Deal Reached On Fuel Economy

By Steven Mufson
Washington Post Staff Write
Saturday, December 1, 2007

Congressional leaders yesterday wrapped up a deal on fuel-efficiency standards that meets the approval of the auto industry's key congressional ally, Rep. John D. Dingell (D-Mich.), and clears the way for Democrats to bring an energy bill to a vote next week.

The final version of the bill will stick with the Senate version's goal of making the new automotive fleet achieve average fuel efficiency of 35 miles a gallon by 2020, about 40 percent higher than current averages. But at Dingell's urging it has tougher standards for cars than for light trucks. It would also help protect jobs at some U.S. auto plants, a priority for the United Auto Workers union.

"This landmark energy legislation will offer the automobile industry the certainty it needs, while offering flexibility to automakers and ensuring we keep American manufacturing jobs and continued domestic production of smaller vehicles," House Speaker Nancy Pelosi (D-Calif.) said in a statement last night.

With Dingell's support secure, Democratic leaders also plan to require under the bill that utilities use renewable energy as the source of 15 percent of their electricity generation by 2020. They believe that Dingell's approval means Senate Majority Leader Harry M. Reid (Nev.) can count on support from Michigan Democratic Sens. Carl M. Levin and Debbie Stabenow, giving him needed votes for a broad package.

The energy bill will also include a massive biofuels mandate, requiring motor fuel refineries to use increasing amounts of corn-based ethanol and, starting in 2013, increasing amounts of advanced biofuels using other feedstocks. The legislation also contains incentives for greater efficiency in electricity consumption.

The final and most difficult negotiations hinged on two key clauses about motor fuel efficiency. One gives automakers credit against federal mileage targets for producing flexible-fuel vehicles capable of using gasoline with as much as 85 percent ethanol. There is, however, no way to tell if such vehicles actually use biofuels or regular petroleum-based gasoline, and critics call the credits a major loophole.

Under the agreement reached last night, those credits will be extended to 2014, then phased out to zero by 2020. Dingell and U.S. auto companies had wanted the current maximum credit, 1.2 miles a gallon, to remain unchanged through 2018 or longer.

The other obstacle was a Dingell request that the Environmental Protection Agency not be allowed to override the bill with a decision on limiting tailpipe emissions of carbon dioxide, a greenhouse gas. The bill will not interfere with the agency's authority or its ability to approve of a California plan to set tougher tailpipe emissions standards, said a Democratic aide. The EPA is expected to issue a ruling on the emissions in the next few weeks.

The accord reached this week ends nearly a year of uncertainty about how Pelosi, who made an energy bill one of her top priorities, would reconcile key differences with Dingell, the House's longest-serving member and the chairman of the powerful

¿ House Energy and Commerce Committee.

Dingell has long been loyal to his hometown industry, though he has also supported steep energy taxes across the economy to discourage oil use.

Last night, Dingell issued a statement saying that the agreement "prescribes standards that are both aggressive and attainable" while "providing incentives to preserve approximately 17,000 domestic assembly plant jobs."

Auto companies have complained that the cost of raising fleet mileage is in the tens of billions of dollars, but advocates of higher fuel efficiency say that U.S. vehicles are essentially no more fuel efficient than they were in 1985 and less efficient than vehicles made in other countries.

Fuel efficiency standards, known as corporate average fuel economy standards, were adopted in 1975 in the wake of the Arab oil embargo and oil price shock of 1974. At the time, U.S. gas mileage averaged about 12.9 miles a gallon. The legislation set a standard of 27.5 miles a gallon by 1985.

Since then, however, the average vehicle mileage has gone down slightly because of the popularity of fuel-gobbling light trucks and sport-utility vehicles. In 2003, the National Highway Traffic Safety Administration tweaked the mileage minimum for light trucks, raising it slightly more than one mile a gallon.

A ruling by the U.S. Court of Appeals for the 9th Circuit earlier this year told the Transportation Department to reconsider the classification of certain light trucks, which the court said were plainly passenger vehicles.

Environmental groups hailed the agreement reached last night. "After two decades of being stuck in neutral and with oil prices in overdrive, Congress is finally on the verge of raising fuel economy standards," Carl Pope, executive director of the Sierra Club, said in a statement last night.

Groups concerned about energy security also praised the bill. "If it becomes law, this deal will mark the most important step toward improving U.S. oil security in a generation," said Paul Bledsoe, director of communications and strategy for the bipartisan National Commission on Energy Policy.

© 2007 The Washington Post Company