From AAIA Capital Report
The Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) issued a joint proposed rule on Nov. 16 that would require an increase in the average fleet fuel economy standard for passenger cars and light trucks to 54.5 miles per gallon (mpg) by model year 2025. This proposal would further extend fuel economy and greenhouse gas emission regulations issued last year that required car companies to meet a 35.5 mpg average by 2016.
In the proposal, EPA establishes a goal of reducing carbon dioxide emissions to 163 grams per mile by 2025, which, EPA and NHTSA state, can be achieved solely by increasing the fuel economy standard to 54.5 mpg. The agencies, however, recognize that automakers will meet a slightly lower combined fleet-wide average of 49.6 mpg – 56 mpg and 40.3 mpg for cars and light trucks, respectively, due to expectations that automakers will attempt to meet the carbon dioxide emission standard through reducing air conditioning leakage as well, which will have no effect on fuel economy.
The agencies will conduct a midterm review, subject to a notice and comment period, from which NHTSA will determine whether or not modifications need to be made to the 2022 through 2025 standards.
Not only would these standards reduce both oil consumption and greenhouse gas emissions, but they also would provide net benefits to motorists in the hundreds of billions of dollars based on fuel savings. For example, while prices of vehicles are expected to increase by $2,000 by 2025 as a result of the new rules, consumers would save $6,000 in fuel costs over the life of the vehicle. Furthermore, according to NHTSA and EPA, many of the technologies needed for automakers to meet these standards, from advanced engines to improved aerodynamics, are already available.
Meanwhile, House Oversight Committee Chairman Darrell Issa (R-Calif.), is continuing his investigation into whether or not the agencies violated the Administrative Procedure Act in meeting with automakers and unions prior to crafting this proposed rule. While Rep. Issa conducts his investigation, EPA and NHTSA have scheduled three public hearings to discuss the proposal for early next year: Jan. 17 in Detroit, Jan. 19 in Philadelphia and Jan. 24 in San Francisco.
The proposed rule can be found here.
