Win! Congress Passes Fuel Economy Increase

By Lena Pons

In December, Congress passed fuel economy legislation that by 2020 will reduce oil demand by 1.2 million barrels per day, cut global warming pollution by 200 million metric tons and save consumers more than $20 billion at the pump.

But it’s not perfect. It has some serious shortcomings that clearly are concessions to the auto industry, negotiated by the industry’s man on Capitol Hill, Rep. John Dingell of Dearborn, Mich., chairman of the powerful House Energy and Commerce Committee.

The legislation raises fuel economy standards for cars and light trucks from 25 miles per gallon to 35 miles per gallon by 2020. The average fuel economy of all vehicles will have to improve to meet these standards because the law specifically requires that the average fuel economy of all vehicles sold in the U.S. improve by 40 percent by 2020.

The legislation changes how these fuel economy standards are calculated. Under the current system, the average fuel economy of each manufacturer’s fleet must meet a single standard. Under the new law, that’s not the case. The entire automobile industry must achieve 35 miles per gallon for combined car and truck fleets by 2020. Each year, each company will get its own fuel economy targets.

So what does this all mean? It doesn’t mean that every vehicle is going to have a fuel economy of at least 35 miles per gallon. And it doesn’t mean that every automaker is going to achieve a fuel economy of at least 35 miles per gallon.

It does mean that some automakers will exceed the industrywide standard within a few years, while others will lag behind and struggle to catch up.

Congress has established a system that will allow Detroit to achieve lower fuel economy standards than foreign automakers but still meet the requirements. Each automaker will be assigned separate targets for its car and light truck fleets, based on the characteristics of the vehicles and the mix of those vehicles in its fleet.

So, for example, the National Highway Traffic Safety Administration (NHTSA) might give Toyota higher car and light truck targets than Ford. Automakers that fall short of their fuel economy targets will be able to buy fuel economy compliance credits from those companies that exceed their targets. In other words, if Ford is not meeting its target, it can buy some compliance credits from Toyota.

Automakers also can avoid fines by shifting some compliance credits between their own car and truck fleets or projecting that they will significantly exceed their fuel economy targets within three years of their missed target.

“The automakers are given considerable latitude to continue to put off progress on fuel economy for another five to 10 years,” said Joan Claybrook, president of Public Citizen. “By playing shell games with fleet mix and credit trading, domestic manufacturers could continue to drag their feet.”

Still, the 35 miles-per-gallon mandate is an important win, because it ends a 20-year period of stagnation in fuel economy. But it is also too little, too late.

“Automakers could and should achieve much more than 35 miles per gallon, but it does help that there is no longer any statutory block to further progress in fuel economy after 2020,” Claybrook said.

Also dropped from this bill was a provision that would have allowed NHTSA to set lower standards based on industry-biased cost-benefit analysis. Although most public interest groups were silent about this enormous loophole in the Senate bill, Public Citizen refused to back down.

Public Citizen members and activists sent thousands of letters to lawmakers demanding that the cost-benefit analysis loophole be stripped – and it was.

“This victory is long overdue and urgently needed,” Claybrook said. “The auto industry improves the fuel economy of vehicles only if Congress mandates it.”

President Bush signed the energy bill into law in December.

Some Compromises

Although passage of this law, overall, is good news for consumers, some additional concessions were made to the auto industry:

The law gives extra credit to automakers that build flex-fuel vehicles, which are typically designed to run on either gasoline or a blend of gasoline and ethanol known as E85.

This flex-fuel credit is a loophole that assumes the vehicles, which are relatively cheap to build, use gasoline 50 percent of the time and E85 50 percent of the time.

That doesn’t happen because E85 is not widely available throughout the country. Still, automakers receive credit for the fictional fuel economy gains, enabling them to meet the legal fuel economy target, even though their vehicle fleets may actually fall short.

Thankfully, the credits are scheduled to be phased out starting in 2015 and disappear in 2020.

The law eliminates language that had been included in the Senate bill that would have required NHTSA to set a standard for vehicle compatibility, which addresses how the size of vehicles affects how they match up in a crash. For instance, when an SUV crashes into a car, the occupant of the car is 4.3 times more likely to be injured or killed than the SUV occupant. This standard would have required automakers to make design changes that are directed at protecting the occupants of cars.

Still, in spite of some concessions to industry, this law is good for consumers.

“Gains in vehicle efficiency over the past 20 years have gone to enlarging engines and amenities, such as air-conditioned glove boxes. It’s time to funnel those improvements toward saving at the pump and reducing greenhouse gas,” Claybrook said.

Lena Pons is a policy analyst with Public Citizen’s Auto Safety Group.

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