he said.
In the mean time, Lux Research’s See points to lower-cost and shorter-term measures such as micro-hybrid technology, lightweight steel, and improvements in engines as more viable ways to hit the Obama administration’s fuel-efficiency goal.
“The more incremental solutions to improving fuel efficiency will be the ones that win the day,” he said.
But then again, See noted, any major improvement in fuel efficiency can push up costs for manufacturers, and is likely to spur resistance.
“In the end the risk is there, so automakers will try to keep the product as close to what the consumer is used to as possible,” he said.
Increasing opposition from automakers represents a step back from two years ago, when auto executives agreed for the first time to set a national fuel economy standard at 35.5 mpg by 2016.
“This sounds just like what they said every time except in 2009, when they were bankrupt and there was a different complexion in Washington,” Hwang said.
Jaeah J. Lee is an editorial fellow at Mother Jones magazine in San Francisco. Previously she worked as a research associate at the Council on Foreign Relations. She has written in the Christian Science Monitor, Global Post, and Huffington Post.
Read her latest pieces here and follow her on Twitter.
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