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Auto Industry Must Not Be Allowed to Compromise Obama Administration’s Fuel Economy, Greenhouse Gas Standards

Sept. 15, 2009

Auto Industry Must Not Be Allowed to Compromise Obama Administration’s Fuel Economy, Greenhouse Gas Standards

Statement of Lena Pons, Policy Analyst, Public Citizen’s Congress Watch Division

The Obama administration proposed a historic step forward today that would reduce our nation’s oil consumption and greenhouse gas emissions. The proposed standards it announced for fuel economy and emissions would save 1.3 million barrels of oil per day in 2020 and save drivers about $26 billion per year in 2020, based on the current price of gas. Under the proposal, automakers would have to raise the average gas mileage across their fleets to 35.5 miles per gallon and reduce carbon dioxide to 250 grams per mile by 2016.

At the same time, the proposal must be improved before it is finalized because it offers auto manufacturers too many opportunities to evade proposed fuel economy gains. The Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) must ensure that the rule’s fuel savings are realized by limiting auto manufacturers’ ability to undercut fuel economy gains. In the past, the auto industry has done everything in its power to weaken critical safety and environmental regulations. The EPA and NHTSA should guard against history repeating itself.

Above all, the final rule must contain a “backstop” to ensure that the program’s goals are met even if manufacturers alter their mix of cars and trucks. Under the current proposal, if manufacturers produce a larger percentage of trucks than planned, then overall gains will be undermined because the standard for trucks is much weaker. A backstop would require the industry to make up for these losses and ensure that the program’s goals are met.

Another potential problem for achieving the program’s goals is a variety of “credits” that manufacturers may earn to reduce the required improvement in a given model year. For example, the proposed rules would allow manufacturers to accrue credits for exceeding the existing fuel economy standards before the first new standards take effect in the 2011 model year. However, the existing standard has been in effect for passenger cars since 1985, and the light truck standard has been only nominally raised in the past 20 years. Manufacturers should not be permitted to undermine gains required by this proposal by rewarding them for complying with a woefully out-of-date standard.

Another concern is that the public will not know whether manufacturers are complying with fuel economy and greenhouse gas emissions standards, even though levels of compliance may be an important factor in setting future standards. Under the proposal, manufacturers can bank credits for five years when they exceed the standards, borrow credits from three years into the future when they fail to meet the standards, and buy and sell banked credits. These features of the program will make it extremely difficult for the public to discern year-to-year compliance with the standards. Therefore, NHTSA and the EPA should ensure that information about compliance is publicly available.

Automakers will comply with these new standards by expanding the use of proven fuel-saving technology like downsized turbocharged engines, improved valve timing, continuously variable transmissions, reduced rolling resistance tires, cylinder deactivation, hybrid drivetrains, and even emerging plug-in hybrid and electric vehicle technologies without reducing the safety protections required by current standards.

Achieving the level of improvement proposed today is a key step forward in putting the United States on a path to more energy-efficient transportation and reduced global warming pollution.