Obama Announces New Fuel Standards

President Barack Obama will announce plans on Tuesday for a national fuel-economy and greenhouse-gas standard that would significantly increase mileage requirements for cars and trucks by 2016.

Obama called it “an historic agreement to help America break its dependence on oil, reduce harmful pollution and begin the transition to a clean energy economy.” 

The new requirements mark the first time there has been a nationwide standard for emissions of greenhouse gases. They require an average mileage standard of 39 miles per gallon for cars and 30 mpg for trucks by 2016 – a jump from the current average for all vehicles of 25 miles per gallon.
Obama made the announcement in a Rose Garden ceremony flanked by representatives of auto workers unions and 10 auto manufacturers, plus elected officials including California Gov. Arnold Schwarzenegger. 

“In the past an agreement such as this would have been considered impossible. It’s no secret these are folks who’ve been at odds for years, even decades,” Obama said. But, he said, “The status quo is no longer acceptable.” 

The new standards cover the model years 2012 to 2016 and are expected to add about $600 to the cost of a new car, the White House said. Administration officials hope the added costs will be recouped by savings in gasoline costs from the higher mileage requirements. 

Auto manufacturers have fought past attempts to raise mileage standards but came to the table this time out of fears of patchwork of national standards – particularly because California has been trying to create a more aggressive benchmark for decreasing greenhouse gases. Obama’s moves gives the companies certainty in what they must achieve for all model nationwide — , at a time when car companies are struggling for survival. 

The policy for autos will link together the corporate average fuel economy, or CAFE, standard and the Environmental Protection Agency's greenhouse-gas standard. That way, officials explain, industry will not have to worry that the administration will regulate those on separate tracks. The standards will be gradually increased each year after 2012 until they hit Obama’s targets in 2016.

The White House predicted significant environmental benefits from the program, with a projected savings over the life of the program of 1.8 billion barrels of oil, and reductions of 900 million metric tons of greenhouse gas emissions. White House officials called it the equivalent to taking 177 million cars off the road or shutting down 194 coal plants.

Obama called the tailpipe-emissions announcement historic because it avoids a patchwork of standards and has won agreement from so many stakeholders, including automakers, state governments, the Department of Transportation and the EPA. 

“President Obama has solved the energy and economic policy equivalent of a Rubik’s Cube,” said Rep. Ed Markey (D-Mass.), who was a principal author of a 35 mpg standard that passed Congress in 2007.

California had been seeking permission to establish its own greenhouse-gas reduction standard for tailpipe emissions but now can be expected to ultimately accept the federal standard.

In secret conversations, the Obama administration has lined up support from many state governments and a huge array of domestic and foreign automakers, including GM, Ford, Chrysler, BMW and many more.

Attending the announcement were top officials from Ford, General Motors, Toyota, Honda, Chrysler, BMW, Nissan, Volkswagen, Mercedes Benz and Mazda, along with United Auto Workers president Ron Gettlefinger. In addition to Schwarzenegger, Michigan Gov. Jennifer Granholm and Massachusetts Gov. Deval Patrick were there. 

The original CAFE standards was established by Congress in 1975 in response to the Arab Oil embargo.

On Obama’s seventh day in office, he directed his Transportation Departmen to establish higher fuel-efficiency standards for carmakers' 2011 model year “so that we use less oil and families have access to cleaner, more-efficient cars and trucks.”

“This rule will be a down payment on a broader and sustained effort to reduce our dependence on foreign oil,” he said. “Going forward, my administration will work on a bipartisan basis in Washington and with industry partners across the country to forge a comprehensive approach that makes our economy stronger and our nation more secure.”