New Energy Act Boosts Fuel Economy Standards
January 2, 2008
President Bush signed the Energy Independence and Security Act of 2007 into law on December 19th, thereby mandating a 40% increase in fuel economy by 2020. The act requires the Department of Transportation to set tougher fuel economy standards, starting with model year 2011, until the standards achieve a combined average fuel economy for model year 2020 of at least 35 miles per gallon (mpg). The standards apply to the total fleet of passenger and non-passenger automobiles manufactured for sale in the United States for that model year, up to a gross vehicle weight of 10,000 pounds. Currently, passenger automobiles must achieve an average of 27.5 mpg, while "light trucks"—a category that includes pickup trucks, sport utility vehicles, and minivans—must achieve 22.5 mpg, bringing the average for cars and light trucks to about 25 mpg. The Alliance to Save Energy (ASE) estimates that the improved fuel economy standards will reduce U.S. oil consumption by 1.1 million barrels per day by 2020, saving consumers $22 billion per year. See the White House press release and fact sheet and the ASE press release.
Starting in model year 2015, the new act starts to phase out the automakers' credit for manufacturing flex-fueled automobiles, which can run on gasoline or an alternative fuel (usually the ethanol-rich E85). The credit is phased out completely by model year 2020, placing additional pressure on automakers to improve fuel economy. To help consumers maximize their fuel economy, the act requires the U.S. Environmental Protection Agency (EPA) to create rules for a national labeling system for tires to show their impact on fuel economy. For federal fleets, the act prohibits agencies from purchasing light-duty vehicles or medium-duty passenger vehicles that do not achieve low greenhouse gas emissions, and it requires new regulations to cut the petroleum consumption of federal fleets by 20% by 2015, while boosting alternative fuel consumption by 10%. The act also calls for studies by the National Academy of Sciences on the technologies available to meet the new standards and on the possibility of increasing the fuel economy of medium- and heavy-duty trucks. In addition, the act establishes incentives and loan guarantees for advanced vehicle technologies, but those measures will depend on future appropriations of funds. See Title I of the new energy act on the Library of Congress Web site.
As noted by ASE, the new fuel economy standards will reduce greenhouse gas emissions by an amount equivalent to removing 28 million of today's cars from the road. A separate requirement to boost renewable fuel use will also lower greenhouse gas emissions. Given these national regulations, the EPA decided on December 19th to deny a request for a Clean Air Act waiver that would have allowed California to set its own greenhouse gas emission limits for vehicles. See the EPA press release and related fact sheet.