Autos must average 54.5 mpg by 2025, new EPA standards say

August 28, 2012

The Obama administration announced strict new vehicle fuel-efficiency standards Tuesday, requiring that the U.S. auto fleet average 54.5 miles per gallon by 2025, an uncontroversial move that, unlike other administration energy policies, was endorsed by industry and environmentalists alike.

The new rules, announced by Transportation Secretary Ray LaHood and Environmental Protection Agency administrator Lisa P. Jackson, expand on existing standards requiring American-made cars and light trucks to average 34.5 mpg by 2016. They will significantly cut U.S. oil consumption and greenhouse gas emissions by the time they are fully implemented, according to the EPA.

“These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil,” President Obama said in a statement.

This second phase of standards, which apply to model years 2017 to 2025, will double the efficiency of the U.S. fleet compared with vehicles manufactured in 2008.

Tuesday’s announcement marked the culmination of a compromise the White House forged between the auto industry, environmentalists, labor unions and the state of California.

California enacted its own greenhouse gas emissions standards several years ago, and it battled the auto industry in court until the administration brokered a deal between all the parties in May 2009.

“Customers want higher fuel efficiency in their cars and trucks, and GM is going to give it to them,” said Greg Martin, General Motors’ executive director for communications. “We expect the rules to be tough, but we have a strong history of innovation, and we’ll do our best to meet them.”

Phyllis Cuttino, director of the Pew Environment Group’s clean-energy program, said the fact that so many people now accept the idea of greater fuel efficiency does not lessen the rules’ “historic” importance.

“We’ve just come a long way in five years,” Cuttino said, noting that in 2007 lawmakers debated whether the U.S. fleet could average 30 mpg by 2025. “This gives me hope for energy policy in this country.”

Auto dealers warned Tuesday that making the technical changes required to achieve greater efficiency would increase the average price of a vehicle by $3,000 by the time the rules are fully implemented.

“This increase shuts almost 7 million people out of the new-car market entirely and prevents many millions more from being able to afford new vehicles that meet their needs,” Bill Underriner, who chairs the National Automobile Dealers Association, said in a statement.

While the sales of some electric cars have failed to meet industry expectations — GM initially predicted its electric Chevy Volt would sell 45,000 units in 2012, and it now projects it will reach sales of 20,000 Volts by the end of next month — the overall efficiency of the American auto fleet continues to rise.

Edmunds.com senior analyst Jessica Caldwell said buyers have begun to place fuel efficiency “at the top” of their shopping priorities, regardless of the size of the car they’re buying. But she cautioned that it remains to be seen whether sales of electric vehicles or hybrids — which make up just 3 percent of the U.S. auto market — will expand, or whether more-efficient internal-combustion engines will dominate a decade from now.

“The jury’s still out in terms of which technology is going to come out on top,” Caldwell said.

Some future changes may have less to do with the engine than what surrounds it. Alcoa’s chief sustainability officer, Kevin Anton, said that making a car body entirely out of lightweight aluminum rather than steel automatically boosts its fuel efficiency by 10 percent.

“We have a cost-effective way for them to meet the new fuel standards without compromising on safety, comfort or performance,” Anton said.

Caldwell also cautioned that the EPA uses a different method of calculating mileage for the window stickers that consumers see at an auto dealer, so the estimate consumers should expect to see on window stickers in 2025 will be closer to 36 mpg.

In addition to increasing fuel efficiency, the rules also establish an emissions standard of 144 grams of carbon dioxide per mile for passenger cars and 203 grams of CO2 per mile for trucks.

Kevin Kennedy, who directs the U.S. climate initiative at the World Resources Institute, noted that light-duty vehicle emissions represent approximately 17 percent of the country’s total greenhouse gas emissions.

“These rules represent one of the best opportunities for the administration to take a bite out of emissions that are damaging the planet, and in a way that’s good for consumers and the auto industry,” Kennedy said.

According to EPA estimates, the proposed standards would reduce CO2 emissions by 2 billion metric tons over the lifetimes of light-duty vehicles sold between model years 2017 and 2025. By 2025, the EPA said, the standards would cut U.S. oil consumption by 2.2 million barrels of oil per day compared with 2010 levels, save $1.7 trillion in fuel costs and result in an average fuel savings of more than $8,000 per vehicle.

“Vehicles that go much farther on a gallon of gasoline are the best weapon we have against rising gas prices,” said Daniel J. Weiss, senior fellow and director of climate strategy at the liberal think tank Center for American Progress.

Even as the administration moved to finalize the standards, GOP presidential nominee Mitt Romney has vowed to overturn them if elected. Last fall, Romney said he “would get the EPA out of its effort to manage carbon dioxide emissions from automobiles and trucks.”

In February, Romney reiterated his opposition during a speech in Detroit, saying the fuel-efficiency rules “hurt domestic automakers and provided a benefit to some of the foreign automakers.”

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