U.S. releases final rule for increasing vehicle fuel efficiency Bloomberg News April 1, 2010 - 12:32 pm ET UPDATED: 4/1/10 1:25 p.m. ET
WASHINGTON (Bloomberg News) -- The Obama administration released a final rule today requiring automakers to boost fuel economy to an average 35.5 miles per gallon for 2016 model vehicles.
President Barack Obama, automakers, union leaders, state officials and environmentalists agreed on the goal in May. The administration released a preliminary version in September.
"This is a significant step towards cleaner air and energy efficiency," Environmental Protection Agency Administrator Lisa Jackson said in a statement. "Our economic and environmental priorities go hand-in-hand."
The rule will cost auto manufacturers $52 billion to comply for the
2012 through 2016 model years, according to the agencies' rule. Carmakers will recover most or all of the costs through higher prices for their vehicles, according to the rule.The EPA's 2016 target of 35.5 mpg would be reached if all emission reduction standards came from fuel-economy improvements, including credits automakers may receive toward the goal by making air-conditioning improvements.
The National Highway Traffic Safety Administration, which issued joint fuel-economy rules with the EPA, estimates an average fleet-wide fuel economy of 34.1 mpg.
Fuel savings
Passenger cars will have to meet a target of 37.8 mpg by the 2016 model year, while pickups, sport utility vehicles and minivans will need to average 28.8 mpg, according to an Obama administration fact sheet.
The rule will raise vehicle costs an estimated $926 by 2016 models, according to the fact sheet. Over the life of the vehicle, consumers may save more than $3,000 in reduced fuel costs, the agencies estimated.
The new targets are up from the 27.3 average required for 2011 models covered by the previous rule. The 5 percent annual increase in fuel mileage in the next five years would save 1.8 billion barrels of oil and reduce 960 million metric tons of greenhouse gas emissions by
2016, the administration said.Reactions vary
Groups representing the automobile industry and car dealers had strikingly different reactions to the new rules.
"The regulations provide manufacturers with a roadmap for meeting significant mileage increases for model years 2012-2016, as well as the certainty and lead time necessary to cost effectively add new technology," the Alliance of Automobile Manufacturers, which consists of 11 domestic and foreign automakers, said in a statement.
The group's CEO, Dave McCurdy, added that the new regulations "mark the beginning of a new integrated approach" that "eliminates the patchwork of regulations and conflicting standards across the country."
But the National Automobile Dealers Association said that the new rules will create more regulatory confusion, not less.
It said that there would be three different fuel-economy standards set by the U.S. Transportation Department, the U.S. Environmental Protection Agency and the California Air Resources Board.
Automakers' costs in complying with these different rules will rise, and they will pass on these costs to consumers in the form of higher prices -- making it more difficult for dealers to sell cars, NADA said.
"Under these new mandates, the price of new cars and light trucks will rise significantly, meaning fewer Americans will be able to buy the new vehicles of their choice," said NADA chairman Ed Tonkin.
Neil Roland contributed to this report.
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